'Property sellers reluctant to drop prices

'Property sellers reluctant to drop prices'

The levels at which South African residential property prices are currently standing are debated weekly in the country's media, often with very pessimistic forecasts, but, says Bill Rawson, chairman of Rawson Properties, even now relatively few sellers accept that buyers are in a commanding position and big price adjustments are essential.

"From the figures coming across my desk," he says, "it is clear that the majority of sellers still baulk at cutting prices by over 10%. A good agent may be able to persuade them to accept that a bigger cut is essential, but generally they prefer not to sell rather than to take a big cut."

The sellers' thinking, says Rawson, appears to be that the bottom of the downturn has now been reached and from now on prices can only move up.

"Most of the banks' analysts would not agree with this view – they see price stagnation staying with us for six months or a year but that is very seldom the view of the sellers with whom our franchises have to deal. Countrywide confidence in property remains strong."

Rawson said that he himself is now cautiously optimistic about the chances of a mini-recovery becoming evident towards the end of this year.

"It is significant that our development company is finding that certain banks are now ready to talk about loans. One bank has already advanced R1 billion for new projects in Gauteng. This has not been publicised as they do not want a flood of applications but it has happened."

The tight credit controls ooba recently revealed that 46% of bond applications are still being turned down have, said Rawson, made buyers far more enterprising in finding money for property: families, private companies and syndicates have stepped into the breach left by the banks' withdrawal.

"This innovative trend is good for the SA housing market: it is noticeable that luxury non-essentials are being sold off to provide property investment funds a sure sign that those who watch the market appreciate that today's market offers them bargains."

Those contemplating which asset class to invest in money, stocks or property - added Rawson, have to bear in mind that housing is an essential product.

"Although people pull out of other assets in bad times there will always be underlying activity in property. People get married, families grow, new schools are attended, transfers take place, people die or separate these and other daily occurrences keep all but the very worst housing markets alive."

Rawson Properties Press Release

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Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!