(Click here for the Third Quarter Joburg FNB Residential Property Barometer.)

The Third Quarter Cape Metro FNB Residential Property Barometer pointed to a significant jump in activity levels in the region, after a very weak second quarter level. This suggests that the region is beginning to feel the positive impact of the series of interest rate cuts that took place in the first half of 2009.

The Property Barometer is a survey of a sample of estate agents in the major cities of the country regarding their personal experience of market conditions.

The main Barometer question relates to the level of demand activity and agents are asked to rate the level of demand that they experience on a scale of one to 10.

After an initial rise in the first quarter to 4.71, agents estimated activity to have declined back to 4.21 in the second quarter. The third quarter level of 5.82 is thus a significant rise in what was a very weak demand level. The third quarter survey was undertaken in mid-August, after the bulk of the South African Reserve Bank's 2009 interest rate cuts to date.

Coastal regions most optimistic

The jump in the Western Cape’s activity rating means that the agents surveyed from that region are more upbeat about activity than their Gauteng counterparts, although all regions have seen an improvement.

The three major coastal metros, namely eThekwini (5.86), Mandela Bay (5.82), and Cape Town (5.82) are now more upbeat in their estimates of activity compared with Joburg’s 5.47 and Tshwane on 5.76.

Greater seller realism setting in

The estimated percentage of properties sold at below asking price showed a significant decline from 91 percent in the second quarter to 83 percent in the third quarter, while the average time of a property on the market prior to being sold declined sharply from 22 weeks and 2 days in the second quarter to 16 weeks and 1 day in the third. These two indicators, when read together, point towards more realistic pricing by sellers. The greater realism may not only be due to sellers setting prices lower, but also due to the market catching up to price levels, therefore making previously unrealistic price levels now a little more realistic in a stronger market.

Selling in order to downscale due to financial pressure declined significantly in importance, dropping from 36 percent of total selling to 25 percent from the second quarter of 2009 to the third. Simultaneously, selling in order to upgrade jumped from nine percent of total selling to 17 percent over the same period. Both of these numbers suggest that interest rate cuts have now had a significant impact in terms of alleviating the pressure on households as a whole.

As a percentage of total selling, emigration selling in Cape Town showed a surge during 2008, similar to the trend in other metros, but never reached as high a level as the likes of the Gauteng metros or eThekwini. After a peak of 14 percent in the third quarter of 2008, there has been a broad decline in emigration selling’s significance to only four percent of total selling by the third quarter of this year, according to the estate agents surveyed.

Article continues on page two with a detailed suburb-by-suburb breakdown...

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