A dilemma for home sellers
Category Blog
The residential property market as a whole has clearly ridden out the worst of the economic recession and talk about ‘green shoots’ is now rife. This presents a timing dilemma to the sellers who have been holding out for a recovery in home prices.
The question is whether to sell now, believing that the market will not move much in the six to 12 months ahead or hold out for a better price expecting a faster recovery. There is no easy answer. What must be borne in mind is that there is a backlog of homes on the market currently, which sellers have not been able to sell because of the recession-induced low offers that have characterised the market. Prices will start climbing when this backlog is mopped up. Supply and demand define any market. Hopefully the buyer pool will increase soon too.
As one of South Africa’s leading economists, Dr Azar Jammine, recently noted, next year’s general election is a bridge that must be crossed before the socio-political and economic landscape becomes clearer. Even though the cloud of uncertainty that has been persistently overhanging the homes market for the last couple of years lifted modestly, it returned with the news of the negative economic growth in the last quarter. But the “green shoot” conversations prevail. The ever-present issue of land expropriation without compensation is another potentially market sentiment-inhibiting factor.
Meanwhile, some potential home buyers may well be holding back at this stage until the “land expropriation without compensation” issue becomes clearer. Time will tell. My relatively safe bet is that, on current fundamentals, prices will probably not bounce back in the short term, but as the positive effects of the Cyril Ramaphosa led government continue to manifest, positive growth will slowly start to gather momentum.
Know Your Market Before You Sell or Buy
Whether you are a buyer or seller, make sure that you know what the market circumstances and fundamentals are in the relevant suburb or area before you embark on the process. The more information you have, the better you will be positioned to ascertain the correct value of the home in question. Today’s buyers are generally better informed and do their homework – some even for as long as six months to a year before taking the plunge.
Time Frame
There is a critical time frame – between week two and week 12 after a home is put on the market – within which potential buyers should be aware of the property, what it offers, and at what price. It is vital that the property is priced right in that period. Beyond week 12 the buyer pool diminishes – and so does the realistically achievable price, as interest begins to wane.
Common and valid sentiment experienced by buyers and sellers when transacting in today’s market is that each participant ends up settling at a point of slight discomfort. Indications of a fair deal.
Author: Ronald Ennik
