How home buyers and sellers should approach the market in 2021. *Part 2 Sellers
Category Blog
If it's the best time in a lifetime to buy* ...is it the worst time to sell? Perhaps this is a conundrum.
The negative economic consequences of the pandemic are likely to be prolonged. It's conceivable that selling anytime in the next three to four years could be less ideal than now. Buyer demand, particularly 'interest rate induced demand', is slowing according to FNB's Property Barometer.
The lower levels of the property market have seen moderate growth, over the last six months while the more expensive houses in middle market areas and top end suburbs have seen price shrinkage.
So from a seller's perspective
Has the status quo in the homes market become a conundrum? I pose this question seriously, because widespread perception is that, pricewise, it is now clearly a good time to buy a home. But it might be a good time to sell. Not least so if upgrading is on your mind, because top-end home prices are currently cheaper (in real and nominal terms) since before the financial crisis. And offer better value than properties at the bottom end of the property spectrum.
So, if you intend to sell and then buy upmarket, do so....and then forget about it and sit tight for the next ten years, like we used to do in the home-buying days of our parents. The world has rebooted, the treadmill of life has slowed and 'frugality' and 'old school' values are coming back. Including those around investment values. A home should be a long term investment.
Some tips for sellers now
- If you're selling to downgrade or rent do so now as as the market is like to become tougher for sellers. Any time in the next three years may well turn out to be a worse time to sell.
- Put your house on the market at the lowest level you would accept ...and hold the line! If priced right many houses are selling at the price they're advertised at. Pricing slightly inflated with 'wiggle room' or with some 'fat' isn't working. Responses diminish and the sweet spot target where maximum response meets right price is missed.
- If selling is a 'whim' to test an optimistic price on the market, rather don't. There is a large supply of properties for sale and interest will be thin.
- Accept that the final deal will settle at a level of discomfort for buyer and seller. This is trend across almost all sales in the current market.
In a nutshell, the pandemic has changed, and continues to change, the way we look at everything. What it is clearly doing is slowing most people down and setting them back. As a result, conditions may well become tougher - to the extent that the residential property market could probably drift sideways for an extended period, up to a few years.
A strong rebound is likely if the politics stabilize and the economy gets traction. This is difficult to anticipate soon. Meanwhile, in this prevailing market climate, my advice to sellers is very simple: Right now, there is a clear window of opportunity to sell your home and upgrade. But make sure that the upgrade is a long term investment. Alternatively, you must have a clear reason to sell. Otherwise don't sell.
*The convergence of two facts make this a valid opinion. (The best time in a lifetime to buy) The lowest interest rates in 50 years and the lowest residential property values in decades. (in real terms and against foreign currencies). Is this therefore the worst time in a lifetime to sell? Possibly not... a typical conundrum!
Author: Ronald Ennik
