Despite growing sellers’ market, it is still a great time to buy property

With buyer sentiment growing, more balance in the market and coming off one of the best years since the economic downturn, the residential real estate market appears to be on solid ground as we head into 2014, says Seeff chairman, Samuel Seeff. 

Last year saw trading conditions in the primary urban sectors of the market at the best levels in more than five years with stock shortages and growing sellers' markets in the high demand areas. While the favourable buying conditions are set to persist, there is now for the first time in years, encouraging signs for sellers as well, he adds.

The tenuous macro-economic landscape however, is likely to keep the real estate market under pressure throughout the year and while optimistic, we remain cautious, says Seeff. This notwithstanding, it will be business as usual for buyers and sellers. Provided that the economy remains stable, we anticipate a good year for real estate with buyer sentiment and the willingness to buy continuing to strengthen although.

FNB's latest Property Barometer confirms the improved market conditions and notes that the demand and supply rating at 48.73 for December is edging closer to the more balanced 50-point benchmark. It also reports the average house price growth at 8.7% as at December and predicts 9% for the year, something that should encourage not only sellers, but also buyers who may still be uncertain as to whether it is the right time to buy, he says.

For those still hesitant, now is indeed a great time to buy, but these favourable conditions are not likely to last too much longer, says Seeff. Buying now means that you can still pick up great value and take advantage of the historically low interest rate. The longer you wait, the more you will pay. Aside from a potential interest rate hike towards the end of this year, house prices in the urban, high demand areas continue to rise although still at modest levels. Using the ABSA house price index as a guide, then a small home (80-140sqm) that would have cost R709,500 on average in 2009, now costs around R804,000; R94,500 and 13% more than in 2009.

Mortgage lending too is improving, advises Seeff. While the high national household debt ratio will continue to influence the levels of mortgage granting, the latest NCR data points towards accelerated growth of 20% in mortgage granting over the last year. Prospective buyers that are in good credit standing should take real encouragement from this.

One of the contributing factors to the improved market conditions has been that serious sellers are heeding the call to adjust their pricing expectations in line with market dynamics, says Seeff. This has facilitated the clearing of some of the oversupply of stock in the primary areas with shortages becoming prevalent. This in turn paves the way for those looking to sell to get their properties listed and now is indeed an opportune time for serious sellers, he adds.

The low home loan borrowing costs and flat house price growth will continue to boost home affordability and encourage buying. Pricing in line with prevailing market conditions will remain vital for sellers hoping to conclude a successful transaction, says Seeff. Having said this, sellers in high demand areas are seeing good offers, sometimes even multiple offers and getting closer to their asking prices.

Prospective buyers are encouraged to shop around and ensure they buy below their means and pay fair market value. Investing a deposit and careful budgeting for the costs of home ownership, especially in view of the rising basic living and travel costs will be more vital than ever, he concludes.

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