Big decisions regarding high value assets can be risky during uncertain times, but is the only option to hang tight until our political future is decided?
Tony Clarke, MD of the Rawson Property Group, shares his thoughts.
“Our property market is definitely going through a period of contraction,” said Clarke, “but not all of that can really be attributed to politics. We’ve been seeing a slowdown in growth over the last 18 months. Ups and downs are a natural part of the property cycle, and certainly don’t mean there are no opportunities out there.”
Clarke is confident that the market will recover in time, he believes property will remain a secure and profitable investment over the long term, and advises buyers and sellers to adjust their approach to account for current trends.
“The cost of finance is rising, and inflation is eating more and more into people’s disposable income,” he said.
“That means fewer people are qualifying for bonds, and the ones that do qualify are more likely to be conservative with that spending power. As a result, there are going to be fewer buyers on the market, which means less competition for listings, and far less tolerance for overpriced homes.”
According to Clarke, this is one of the most vital elements for sellers to consider if they’re going to achieve a favourable sale.
“Buyers these days are very well informed when it comes to value, and can spot an overpriced property from a mile away,” he said. “During a seller’s market, they may be willing to push their budget a little – particularly if there’s competition for the purchase – but in the current climate they’re just going to look elsewhere.”
This, according to Clarke, can result in a stagnant listing that sits on the market for months, if not years at a time – a situation guaranteed to drop the eventual sales price far below its true market value.
“Stagnation is a real risk for sellers in today’s market,” he said, “which makes it incredibly important to ensure your listing is groomed to be as attractive to buyers as possible. It’s not just about price, either – it’s a combination of great photographs, compelling descriptions, and smart marketing placements that ensure your property gets seen by the right people.”
Data from FNB’s Estate Agent Survey for the fourth quarter of 2017 showed a further increase in the estimated average time of homes on the market prior to sale, to 17 weeks and 2 days.
This continued a broad rising trend which began early in 2016, from low of 11 weeks and 1 day at the beginning of that year, it said.
In addition to a rising average time on the market, an increasing percentage of sellers has ultimately been required to drop their asking price to make the sale.
“At the end of 2017, this estimate stood at 95% of total sellers being required to drop their asking price, up from a previous 93%, continuing a broad rising trend from 78% as at the second quarter of 2014,” FNB said.