SOUTH Africa’s residential property market is improving, as evidenced by increased inquiries from prospective buyers, improved show-house attendance and stock shortages in a growing number of areas.
That’s the word from Harcourts Real Estate SA chief executive Richard Gray, following the release of FNB’s April 2013 House Price Index, which reports “mildly positive growth” during the first quarter of 2013, with the likelihood of further value gains in the second quarter.
“As a group, we’re seeing a widespread uptick in terms of buyer interest. The market appears to be on the road to recovery, with house-price growth in popular suburbs on track to exceed inflation in real terms for the first time since 2008,” he says.
However, he warns, the positive spin-offs of an improving market are likely to be experienced by only 10% of today’s sellers.
“During the first quarter of 2013, FNB released statistics showing that 89% of properties sold for an average of 10% less than their original listing price.
“Furthermore, the average length of time properties spent on the market before being sold or withdrawn was 17 weeks and two days, and while there is no hard and fast rule about how long a home should take to sell, four months is excessive.”
According to Gray, the failure of such a large percentage of listings to achieve their asking prices or to sell within a reasonable time frame can only be ascribed to human error.
“Feedback from our member offices as well as from within the industry at large is that sellers are making some serious mistakes which are chasing otherwise willing and able buyers away.”
Incorrect pricing, which Gray says is often accompanied by an instruction to the listing agent to put the property on the market at an inflated price and “see what happens”, is a common mistake sellers make.
“Sadly, nothing good usually happens,” he says. “Active buyers are watching the internet and the papers for new releases and are quick to make contact with the listing agent to set up viewing appointments when a new property comes on to the market.
“The most traffic passes through a new listing within the first two weeks, after which it tapers off dramatically.”
In the interests of establishing an objective and realistic selling price, Gray recommends the use of a report called a comparative market analysis (CMA). “When done by a professional estate agent, the CMA will contain a wealth of important data pertinent to the seller’s area, including properties currently for sale, sold properties and withdrawn listings comparable with their own home.
“It will also contain analytical information such as market trends and house price growth, highest, lowest and average selling prices as well as an evaluation of their property.”