select
|

Are house prices about to plateau?

There are now, says Wayne Albutt, the Rawson Property Group’s Western Cape Regional Sales Manager, many signs indicating that in the metro areas a stalemate situation between sellers and buyers could become evident before the end of this year.  

This, if it materializes, will be based on a growing buyer reaction to increasing prices which in the metro areas have led to perceptions that the market is now definitely slanted in the seller’s favour.

“It is quite possible,” says Albutt, “that sellers will in the fairly near future have to rethink the prices at which they put their houses on the market, if they want to meet buyers’ new expectations and achieve a satisfactory turnaround time on their sales.”

In the first half of this year, says Albutt, big city properties were selling in a few days and in many cases achieving either the asking price or even prices above the asking price – a most unusual situation.

“There was,” says Albutt, “a real sense of urgency in the real estate market for the simple reason that buyers, realizing that stock was in short supply, were often afraid that if they did not make an offer quickly the home would be sold under their feet.  Estate agents, too, fuelled this sense of urgency by telling sellers that they could expect quick offers at high prices by advising buyers to make fast decisions.”

The banks, too, adds Albutt, contributed to the hyped up atmosphere by competing aggressively for the award of mortgage bonds and by offering favourable lending rates.

Now, as he sees it, says Albutt, the easy wicket on which sellers have batted for some time could change quite radically.  Buyers are already beginning to dig in their toes and are resisting pressure from estate agents and sellers.  There is a growing realization that the high prices of the sellers’ market, although primarily brought about by demand exceeding supply, are also in many cases due to sellers adopting tough take it or leave it stances.

“While it is of course true,” says Albutt, “that the real estate values over the long term have always gone up, it is also true that the price troughs and peaks which are inevitably part of the property scene are often driven by perceptions rather than real value.  As on the stock exchange, over inflated, upward trends will always at some point undergo a correction, possibly even a crash – and I am inclined to think that the recent steady upward trend in house prices is now due for just such a correction.  Whether this will be major or minor, I am convinced that it is inevitable.”

If and when that happens, says Albutt, the shrewder sellers and estate agents will in consultation with each other adjust their prices and start considering offers that previously would have been rejected.  Those who fail to recognize the new trend will pay for their lack of perception.

“Perceptive estate agents,” says Albutt, “should, I believe, now be warning their clients of the possible changes in the market and should be preparing them for these.  They must no longer encourage anticipation of price rises continuing at previous levels.”

Albutt adds that the plateauing of the market will be with us for at least 18 months.

“Housing markets in which price rises are offset by plateau periods are generally healthy.  Those in which peaks are followed by crashes are not good for the housing market and reduce drastically the public’s confidence in housing as an asset.  I am, however, confident that we are unlikely to see a crash but a leveling off.  Price rises of the last two years have been phenomenal and it is now time that the hard-pressed consumer/buyer, already up against a much higher cost of living index and lower salary increases, is given a chance to catch up.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 20 Feb 2018
      Owning a home is a milestone that most South Africans aspire to. Becoming a homeowner is a step towards growing personal wealth and owning an asset that appreciates in value over time, provided of course that the correct principles are applied during the buying stage of the process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Feb 2018
      The suburb of Greenstone in Johannesburg east came to be over the last two decades. “In the beginning, it was literally just a hill with not so much as a shopping centre,” says Michael Levy, Property Consultant at Jawitz Properties Bedfordview. Today it has plenty shopping facilities and is fully built, boasting high-density, upmarket housing and residential estates, though still has a few pockets poised for commercial development.
    • 20 Feb 2018
      A major shift in the ageing paradigm has precipitated an equally dramatic transformation in the retirement sector, with modern accommodation options worlds away from the conventional model.
    • 19 Feb 2018
      Possibly one of the biggest sources of contention between landlords and tenants surrounds the rental deposit. “Most tenants rely on getting their rental deposits back when moving, so that they can use it to pay a deposit on their new home. Having it withheld or even having large amounts deducted can lead to a lot of distress,” explains Bruce Swain, CEO of Leapfrog Property Group.
    • 19 Feb 2018
      Situated approximately halfway between Johannesburg and Pretoria, Midrand was established in 1981 and forms part of the City of Johannesburg Metropolitan Municipality. It has become one of the major business hubs in the country with major pharmaceutical, textile, telecommunication and motoring giants situated within its boundaries.
    • 19 Feb 2018
      The PayProp Rental Index Annual Review of 2017 shows that the rental market suffered from much volatility during the year. It kicked off with rental growth spiking in January with weighted year-on-year growth (YoY) growth peaking at 8.3% before dropping to 6.34% in July, dipping down to less than 5% in November and then experiencing a slight uptick at 5.75% in December.
    • 19 Feb 2018
      While most homes in cluster complexes, estates and other gated communities come with at least one garage or carport, residents would often like additional permanent parking or storage areas for things like trailers, bikes, boats and caravans.
    • 16 Feb 2018
      Whether you own a property in a sectional title complex or are looking to invest in one, the financial standing of the body corporate is the single most important thing that can affect your investment or your buying decision.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK