From the Desk of the MD - March 2018
Category From the Desk of the MD
Fuel prices are down, consumer confidence is up and there are definitely more prospective home buyers in the market now than there were a year ago. But that does not mean that home sellers should start increasing their asking prices.
There is still an oversupply of properties for sale and buyers are extremely price conscious. They know they have a big selection of homes to choose from and are determined to get the very best value for their money.
In fact, the latest FNB Property Barometer statistics show that 95% of all home sellers currently have to discount their initial asking prices by an average of 10% in order to achieve a sale, compared to an average of 7% at the start of 2017.
In addition, it must be said that while there are more consumers who would like to buy a home now, many of them unfortunately cannot qualify for a home loan, because they have a bad credit record, too much debt or insufficient income. This leads to homes sometimes having to be "sold" a few times in order to find a buyer who can get bond approval.
This is also reflected in the FNB figures, which show that at the end of last year, the average time that homes were spending on the market before being successfully sold was 121 days (four months). So we believe that the best tactic for sellers at this time is to try to shorten this interval and save on holding costs by continuing to price extremely competitively.
If you can sell your home two months earlier than the average, for example, you stand to save two bond repayments, two lots of city council rates and taxes, two insurance premiums and so on. That can quickly add up to a sizeable amount of money that will more than compensate you for a reasonable reduction in your asking price.
The best way to attract more interest from buyers and sell faster is of course to seek the advice of an experienced and reputable agent in your area who can give you access to the very latest market intelligence and help you fine-tune your asking price to match buyer demand.
Meanwhile, our advice to prospective home buyers is not to wait too long to pull the trigger on their purchase plans. The oversupply is dwindling and prices are expected to start rising faster later this year, especially if interest rates are cut.
Author: Gerhard Kotze
