SMALL TOWN BOOM

Wave of house sales in E Cape

Inland towns in the Eastern Cape are experiencing a property sales surge, which is getting the market moving after years of stagnation. The problem is prices are as little as half of what sellers wanted several years ago.

Asking prices are no longer the kick-off point for negotiations when selling properties. The only number both sellers and buyers need to consider, is the offer. Using offer as the launch point is sensible for buyers, especially those who have bond repayment ceilings imposed by banks.

However, it simplifies the process for those owners desperate to sell. “Take it or leave it” is a quick solution.

“After five lean years, sales in Stutterheim are buzzing,” said Penny Niemand, who manages Stutt Property Shoppe.

“My colleague, Melanie Kemp, kept advising sellers to bring asking prices in line with buyer affordability, and it is paying off. Granted, homes asking R1.6m years ago are now selling at R950,000.

But that is what people are prepared to pay, which means that is market value, it’s not what people paid five years ago plus inflation.

Conveyancers Bate, Chubb and Dickson senior partner Angus Warren cautioned sellers that holding out for an asking price for too long can be dangerous, especially in a buyers’ market.

The boom years of 2006 and 2007, when sellers overcharged and buyers were desperate, have skewed impressions of value. Many homes will sell well below the price paid 10 years ago.

Buyers are not interested in historical value.

“Many people have got themselves in a position where they are forced to sell. Some to downsize as they are approaching retirement, others as hard financial times bite. Maintaining a large house is expensive, given the mounting cost of rates, security, repairs and refurbishment.

“In many cases, especially for people wanting to retire to a more affordable property, it is smarter for them to take what they may feel is a low offer, if there is one.”

Nomawethu Sueku manages Xoliswa Tini Properties King William’s Town. She agrees with Warren’s advice on taking an offer.

“Houses well over a million are now in the R800,000 bracket, and are selling well.

“However, where we are getting most of the action is R350,000 to R400,000, with location homes, such as in Ginsburg. We encourage people to check what bonds banks will grant and then zero in on homes in their price range, and make an offer.”

Nkulie Mtya, of Era Sun Properties, also in King William’s Town, said sales “are on the up”. “Our demand is largely due to people taking government jobs in Bhisho. Price is important but demand close to Bhisho is equally so, and that commands a slight premium.”

It is not only towns close to East London where sales are brightening. Aliwal North, in the Eastern Cape but bordering Free State, is also seeing movement after years of inertia, said Seeff’s Jannie Malherbe, an agent in the town.

“There are buyers – but at their price.

“In the past year, we have had a price reality check that has assisted in causing a property turnaround in Komga,” said EPS agent Malcolm Swingburn.

A final caution from Warren to sellers is to weigh up low offers before rejecting them. He advises prospective sellers to take into account all the costs associated with holding on to a property.

Then calculate by how much each month’s mounting costs, and no interest on the sale, deflate the value of the property.

“Many people are wishing that they had accepted one of the earlier prices, and moved on with their lives.”

Holding out for an asking price for too long can be dangerous, especially in buyers’ market