Eastern Cape reports upper-end market stand off

As in most parts of the country a price driven standoff, fuelled in part by obliviously optimistic seller and determined buyer, has surfaced to slow residential property sales in the Eastern Cape.

Rudi Botha, CEO of mortgage originator PA BetterBond, says the trend is national and in part a hangover from the frenzied selling of the past two years during which sellers thought of a number and buyers carried along on the same wave of euphoria, happily paid the asking price.

But while sky-rocketing prices and sheer affordability has brought the curtain firmly down on many buyers’ ambitions, this message it seems, according to Botha, has still to reach the majority of sellers.

With few exceptions, Botha notes the price resistance, which is in the upper end of the market, is in advanced stages of shifting market dominance from the seller to the buyer and he expects the trend to continue, but remain restricted to the market’s top-end. His reasoning is based on the huge interest still grinding away in the lower to lower-middle markets, which he foresees underpinning the middle market.

This view is confirmed by Marion Engelbrecht, director at Independent Property Consultants (IPC) in Port Elizabeth, and John Cooper, Chas Everitt International franchisee for Jeffreys Bay, who both report a downturn in their respective market’s top price range. In Port Elizabeth’s case this is above the R1,5 million mark, according to Engelbrecht, who also stresses sales are still taking place in this price range, but final selling price is usually at the buyer’s contrivance.

The city’s middle and lower markets remain active, but slightly quieter in keeping with the seasonal downturn, which in IPC’s case, has been marginally better than this time last year.

Both Cooper and Engelbrecht confirm good supply in the number of serious and market savvy buyers throughout the region with a common determination not to pay “over the top” prices. Cooper, whose franchise covers the areas of Jeffrey’s Bay, St Francis Bay and Cape St Francis says, the attitude is endemic throughout the region and largely responsible for a stock build up.

He advises sellers not to under estimate the depth of resistance to overpriced homes, warning them that a ten percent too high asking price could mean a six-month wait to sell their home. “Some realisation among owners wanting to sell urgently is taking place and these homes are moving quickly, but the key is to list at the right price, not playing about with it later, because buyers, unlike the past, are interpreting downward price adjustments as that of a desperate seller and making silly offers.

Cooper has strong advice for agents urging them to be brutally frank in briefing sellers on the true market worth of their homes. “Too often we’re dictated by sellers to the point of valuing their property at the price they want to hear, rather than hurt their feelings.”

He also scoffs at the trend of blaming sellers for overpricing. “It’s absolute nonsense, sellers are far too market educated to overprice their homes, the fault lies with agents failing firstly to prove through a comparative market analysis the property’s worth and secondly listing a property they know is overpriced.”

Engelbrecht puts the current market entry for townhouses in Port Elizabeth at R400 000 and R600 000 for single dwelling in the city’s middle class suburbs such as Newton Park and Cotswolds.

Both agents report no deceleration in the number of new developments under construction. But Cooper airs some concern that new units coming on stream in St Francis Bay on land purchased recently may lack the competitive pricing of units also being launched but built on land purchased at much lower prices before the boom.

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