Now that the soccer event is over, the factors most affecting the property market are the local economic indicators.
The prediction is that interest rates will remain relatively unchanged for the rest of the year, and with the increasing costs associated with property ownership, there are fears that market activity will remain relatively low for the second half of the year, says Carol Reynolds, area principal for Pam Golding Properties in the Durban North and La Lucia areas.
“The key to successful sales is correct pricing, and it is useful to consider the various factors that play a role in achieving the best price for a property. The old adage that the first offer is generally the best offer definitely rings true at the moment. Because stock turnaround time is still relatively slow with homes taking more than three months to sell (compared with the 45 day average of the boom years) buyers are moving on and seeking fresh stock.”
Reynolds says PGP buyer activity studies have shown that foot-traffic peaks during the first two months of acquiring a mandate, so it is critical that properties enter the market at the right price. Adjustments after-the-fact, when buyer activity levels have waned, are simply not enough – it’s a case of too little too late. By months three and four of a mandate, buyers have already lost interest and the buyer pool shrinks considerably – suddenly sellers find themselves on the back foot and start readjusting their prices to meet market demands, but sadly by this stage, the market has moved on.
“Sellers should therefore avoid ‘testing’ the market and should rather capitalise on the heightened activity during the initial mandate period by ensuring that their properties are correctly priced from the outset. Once a property becomes overexposed by sitting on the market for an extended period at the wrong price, the inherent value of the property is compromised by the perception that the property is ‘old stock’ and the eventual selling price is far below the seller’s initial expectations.
“The key buyer needs in today’s market are price, security, lifestyle and convenient location. Of all of these demand drivers, price comes up trumps. Banks are governed by the National Credit Act, so price becomes paramount. Even on the rare occasion where a buyer might well be prepared to pay a slightly inflated price for a property, the transaction doesn’t take place because the banks enter the equation and don’t find value in the property. Without finance, there is no sale, no matter how willing the parties,” says Reynolds.
“So many factors that are having a moderating effect on house inflation that unless sellers are motivated and committed to pricing their homes correctly, they run the risk of rejecting that all important first offer – and then later regret their decision. We may be enjoying a more stable market than last year, but it is still a price sensitive market, and money definitely talks,” says Reynolds.
