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THE RIGHT PRICE WILL EXPEDITE A SALE

In South Africa, estate agents participating in the most recent FNB Estate Agent Survey revealed that the percentage of sellers having to drop their asking prices remained unchanged from the previous quarter at 81%, with the average price drop estimated at -12%. 

"This indicates that many sellers in South Africa are still hoping to obtain unrealistic prices given the current state of the market,” says Peter Gilmour, Chairman of RE/MAX of Southern Africa. “The consequences of unrealistic pricing are clearly reflected in the average time properties remain on the market - 15 weeks and 4 days. Realistic asking prices are those that are in line with the current market, and such pricing brings the average time a property is on the market down to eight weeks or less.”    

 

Gilmour notes that this trend in which sellers are forced to drop their asking prices to make a sale is not a South African phenomenon. “Sellers in property markets across the globe are facing similar challenges, and although the exact percentages vary from one market to another, the trend of reducing asking prices is a global one.”

In the UK, it has been widely reported in the media that home owners in the UK are forced to accept offers of 10% below the asking price to sell their properties.

On the other side of the globe, data released by the Real Estate Institute of Western Australia reveals that 67% of sellers in Perth are prepared to drop the asking price by an average 6% to get a sale, as the average paid for a property in the city has slumped. The average time required to sell a property in Perth today is 63 days.

In neighbouring New Zealand, the NZ Property Report says that the average nationwide asking price of sellers recently reached its lowest level in a year - coming close to matching mid-2008 levels. The stock of unsold houses continues to increase, and at the end of September there was an equivalent of 47.5 weeks of sales volume of unsold properties on the market.    

Across the Pacific, the most recent data from Trulia.com, a real estate listings website in the US which tracks 50 major property markets in North America, shows that 20% of asking prices for current home listings were reduced at least once. Price cuts are more prevalent in some markets than others, and the average size of the cut also varies. In Minneapolis, for example, 40% of the listings had at least one reduction and the average reduction was 9% of the listing price. In Las Vegas, 12% of the homes had price cuts, but the reductions averaged 15% off the listing price.

In several US property markets the number of listing price reductions are decreasing - good news for the rest of the global property markets, given the reality that other markets tend to follow the US trends. However, Gilmour believes this trend is not reflective of a stabilising housing market, but rather an indication that sellers are beginning to price their properties more realistically.

“Sellers in South Africa should take note of these global trends and apply the learning: setting a realistic selling price is the way to sell a property quickly. The basic economic law of supply and demand will always prevail. When an oversupply situation exists, and the number of buyers is severely limited by the availability of finance, selling prices will be subdued and overpriced properties will simply not sell,” concludes Gilmour.  

 



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