Priced Right, Your Property Will Sell
Category Property Advice
South African median house price grew by 2.4 percent year-on-year in July from 2.9 percent year-on-year in June according to Standard Bank. The Standard Bank nominal prices continue to lag inflation and market activity is still subdued. The economy’s strong performance in 1st quarter 2011 is unlikely to have been repeated in 2nd quarter 2011 and the labour market continues to struggle.
In an environment of moderating economic growth, muted credit growth and struggling employment growth, Standard Bank maintains the view that growth in the residential property market will remain at low single digits in 2011.The residential property market is moving sideways at the moment with prices growing in nominal terms but in many cases, volumes continue to be under pressure.
It is encouraging that the number of first time buyers continues to be at solid levels as this is needed to give the market a ‘bottom up’ push. Without these buyers coming into the lower and mid end of the market, there is nowhere for the upper end of the market to go. Interest rates at historic lows, property prices that are generally at value levels across the country and the fact that banks are slowly relaxing their lending criteria means there is still business to be done.
This part of the property cycle will be around for at least the next six months if not longer. Buyers are cautious in this market as they look carefully for value and not only the location of the property. Sellers will have to think hard about pricing in this market. It is not as he puts it a: “If I get my price I will sell” market. There is certainly a demand for property even in this market but buyers are battling to access home loans. Lack of money and banks’ strict lending criteria are the biggest deterrent with regards to property sales.
He said buyers not getting home loans approved will result in very little growth in the residential market.
The supply of property is high and sellers settle for between 15 and 20 percent less of their original asking price or expectation, translating into a minimal growth in price as well as minimal growth in sales.
