PRESSURE ON ASKING PRICES & MORE BUYER INTEREST
The overall state of the South African housing market is best described as a buyer’s market with house price decline in real terms. Yet, the South African housing market is comprised of multiple micro-markets, each with its own trends in recent performance.
“For buyers and sellers, it is always advisable to consult a local property expert to get an accurate picture of how a specific market is performing. While news stories and reports can provide some insight into current trends, nothing compares to the in-depth knowledge a local real estate practitioner will have on his or her given market,” advises Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
For example, Mark Attwood, Broker/Owner of RE/MAX Border in East London, explains that despite there being an increased appetite in buyers in recent times, property prices have been under pressure in his area. “Most recently, and particularly during these COVID-19 times, buyers are looking for deals which have put pressure on house prices. With the gap between the sellers asking price and buyers offer price widening, agents’ commissions have also come under pressure as the parties seek to close the buyer-seller gap by reducing commission paid to agents. In addition to this, properties that have been unable to sell through traditional means are now more likely to be taken to auction as sellers become more desperate to sell,” he elaborates.
In Queenstown, Broker/Owner of RE/MAX Property Professionals, Bruce Raasch, describes that there has been a similar increased appetite from buyers in his area. “However, these buyers are taking their time and looking at a lot more properties before making any offers which are much lower than the asking prices,” he mentions.
“There has also been an increase in the number of new listings, with many sellers leaving town and downscaling. Many of the buyers in our area are first time buyers wanting to enter the market and those who are downscaling,” says Raasch.
Similarly, Nadia Aucamp of RE/MAX All Stars in Alberton and Germiston, explains that middle-income families are staying put at the moment, given the uncertain economic climate. “It’s the first-time buyers who are taking full advantage of the low-interest rates, especially with the banks being willing to grant 100% loans. Investors are also actively seeking ‘bargain buys’,” she explains.
Some markets, on the other hand, are not noticing any notable downward pressure on asking prices. Annie van den Berg, Broker/Owner of RE/MAX Wildlife Properties in Hoedspruit, says that the current exchange for rate for foreign buyers combined with the affordable prices makes her market very appealing. For locals, the interest rates are so low that many are looking to invest in a small apartment as the rental income will earn them more than the repayments. “Our enquiries have doubled recently. These might not all be serious buyers, but it is great to have so much interest,” says van den Berg.
Most of the sellers in her area are selling their second home. A large percentage of sellers in the area are also foreigners who are unsure when they will be able to return.
Other markets that are popular among foreigners, such as the luxury market in Cape Town, are experiencing a mismatch between sellers’ and buyers’ expectations regarding the asking price.
“There is a lot of uncertainty regarding the current property market in South Africa due to Covid-19 which is an unprecedented event worldwide. After the property market being on such a bullish run for many years, sellers still have top dollar prices imprinted in their head and purchasers, on the other hand, are looking for discounted buy, sometimes in a region of 30% below the asking price. We are still waiting for the two lines to intersect,” explains Karryn Cartoulis of RE/MAX Living.
On the whole, however, Goslett remains cautiously optimistic about performance within the South African Housing Market and predicts a slow and steady recovery that will lead to greater house price appreciation in the long-term. “For those curious to know more about their specific market, whether reach out to a local RE/MAX agent to ask for their insights and advice,” Goslett concludes.