Experienced property agents who carefully and professionally manage buyer and seller expectations will become even more important as the national economy shows signs of weakening in the second quarter of the financial year, says Pam Golding Properties.
The property market’s deceleration, caused in part by South Africa’s uncertain economic and political climate, is also a result of the seasonal slowdown one expects at this time of the year as winter sets in and typically fewer properties come to market. But the good news is that well-performing areas, such as the Atlantic Seaboard which according to the FNB Property Barometer reported a 33.9% year-on-year house price growth for the first quarter of 2017, looks set to remain resilient to seasonal challenges if buyer and seller expectations are properly managed.
“There is no doubt that the Cape property market, and more particularly the Atlantic Seaboard property market, has benefited significantly from unprecedented levels of migration from north to south over the past four years,” says Basil Moraitis, Pam Golding Properties area manager for the Atlantic Seaboard. “The effect of this unrelenting demand has been unprecedented and sustained growth, with many instances of properties doubling in value over that period.”
However, with the cautionary sentiment evident in the national economy, Moraitis says buyers are now questioning this value offering and there has been a recent slowdown in transactions in the area. “We are now finding that experienced agents need to carefully manage both purchasers’ and sellers’ expectations to successfully conclude sales.”
On the Atlantic Seaboard, the average variance from listing to selling price for June has increased from 8% below asking price in the first few months of the year to 16% below listing price in June, he explains. “There will always be unique, top-end exceptional properties that command a premium as they are once-off trophy properties and less subject to the vagaries of everyday pricing trends. But for the mainstream market, unrealistic expectations often mean a property will stay on the market for longer, and then sell for a lower price as buyers speculate as to the reason for the property not selling.”
Cape Town, still the top performing metro in terms of house price growth, has shown an increase in the average time a property is on the market from thirteen weeks and six days in the first quarter of the year to eighteen weeks and four days in recent months. This is significantly above the national average of fiftteen weeks and four days, notes the FNB Property Barometer (June 2017).
“But homes that are priced correctly will sell”, says Moraitis. “In Mouille Point, where the average selling price for the period July 2016 to June this year was R7.3 million, the average listing period was thirty-one days or four weeks, with a price variance of only 3.5%. It’s not unusual for homes in this area to sell within a day of being listed and at the asking price”, say Pam Golding Properties area specialists Paul Levy, Kim Bailey and Mariël Burger.
According to the FNB House Price Index (June 2017), a period of renewed economic weakness may be emerging nationally, with a slowing of the month-on-month house price growth. FNB reports that the percentage of homes being resold for 10% or more above their purchase price has started to drop from 78.3% for the period of August 2016 to 77.2% for the six months until May 2017. More homes are being resold at closer to their purchase prices as buyers become more price-sensitive.