Sellers to price properties realistically as market transitions
Category Property news
Data indicates that the current upward cycle in the market may have peaked in October 2017 and has since plateaued and is gradually normalising. The market has already experienced a two percent drop in just the first quarter of 2018 and while that is a significant figure, analysts see it as a natural market correction that happens after a lengthy or vigorous ‘boom’ period.
Although no cause for alarm, the recent statistics reported by FNB’s Property Barometer indicate a change in the status quo of Cape Town’s property market.
The transition also sees a gradual shift, from what was formerly a seller’s market to now becoming a buyer’s market and this is further reflected by the slowing in 8 of 12 sub-regions that make up the City of Cape Town. On the Atlantic Seaboard growth has slowed from 27.5% in the final quarter of 2016 to only 2.3% in the first quarter of 2018.
Cape Town’s real estate landscape is currently peppered with homes that are overpriced and spending several months on the market - a situation that can be remedied by agents going back to sellers and explaining the current market circumstances. In a buyer’s market, the buyer will dictate the price that they are willing to pay as they would have done their research about similar home sales records in the area. In the past agents often agreed to an inflated listing price in order to secure a sole mandate. In time though, the house will not sell, and the seller will have to settle for a more realistic offer when it does arrive.
“Due to the shift in the market this year, incorrect pricing could occur as a result of sellers and agencies sticking to their initial prices without taking into account the nuances of what is happening in the market. Overpricing also occurs when an agent is not successful in counselling their sellers about the importance of correct pricing.” says Mike Greeff, CEO of Greeff Christie’s International Real Estate. “If you want to sell in the current market, then you cannot push the envelope too far in terms of your asking price.
A significant side-effect of the shift is increased time spent on market. From October to November 2017 the average listing period for properties in Constantia was 42 days. Between March and April 2018 this figure skyrocketed to an average of 116 days. This increase in listing time could mean the agent has overpriced the property, and will have to manage the seller’s expectation if they really want to sell the property.
“At Greeff, our experienced and trained agents have been advised to counsel their clients about the prices they can realistically expect. At management level, we have identified properties that have been on the market for six months to a year, as being overpriced. If after a period of time, the price counselling conducted by our agent is not heard, it is within the seller’s best interests, and ours, to withdraw the properties from the market,” says Greeff.
“The first six weeks that a property is listed are the most critical in terms of getting a home sold, so finding a happy balance between buyer and seller is imperative.
If you don’t want to budge on price, another avenue to consider is taking the property off the market and letting it out instead.” concludes Greeff.