Speaking after the region's last ILS meeting, which brings around 140 PE-based estate agents together on a monthly basis, local principal Ian Olivier of Ian Olivier Properties said feedback from industry role players, while heartening for buyers, was not what sellers wanted to hear.
"On average, we're finding that sellers are accepting offers of 10% less than their original listing price, with some dropping substantially more," he said.
"Among recent examples is a house in Goldwater, which was listed at R895k but sold for R620k in May, a difference of 31%. Another example is a townhouse in Lorraine, which the seller initially priced at R575k against the advice of his agent. It is now being marketed at R390k, five months down the line. Then there's a house in an upmarket suburb near Greenacres, which after being listed at R3,7m has just sold for R1m less."
However, Olivier refuted that the market was dead, saying realistically-priced properties were still likely to sell within the globally accepted benchmark period of three months. "It's not unheard of for homes to sell within a month either – if they are properly priced. What is indisputable, though, is that uptake of over-priced properties has dropped to almost zero."
Attributing the general slowdown in the property market to the upwardly mobile interest rate among other factors, he said sellers in all price brackets were being challenged by buyers shopping around for best value. No longer restricted in their choices as they were during the boom years of 2004 and 2005 when stock was in short supply, buyers are controlling market activity by submitting lower-than-asking price offers and setting the bottom line when it comes to price negotiations.
"This means that sellers who are not prepared to entertain pricing advice from their listing agents are effectively knocking their properties right out of the market," said Oliver, warning that buyers are invariably walking away from deals rather than extending themselves financially.
Yet, despite the National Credit Act (NCA), the cost of living and fuel, and the relatively high interest rate, Olivier says the market has the potential to be reasonably buoyant – provided sellers price their properties according to prevailing conditions.
Rian Du Toit of Du Toit Strombeck Attorneys agrees. "A careful analysis of the transfers we've received during the last two months shows that correctly priced or even slightly under-valued properties can still sell within the first week of marketing. We are, however, also aware of clients who declined offers received during the first weeks of marketing and who have been forced to take considerably lower offers a couple of months later."
Accordingly, Du Toit says it's vital that sellers take the "time value" of money into consideration. "We're talking about the cost of keeping the property on a monthly basis, compared with the interest that can be earned on the proceeds, and the effect the proceeds will have on reducing monthly expenses."
"It is heartening to note that there are many people around who have confidence in the South African economy. Many of our successful clients are in the process of buying more properties and overseas buyers are cashing in on the opportunities available locally."
For more information contact Ian Olivier on 041 373 9945 or send an email.
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