Property market - where are we now?

Since the beginning of 2013 we have seen the property market transition from a strong buyer’s market into a slightly more balanced market that is slowly starting to tip in the seller’s favour, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

“Currently the market conditions that we are experiencing point to the fact that we are in the middle of a transition to a seller’s market,” says Goslett. “Although it has been slow, a housing market recovery is taking place in South Africa.

Overall, consumer sentiment has seen marginal improvement, which plays a major role in the spending and investment patterns of the average South African.  Were it not for the fear of implied policy or legislative changes, many of which could affect the real estate sector, I believe the South African housing market would be further along in its state of recovery with a steeper upward trend, much like is being experienced in the US right now. We are also still facing some remaining effects of the recession as there is still an oversupply of bank-owned properties that keep prices within certain areas regulated.”

According to Goslett, while conditions are still favourable for buyers, most RE/MAX of Southern Africa estate agents working in the more densely populated metropolitan areas are reporting a dwindling number of homes available for sale. This means that properties being listed in today’s market - particularly those in the sought-after areas - are selling faster than they can be listed. “The most sought-after properties in the current market are those that offer security and lifestyles benefits. These homes are typically housed within security estates, are lock-up-and-go, traditional three-bedroom, two bathroom style homes,” he says.

He adds that the strongest demand for property within metropolitan areas is in the R900 000 to R1.6 million price band. “At the moment homes within this price range are moving faster than any other property on the market.  Homes that are considered to be overpriced continue to sit on the market for months - even years. However, newly listed, realistically priced property is moving and moving quickly,” says Goslett. “Currently Gauteng accounts for around 45% of the properties sold by RE/MAX agents in South Africa, however we are seeing the smaller coastal property markets making a comeback.”

According to Goslett, while certain areas throughout the country may experience property sales peaks and troughs that can be attributed to seasonal changes, RE/MAX has experienced a consistent sales pattern throughout 2014. In fact, although the property market traditionally sees lower sales figures during the colder months, RE/MAX of Southern Africa had its best month in the history of the company in June with a record R1.9 billion in home sales - 21% up on last year and 30% higher than the average for 2014 to date.

Talking about the challenges moving forward for the remainder of this year, Goslett says that affordability will be a key influencer with the cost of living increases. “The bottom line is that in today’s market banks are far stricter on profiling buyers because they are mitigating their risk. In 2007 around 70% of bond applications were approved and converted into home loans, in 2008 that number dropped to just 28%. In 2014 approximately 50% of bond applications are converted to a home loan, which says that we have seen improvement but lending criteria remains stringent. Potential buyers will need to tighten their belts, reduce their debt levels and save. In today’s market deposits are required by most buyers to some degree and are generally dependent on the credit profile of the individual,” he says.  

“Homeowners who are looking to sell their property will be able to take advantage of the changing market dynamics we are experiencing. However, regardless of where the market is, it is always important for them to work with a reputable, experienced real estate professional who can assist in guiding them through the often complex process of a property transaction,” Goslett concludes. 

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