Tough going at top of residential property market
Category Property market overview
When examining the FNB Estate Agent Survey by income segment for past four quarters until and including the first quarter of the year, a noticeable weak spot appears to be the high net worth segment.
Although the segment doesn't appear to have rising financial stress yet, it would seem that affordability "constraints" may be on the rise for some.
Therefore, we have seen this segment's activity rating decline noticeably in the past four quarters, which sets it apart from the other three segments which still saw some increase over the period. The high net worth segment also saw a slightly more pronounced downturn in the percentage of sellers selling to upgrade, as well as a rise in the average time of properties on the market.
On the other hand, the socalled middle income segment appears to be the "sweet spot" still, but perhaps not too far ahead of the lower income segment.
Examining average estate agent activity ratings (scale of 1 to 10) by segment for the four quarters up to and including the first quarter of 2015, the middle income segment appeared to be the strong part of the market, recording an average rating of 6.85 over the four quarters, with the upper income segment close behind on 6.6. However, these two segments activity ratings appeared to be starting to "flatten out after prior increases, while the lower income segments rating had risen markedly to 6.57, closing the gap with the aforementioned two segments.
At the high end, the high net worth segment appears to have become the weak spot, with a declining activity rating reaching a noticeably lower level of 6.05.
For a few years, a noticeable f eature of t he FNB Estate Agent Survey by segment is the high percentage of sellers believed to be selling to upgrade to a better home from the lower income area segment, at 24.25 percent for the four quarters up to the first quarter of 2015. By comparison, the middle income (17.25 percent), upper income ( 16.5 percent) and high net worth (15.5 percent) area segments have significantly lower estimated percentages of sellers selling to upgrade.
The various segments' percentages of sellers selling to downscale due to financial pressure continue to move in a very narrow range of 12 to 14 percent of total selling, and don't show any noticeable signs of increase yet.
The lower and middle income segments still appear to maintain a noticeable gap between themselves on the one hand, and the upper income and high net worth segments on the other hand, in terms of more realistic pricing, as reflected in the average time of homes on the market.
For the four quarters until the first quarter of the year, the average estimated time of homes on the market before sale for the lower and middle income segments was 10 weeks and 9.6 weeks respectively, whereas the upper income segment recorded 12.9 weeks.
But it is again the high net worth segment that differs more noticeably from the rest, being the only one to see its average time on the market increase slightly over the period to 17.1, the average time gap between itself and the rest thus widening.
Author: FNB Home Loans
