“Plett is still one of SA’s premier resort destinations and most desirable places to own property,” says Hein Pretorius, principal of the local Sotheby’s International Realty franchise, “and the market has shown a substantial increase in buyer interest and activity over the past few months compared with the previous two years.
“But sellers who don’t want to miss this boat need to be sure that their asking prices are really competitive (see pictures), because the truth is that while there are more buyers around, most are astute investors who have recognised that there is an unusual opportunity now, while prices are down, to acquire a ‘bargain’ in this sought-after location, and they really stick to their guns on pricing because they know they have plenty of properties to choose from.”
He says there is still a serious oversupply of property on the market following the recession and that actual prices being achieved in the home sales that are taking place are still about 25% to 30% off their 2007/ 08 peak – that is, closer to pre-boom levels.
“For example, we recently sold a home where the owner netted R6,2m after spending R8,3m in 2008. I have also seen many other sellers who two years ago refused offers that they considered too low, now accepting even lower offers.
“This is a really bad situation for them when one takes into account the time value of money, but it is what inevitably happens to properties that are overpriced. Buyers avoid them and they become stale after being on the market too long, at which stage they can usually only be sold for less than would have been achieved had they been correctly priced in the first place.”
Pretorius says there are many properties in Plett now in this category, and that part of the problem is that their owners are often not really in tune with the realities of the local market. “Plett is primarily a second-home market so many owners are out of touch because they don’t live here for much of the year.
“And on top of that, many local agents also don’t seem to realise just how dramatically the market has changed. You simply cannot value a property in the current market here by using historical sales values from two years ago.”
Consequently, he says, serious sellers should make sure that any valuations they are given are backed up with information about sales that have occurred in the past few months – and get a second opinion if necessary.
“Of course no-one wants to hear that their property is worth less than they thought, but that is far preferable to having an agent who tells you what you want to hear about the value and then can only bring you offers for amounts far below his or her own valuation, if at all.”