A high proportion of South African residential property marketing agencies face a new and very difficult problem right now: stock shortages.
This was said recently by Wayne Albutt, Western Cape Regional Sales Manager for the Rawson Property Group – and, he added, there are as yet no signs of the situation changing.
“Although it is certainly not true of every precinct and every price bracket,” said Albutt, “on average in the R250,000 to R2,5 million bracket there are now more buyers than sellers.”
The exceptions to this trend, said Albutt, are the more expensive, upper middle and upper bracket homes which can still sit on the market for months and certain homes in the outlying country districts.
“Market conditions like those now prevailing,” said Albutt, “can bring with them a very real danger, one that needs to be countered by every honest estate agent. This is the tendency to overprice.”
“When certain potential sellers hear the phrase, ‘We are now in a sellers’ market’, they immediately start to think in terms of bigger profits and mark-ups and this leads them into the old trap of pricing unrealistically, often 10 or 20% above realistic market levels. This is a tendency we have seen in the property sector for as long as I can remember – and it is a fatal tactic because it always leads to the home sticking on the market and then either being withdrawn or eventually selling below its current market value.”
Regrettably, added Albutt, certain estate agents will always play along with the desire to overprice, promising unrealistic prices which they cannot meet in return for getting the mandate.
In the present conditions, said Albutt, potential sellers who held back from selling in the 2008 to 2011 era because prices had been so severely hit by the recession will now start returning to the market and this could, to an extent, help alleviate the shortage. However, he said, some sellers need to be warned against overoptimistic pricing. Having waited so long they are now likely to be impatient for big profits.
“The reason why over-pricers seldom get what they want is simple,” said Albutt. “Today’s buyers have easy access to information and are better informed and wiser than at any previous stage in South Africa’s property history. Unless they fall completely in love with the home, they are very unlikely to be tricked into paying more than its true market value – and they will exercise patience rather than buy impulsively.”