According to the FNB South African Estate Agent Survey for Q3 of 2015, activity in the South African residential property market appears to be slowing down, which could have implications for near-term mortgage lending growth. On a year-on-year basis, Q3 saw marked decline in the residential activity rating for the first time in several years.
FNB household and property sector strategist, John Loos, says the slowing down might be a reflection of a multi-year stagnation in the country's economic growth, along with gradual interest rate hikes. Another explanation could be that incomes have not kept up with house prices.
According to the survey, the average time properties remained on the market declined from the previous quarter's 12 weeks and one day to 11 weeks and one day - a full week less. When other indicators suggest declining demand, this was an unusual finding. It also showed that as much as 87% of sellers drop their asking price. On those properties where a price drop was required to make the sale, the estimated average percentage asking price drop, was 9%.
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