Whatshot
Property Talk
Property Talk
Date: 2018-06-29
Economic Stress or General Pessimism
By the mid year mark are we back to business as usual in a weak economy This is what FNB's 2nd quarter national estate agent survey is reported to be telling us. The spike in sentiment, due to the political leadership changes, appear to have passed through without a lasting effect.
The latest results indicate that estate agents on a whole perceive the next three months to be better in terms of house price growth forecast, having improved from 3,7% in the 1st quarter 2018 survey to 5,4% in the 2nd quarter survey. However the survey shows that the positive sentiment experienced in the 1st quarter has run its course and is no longer influencing their view of near term demand for property.
The facts remain that we are contenting with a weak economy. The factors that were recorded that impact most in influencing estate agent expectations of the near term future are firstly at the top of the list, the broadly defined "Economic Stress or General Pessimism" category.
With 36% of agent respondents in the survey siting this reason as the main driver, it is worth exploring the detail of this view. Four main areas of response were noted, being the recessionary or weak economy, the cost of living pressures (including tax hikes, electricity and petrol price increases), political uncertainty and land reform uncertainty.
All important and topical and that impact directly on property buying decisions. The second largest category impacting on estate agent's expectations are "Pricing and Affordability" at 25% of all respondents. Within this category the questions center around the availability of stock on the market and the relative pricing of these properties.
The affordability of properties relative to earnings, the cost and availability of finance and the cost of ownership are all aspects that impact on people making price and affordability decisions. Just below this category at 24% of respondents came the seasonal factors that would weigh on estate agents and whether they would be expecting an improvement or otherwise in sales.
Interestingly as many as 19% of all estate agents said that Positive Consumer Sentiment was the main driver for their near term view of the demand for property. These agents feel that the economic upturn is pending, that there is more consumer confidence in the market and that there is more buyer and seller activity in general.
For these agents the glass is definitely half full. From the remainder of the responses to this survey it appears that we are currently in a place of the property market cycle where interest rates, seller's and buyer's mindsets, stock issues and the strict credit environment are not perceived as main drivers of current demand for property.