On a year-on-year basis, the second quarter demand activity rating was 11% higher than the level in the second quarter of 2011. This is the first time that there was a positive year-on-year growth in the demand rating since the fourth quarter of 2010. This is also the highest demand rating since the first quarter of 2010.
An interesting feature of two indicators of pricing realism in the Western Cape is that they appear to currently be going in contradictory directions. The first of these indicators is the estimated average time that a property stays on the market prior to being sold. The broad trend in this average has been an upward drift since early 2010, to a second quarter average time of 20 weeks.
This would appear strange at a time when agents perceive demand strength to have improved. The second indicator of pricing realism is the percentage of properties sold at below asking price, which has shown a significant decline from an estimated 100% in the final quarter of 2011 to 80% by the second quarter of 2012. One would expect an increasing average time on the market to go hand in hand with an increase in the percentage of sellers having to drop their asking price.
There has been some mild improvement in buy-to-let buying, suggesting greater confidence and perhaps a gradually improving financial position of a portion of the household sector. From a low of 4% of total buying, reached in the third quarter of 2010, buy-to-let buying in the Western Cape has risen in significance to 14% of total buying as at the second quarter of 2012.
First time buyers have also become more significant in recent quarters. Using a two-quarter moving average to smooth this somewhat volatile data series, the second quarter survey indicated an estimated 21.5% of total buyers being first time buyers for the two quarters up to and including the second quarter of 2011. This is well-up from a low of 7.5% as at the third quarter of 2010.
Selling for emigration purposes was at a lowly 2.5% of total selling in the first half of 2012, well down on recent years and below the national average of 4%, reflecting the relatively high levels of confidence in the Western Cape region by South African standards.
