Good news from the western front

In a development that bodes well for the South African real estate market, it seems that the battered home sales ship in the US is - slowly - starting to turn around.

That’s the word from Dr Willie Marais, national president of the Institute of Estate Agents (IEASA), who notes that according to the latest figures released by the authoritative National Association of Realtors (NAR), the sales of existing or pre-owned homes in the US rose by 5,5 percent in September, to their highest level in 13 months.

“Altogether 5,18m existing homes in the US were sold in September - compared to 4,91m in August and 5,11m in September last year – and housing inventory fell to a 9,9-month supply, down from a 10,6-month supply in August.

“This marked the second monthly decline since inventory peaked in July and is good news for the SA market, which takes much of its direction from the US market especially where consumer confidence is concerned,” he says.

The NAR says the third quarter sales turnaround in the US is due to falling prices and improved housing affordability conditions, with the national median price for existing homes showing a 9% year-on-year decline in September and distressed sales accounting for 35 to 40% of all transactions.

“And while it may seem contradictory to talk about a turnaround when the market is still in such a bad way, increased sales activity is a good indicator of better times to come,” says Marais.

“What happens is that investors and other savvy buyers move in to pick up bargains as they sense the market reaching bottom. The word spreads and they are followed in due course by more and more first-time buyers and people taking the opportunity to upgrade, and slowly the oversupply of homes for sale is absorbed, demand starts to equal and exceed supply, and prices start to rise again.

“We have also seen exactly this scenario in SA before, and in the past few weeks many of our members have reported stronger buyer interest as price growth continued to slow and the number of repossessions continued to climb. So there is light at the end of the tunnel, and we in SA are fortunate in having a rapidly growing new middle class that will no doubt speed up the pace of our market’s recovery.”

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