Home sellers who don't want to lower their asking price will struggle to make a sale since the debt-ridden South African public will continue to avoid buying high-priced houses. This is according to First National Bank's (FNB's) property analytics department.
According to FNB housing specialist, John Loos, the residential property market is jampacked with homes which are struggling to sell.
"Asking prices are still too high given the weak level of residential demand," said FNB housing specialist John Loos.
He said surveys of estate agents for the review point to an unrealistically priced market.
The report revealed that the average time of a house on the market is 15 weeks and four days, which is almost double the eight-week time period from 2005 and 2006.
"There is a lack of realism in the market," said Loos. FNB estimates that 81% of sellers had to lower their asking price to make a sale in the third quarter, compared to 30% in 2004, which recorded the lowest average fall in selling price.
The estimated average drop in asking price was 12% for the third quarter of 2010.
Loos said that the household's sector's lack of interest might result in lower house prices which is good news for those looking to invest in property but bad news for home owners who will be forced to sell at a possible loss.
"Indications are that the supply of existing property is strong, with high levels of financial stress-related selling. Indications are also that residential demand is currently weakening. That leaves a price decline as seemingly the logical outcome," he said.
"We retain the expectation of average price decline for 2011 as a whole," said Loos.