How healthy is the property market?

Just how healthy is the residential property market? Well, according to FNB's property barometer, the market is still very, very buoyant.

Bruce Whitfield:
Just how healthy is the residential property market. Looking through some of the property papers in Gauteng and Cape Town last week, sellers are still being pretty demanding in what they are asking for.

But certainly fewer are getting their asking prices. 60 percent in fact are not achieving their asking prices. FNB does a property barometer, in which it assesses the opinions of professionals in the property market. Ed Grondel is the chief executive of FNB Home Loans, and he joins us on the line now. Ed who exactly is surveyed in this particular research?

Ed Grondel:
Good evening Bruce, yes as you said, it is 150 property professionals or so, real agents and principals of big name brands around the country. Now there are many more agents of course, there is something like 20 000 agents around the country, and we make certain that the sample we use with every quarters researched is a different sample, but always well experienced, big name brand people. People who really understand the market, so we don’t have honest Ed’s Real Estate …

Bruce Whitfield:
We trust honest Ed everyday. But having looked specifically at Gauteng and the Western Cape, Bedfordview, the best performer between the first quarter of 2005 and 2006 up 57 percent. In the Western Cape, Oakglen up 40 percent. Certainly very strong growth in some areas of the property market.

Ed Grondel:
Bruce, yes, but I would not look at individual suburbs because they could be skewed by low volume, one unit, etc. A more important factor for me there is we produce a list of various suburbs and their price increase. We do the highest, we do the lowest etc.

Now, what is more interesting for me, is on a page of say ten suburbs, where we show the growth ranging from say, 50 down to 20 percent or whatever it is, what is more interesting for me is comparing that to a year or two years ago where that figure was standing at a high of 70 or 75 percent growth, and the lower one on that list was standing at 40 percent.

So there has been a definite shift in the growth overall, and I am not referring to the same suburbs every time, but I talk about a list of suburbs in each of the areas. So there is most definitely still growth in the property market, but we have definitely seen a shift down, and as you mentioned, 60 percent of sellers not getting their price. That has turned around from some 29 percent eighteen months ago.

Bruce Whitfield:
And also, properties on average are on the market for eight weeks, which is quite a long time.

Ed Grondel:
Yes, but it has been like that for a little while and it might indicate that that is exactly the sort of level it should be. It takes a while to settle in. We have passed the time when buyers were going out and saying I have got to get a property at all costs before we run out of stock kind of thing. There is more choice in the market now, and I think developers have caught up. So I think a period of two months, really if you think about it, is not a long time and we have seen the same trend happen for the last three quarters or so. So I think we have got a fairly normalised market where that is concerned.

Bruce Whitfield:
We are running out of a stock in time, but what is nice about this particular research is that it is forward looking and provides an opportunity for forecasting. What is it looking like for the twelve months hence?

Ed Grondel:
Indeed, and the real estate professionals who proved over time to be absolutely accurate, they are not trying to talk the market up. We have watched their trends go up and down and every time they have been right on the coconut. And this time they say, expect the next quarter to be quite buoyant, so let’s hope they are right again this time.

Bruce Whitfield:
Ed Grondel thank you very much indeed. He is the chief executive officer of FNB Home Loans. The FNB property barometer showing the property market in South Africa still very, very buoyant.

Article from: http://business.iafrica.com