ACTIVITY IS SLOWING IN THE RESIDENTIAL PROPERTY MARKET, CONCLUDES THE 2015 Q4 FNB ESTATE AGENT SURVEY – FROM THE BANK’S MOST RECENT SAMPLE OF ESTATE AGENTS.
FNB’s household and property sector analyst John Loos says the market remains “comfortable”, with some limits of activity as a result of stock supply constraints rather than from demand constraints. But it is to be expected that demand-side weakening will be playing an increasing role. As the residential property market is something of a leading sector of the economy, this activity rating possibly points to further economic growth weakening in the near term.
The FNB Estate Agent Survey Residential Activity Rating polled a sample of estate agents, predominantly in South Africa’s major metro regions. A key question concerned their perceptions of residential market activity in their areas – a subjective question on a scale of one to 10, 10 being the strongest level of activity.
The 2015 Residential Activity Indicator Q4 dropped to 6.02, down from a 6.73 high in 2015 Q1. While activity levels remained fairly solid, it was the indicator’s direction that is of concern. The Residential Activity Rating’s year-on-year growth rate slid from a 12.18% positive growth high in 2014 Q3, down to a -8.93% year-on-year decline by 2015 Q4.
This decline is not of concern only from a residential property sector point of view. The worry is what it may signal as a near-term trend in South Africa’s economic growth performance, which is already weak.
Real economic growth was only 1% year-on-year in 2015 Q3 – a rate insufficient to promote any significant job creation, being more likely to cause net job losses. Given those statistics, the risk of a recession remains high.
In short, while the residential market is still some way off from being seen as weak, the direction of the Residential Activity Rating points to estate agents as a group experiencing mounting pressure to help sustain the South African economy’s growth.