What happened to the buyer's market in property?
We read headlines like "Property Bloodbath" and yet somehow I don't see too much blood being spilt out there, says Geoff Stroebel, principal of Stroebel Properties.
It is presumed that in this time of serious recession in South Africa, that house prices would have stagnated considerably, and been at levels stable or low enough for buyers who were previously perhaps unable to enter the market due to price constraints, to indeed find affordable homes and perhaps a few bargains.
Perhaps it is more evident in Cape Town, but this seems to be clearly not the general case, as sellers continue to expect to make unrealistic profits, even out of properties purchased 12 to 18 months ago as the market was entering its supposed decline. Yes, there are distressed sales occurring where people are forced to dispose of their asset due to financial woes, but one would naturally expect that after the rampant seller's boom of the mid-2000's, that there would be some impasse. One surely must agree with Rode that in general, house prices remain 20% to 25% over-inflated.
So the phenomenon's of the "sellers' market" and "buyers' market" need to be studied and questioned. If it was truly such a "sellers' market" in the mid-2000's, (which caused prices to virtually sky-rocket and huge profits to be made), then one has to pose the natural question; "so who was buying all the property that caused this frenzy?" Well simply put, it was indeed our fellow South Africans themselves, many of whom got caught up in the fracas and radically overpaid for their properties and who now expect to not only get their money back, but to even profit thereon!
Then there is the other problem thwarting the precious buyer. It's that of our estate agency business itself. "I truly believe that if the property market could be kick-started, then it is up to my fellow agents themselves to adopt a more professional approach and cease overpricing properties in their apparent frenzied ritual of securing mandates", says Stroebel.
"It's dog-eat-dog out there at a time when the market is stagnant, and whilst competition is always healthy, I believe that many more properties would be affordable for purchase if they were priced correctly to sell by both sellers and agents alike". We perhaps have to remind ourselves what a good (and reasonably realistic) return on a property investment is considered to be. Is 10% compounded growth per annum unacceptable? Let's get real.
Stroebel Properties Press Release
- I am a qualified Attorney. I specialise in Property Law, Commercial Law, Corporate Law and Trusts.Please visit our website at www.prop-law.co.za for more details.I am an elected Committee Member of the Property Committee of the Association of Pretoria Attorneys and through my involvement, I like to ensure that I am constantly at the "sharp-end" of Conveyancing Practice.
I am the elected Chairman on the Gauteng Council of SAPOA. The South African Property Owners Association (SAPOA) is the biggest and most influential institution in the property industry. SAPOA members control about 90% of commercial property in SA, with a combined portfolio in excess of R150 Billion (about $22 Billion). I am also on the National Council and the National Legal Committee of SAPOA.Member of the Institute of Directors South Africa and Member of the Sirdar Governance Panel.
23 February 2012
I am a qualified Attorney. I specialise in Property Law, Commercial Law, Corporate Law and Trusts.
Please visit our website at www.prop-law.co.za for more details.
I am the elected Chairman on the Gauteng Council of SAPOA. The South African Property Owners Association (SAPOA) is the biggest and most influential institution in the property industry. SAPOA members control about 90% of commercial property in SA, with a combined portfolio in excess of R150 Billion (about $22 Billion). I am also on the National Council and the National Legal Committee of SAPOA.
Member of the Institute of Directors South Africa and Member of the Sirdar Governance Panel.