Property in South Africa Taking Longer To Sell

Property in South Africa Taking Longer To Sell

A recent report compiled by Property24’s data department shows clearly how the property market has changed over the past 18 months in terms of the number and frequency of properties that are sold. The report covers single residential as well as multi-unit transactions that took place between July 2006 and December 2007, recorded by over 4000 estate agent offices nationwide.

During the report period, sales of residential properties listed as ‘Sold’ on Property24 decreased by 20%. Says Christo Wiid, Property24’s GM of Real Estate Services: “This trend has highlighted the slower turnover of properties in recent months, where the time taken to sell a home has doubled from a 90 day timeframe to 180 days.”

Interestingly, the recorded average difference between asking and selling prices nationwide has increased during the same period. During the second half of 2006 the average difference between asking and selling price stayed mostly flat, but by mid-2007 was showing a steady widening.

The trend gathered momentum in late 2007, with properties selling for between 15% and 25% less than the listing price. From this it would seem that sellers had either not realised the market had changed, or were raising their asking prices proportionately in an effort to realise the sale at the closest amount possible to their original price. This served only to compound the situation and resulted in sellers and agents being accused of overpricing.

Coastal properties taking longer to sell
When drawing a comparison between the inland metropolitan versus the coastal metro areas, it’s clear the inland areas have resisted the property market slowdown better than their coastal counterparts. The coastal areas (CT, Durban and PE) took an additional 45 to 60 days to sell in 2007 compared with 2006, while inland the number of days taken to sell during the second half of 2006 increased by only two to three weeks in 2007. The exception was Bloemfontein, which saw homes staying on the market for up to 13 weeks longer.

Fewer inland properties selling
However, coastal zones are still selling a higher number of properties. According to agent data on Property24, although coastal metros’ sales have decreased by 30%, inland metros are down almost 60%. “As the inland areas comprise the majority of residential property sales in South Africa, this translates into a significant effect on the industry,” says Wiid.

Splitting the data another way
Looking at the same data but comparing freehold (single residential) and sectional title (multi-unit) sales, the same trend emerges with properties as a rule taking a lot longer to sell across the country. Time on the market for the average single residential property increased from 107 to 144 days during the 18-month period, while the average multi-unit offering increased from 100 days to 165 days on market. Both single residential and multi-unit listings also show the widening gap between asking and selling prices, with a difference of 10% and 7% respectively.

“In short,” says Wiid, “the figures reflect a property market that consists of fewer houses being sold for higher prices, that are taking a good deal longer to sell”.

Authored By: James Monteiro
Published By: PROPERTY24.COM