Johannesburg - Market activity in the South African residential property market increased marginally during the third quarter of 2007 but remained at its lowest levels in three years, the FNB Property Barometer showed on Monday.
The barometer, which measures activity levels on a scale of 1 to 10, showed an activity level of 5.3 compared with 4.9 in the previous quarter and 6 in the same quarter last year.
Activity is measured on a scale of 1 to 10, where 1 to 3 indicates 'Not Very Active', 4 to 6 indicates 'Stable', 7 to 8 is 'Active' and 9 to 10 indicates a 'Very Active' market. Activity is defined as 'feet through doors', which translates into the number of potential homebuyers visiting show houses.
"Possible reasons for this marginal increase may include seasonality and settling of the market post the implementations of the National Credit Act," FNB said.
The market has been under pressure since the third quarter of 2006 due to six consecutive interest rate increases, the bank said.
The proportion of first time buyers decreased to 14%, which was expected following the interest rate hikes and the implementation of the new credit laws.
Township property in Gauteng also experienced some pressure, with the number of properties sold at less than the asking price rising from 8% to 21%.
"This indicates that sellers may have been asking unrealistic prices and are now having to adjust their price expectations. This trend, previously noticed in the 'traditional suburbs', seems to be filtering through to the township market," the bank said.
The bank said that property professional also claimed there was an increasing trend in the ratio of sellers to buyers, indicating that the market is becoming more of a buyer's market.
"Only approximately three in five property professionals operating in the townships have a positive outlook for the next quarter," the bank said.
Published By: I-Net Bridge
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