In another lifetime, with a set of skills far more lucrative than those I possess now, I might end up as one of those people who flips houses.
For a while, it looked like all you had to do was buy something on the Atlantic Seaboard, give it a new coat of paint, and sell it on for a tidy profit.
Well, in terms of South Africa as a whole, the forecast for potential property flippers is not exactly a walk in the park. Moneyweb reports that “the residential property market has been flat in real terms over the past decade”, and if you look at the latest August House Price Index from FNB, a few figures stand out.
Let’s run through four of those, with some charts to boot.
1. 96% of sellers have had to drop their selling price
By the second quarter of 2018 (which the August Property Barometer reports on), 96 of every 100 sellers had to drop their asking price. John Loos, household and property sector strategist at FNB, cautions about volatility between quarters (91% in Q1), but this is up significantly from 78% in 2014.
Go in high, I guess, because you can always come down.
2. The average time of homes on the market is 114 days
On average, houses are now on the market for a lot longer. The current average, from the bank’s Estate Agent Survey, is 16 weeks and four days, “noticeably” higher than the 11 weeks and one day in early 2016. The current length of time is not too far off historical highs over the past decade.
3. Secondary home ownership has been flat for roughly five years
“Secondary properties, as expressed as a percentage of total properties owned by individuals, has declined mildly of late,” says Loos. As of July, this number is at 16.24% from 16.31% roughly a year prior. Secondary residential buying (not ownership) has seen a noticeable decline as a percentage of total home buying. In Q2, this number had declined to 9.91% from a medium-term high of 14.47% in the first quarter of last year.
Excuse me for not being overly sympathetic, but something to factor in.
4. Emigration selling of residential property has doubled since 2013
The survey tracks three non-cyclical motives for selling: due to a change in family structure, for safety and security reasons, and in order to emigrate. Loos says the “former two have moved more or less sideways in recent years, but emigration-related selling has risen noticeably since 2013 on the back of weakening sentiment in South Africa often related to concerns over its long term policy and political direction. From a low of 2% of total selling, the emigration motive has risen to 7.8% of total selling by the second quarter of 2018.”
Your auntie finally moved to Perth, hey?
I don’t know enough about the property market to dig much deeper into any of those charts above, but I’m sure some realtors are going to be pretty bleak.
Then again, when houses in Bishopscourt are still on the market for R100 million, it can’t be all that bad.
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