'Serious property sellers will have to accept price cuts'

'Serious property sellers will have to accept price cuts'

The fact that there are now occasional signs of an eventual recovery in the SA residential market should not lead home sellers to think that higher prices are once again possible, says Lanice Steward, MD of Anne Porter Knight Frank, the Cape Peninsula estate agency.

"Although at APKF we always try to achieve the highest price for our sellers," said Steward, "they sometimes think we can achieve the impossible - but it is still a buyers' market and those not prepared to price realistically should not put their homes up for sale.

Steward drew attention to the latest FNB Property Barometer figures which show that 87% of SA's homes sold in the second quarter of this year were unable to achieve their asking prices - often, she says, because their prices were set by the seller at a level higher than the agents would have recommended.

"In real terms," said Steward, "since the price peak of February 2008, FNB show that SA prices have fallen by 15,3%. In my view that is not excessive considering that since July 2000 they have risen 64,7% (in real terms) and 313% in cash value. However, those sellers hanging on for former peak prices are, quite simply, living in an unreal world."

Steward quoted the FNB report as saying that, as there are as yet no obvious signs of a significant growth in SA's economy, house prices, which traditionally respond to growth, are likely to remain static. A further cut in the interest rate, which Gill Marcus has now said is possible, will help but in the foreseeable future "serious" sellers will have to accept a few more downward price adjustments.

"If people think that this is poor advice," she said, "they should take note how many overpriced homes stick on the market and do not sell until they have reduced their prices."

A Hout Bay property came onto the market at R11 million. It finally sold 24 months later at under R7,5 million. Another listed at R2,985 million sold after a five month wait for R2,3 million. Yet another came onto the market at R4,8 million and sold a year later at R3,5 million - a 24% drop,

Two further facts, said Steward, are worth mentioning on this subject: in these cases mentioned, the sellers lost considerable interest on money they could have collected earlier if they had priced correctly - and it is abundantly clear that most buyers detect overpricing early on and, after a perusal of the website do not even bother to visit too-high priced homes.

Anne Porter Knight Frank Press Release


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!