|After an under-performing first half of the year, the property market in the southern suburbs of the Western Cape is set for a revival on the back of traditional year-end transfers and demand for university student accommodation, according to a Realty 1 International Property Group media release.|
But, says Clive Booth, principal of Realty 1 International Property Group Kenilworth, the hoped-for resurgence in activity will hinge on correct pricing, an issue that many sellers have skirted in the last two years.
Commenting on the market’s potential to regain its former vibrancy, which peaked in 2004, Booth says sellers need to come to terms with the fact that buyers are now firmly in the driving seat. “Buyers are far more discriminating and decisive about what they are prepared to spend than ever before,” he says. As a result, they are digging in their heels when it comes to over-paying; either by walking away from these properties without a backward glance or by submitting lower-than-asking price offers on a ‘take it or leave it’ basis.
The result of this is that serious sellers, especially those at the top end of the market, are accepting up to 30 percent less than their original listing price, very often after having spent months on the market, he says.
But, he adds, these prices are a realistic reflection of current market values rather than cause for alarm, since the area remains popular among young families, emergent buyers and those who put a value on its location and abundance of quality, character homes.
According to Booth, most demand is currently for middle market stock, with well priced properties in the R700 000 to R1,2 million price selling almost as soon as listed. Take-up tends to be by the emergent set, which includes young couples making their first real estate purchases. Unable to afford houses at this point in their lives, they are refocusing on older flats, cottages and townhouses that very often require modernising or renovation, he says.
More expensive properties, however, are taking longer to sell. A case in point is a home in Kenilworth which was listed at R1,8 million but sold for R1 075 000 after spending six months on the market, says Booth. “The flip side of the coin is a two bedroom townhouse in Wynberg, which was listed for R729 000 yesterday. It is likely to sell within days at close to asking price.”
Predicting that buying interest in the area will rise from September onwards, Booth says this is the time of the year when parents start buying flats for their children commencing studies at the University of Cape Town the following year. “For most, these purchases are medium term investments, which they will sell for profit when their children graduate.” Booth is also expecting sales volumes to start rising as a result of year-end transfers and in the aftermath of winter, which tends to govern real estate activity in the Western Cape.
However, he cautions sellers against holding out for excessive prices, saying that it has become critical to base pricing on accurate comparative market analyses (CMAs). “Sellers need to be aware that there are a number of desperate agents out there prepared to load their values by up to 20 percent in order to secure a sole mandate. The test of how well a property is priced can be measured by how long it spends on the market. If a middle market property has had no serious interest after four to five weeks, it’s probably over-priced.”
Booth says sellers need to be aware that the banks are no longer lending costs on top of full bonds. “The days of 108 percent bonds are over, which means that buyers have to find their costs themselves, putting additional pressure on their affordability levels.”