High-end homes hard to sell
Are high-end owners pricing their properties to sell? Lea Jacobs investigates
THE general public may be forgiven for thinking that the wealthy have managed to survive the economic fallout and escape relatively unscathed. While this may be true to some extent at least, those who earn the most, invested the most, and bought the most, have been burnt. Although the financial burns may not be as painful as those felt by people in the lower income brackets, it still hurts and many have been forced to offload assets in a bid to survive.
The number of luxury properties coming onto (and staying on) the market has risen in recent times. The must-have purchases have become a liability for many and listings of high-end properties have increased.
One may assume that as highend investors these individuals have enough financial savvy to realise that an over-priced prop- erty is not going to sell. Sadly, however, this does not appear to be the case and many people selling property in the higher brackets often seem to be more stubborn as those in the lower markets — holding out until their price is met. This has affected the average time for which these properties remain on the market.
John Loos, a Strategist with FNB Home Loans, noted in a recent report that although the figures have dropped since 2008/9, the percentage of home sellers selling to downscale due to financial pressure remains high, at around 22%.
An estate agent survey conducted by the bank suggests that the middle and lower-income segments are still performing better than the higher-end segments. The report indicated that the high net worth segment remains very flat in terms of demand.
The upper-income segment showed some summer improvement in demand, but remained lower than the middle-and lowerincome segments.
In terms of balance between supply and demand, as reflected in the average time for which a property is on the market, the upperincome segment had the most pronounced increase in the estimated average time on the market in the first quarter of this year. It was also the only one of the four segments not to have an improvement in the percentage of sellers selling to downscale due to financial pressure, as well as having the weakest estimated performance in the percentage selling to upgrade.
More often than not residential properties tend to be bought on an emotional whim and Laurie Wener, MD of Pam Golding Properties in Western Cape, says this applies to even the savviest of investors and in these cases return on investment is secondary.
The fact that many of the highend properties currently on the market are situated in areas traditionally regarded as holiday areas has not helped matters, as this segment of the market in particular has felt the full brunt of the economic slowdown.
John Fuller, principal of Chas Everitt’s Plettenberg Bay office, says reports reflect only 1,5% of SA buyers are looking to invest in a holiday home.
Given the iconic nature of the properties, it is often more difficult for agents to value an upmarket property and this, coupled with the incidence of motivated sellers, makes this segment of the market more difficult to sell.
Everyone knows that price is key and if buyers regard the property as overpriced, they will continue to hunt until they find what they deem to be good value for money. One would think that these factors would induce the sellers of upmarket properties to market them at a realistic level, but Fuller says this is often not the case.
“The viewpoint remains that if they receive their price they will sell. A factor compounding market value is the fact that this depends entirely on what a willing buyer is prepared to offer — and offers are usually well below the asking price. At the top end there are so few buyers that the choice is quite considerable and the most expensive properties therefore stay on the market for a very long time — years in fact.”