Sellers reign supreme in low stock scramble

AFTER idling at a sluggish pace over the last few years, the residential real estate market has shifted into overdrive, says Samuel Seeff.

Despite the subdued economic outlook and second interest rate hike, he does not expect the buoyant demand in the urban areas to subside.

Quite the contrary, he adds, the demand has been building for the last few years and we now see buyers scrambling to get their hands on attractively priced property.

FNB’s property strategist, John Loos, notes in the bank’s latest Property Barometer that he predicts that market activity will inevitably slow over the coming months. He believes that the poor economic performance, interest rate hikes and inflationary pressure will rein in the demand. But Seeff disagrees.

“While we may see a seasonal dip over the winter months and buyers will undoubtedly have to budget carefully, the overall performance as far as we can gauge is still up on previous years,” he says.

Consumers have been cutting back, improving their credit standings and saving for their deposits over the last few years and Seeff says that we now see the effect on the housing market. Not even the cold weather is keeping house hunters away as they continue to flock to show houses. “We sit with a backlog of cash and credit-ready buyers but, with stock levels down by about 40% year-on-year, our agents now battle with significant stock shortages.”

Homes are selling twice as fast compared to last year and about 90% of buyers now pay close to, or the full asking price, he says. “Multiple offers and strong buyer competition are driving offers ever higher to above the asking prices in many instances. Sellers reign supreme.”

The primary housing market is hot, not only in the sub-R2-million sector, but almost across the board. Even at the top end R20-million plus sector of the market, stock shortages are a significant draw-back, says Seeff. Foreign and trophy home buying are at the highest levels since 2007. On the Atlantic Seaboard alone, some 26 properties above the R20-million mark, worth in total just under R780-million, have sold this year, compared to 18 sales worth about R529-million during the first six months of last year. That is more than 40% up year-on-year, he adds.

In top-end areas such as Sandton, Ballito, Cape Town’s Southern Suburbs and the Atlantic seaboard, Seeff’s turnover is up by over 30% this year compared to last year. “Sales on the Atlantic seaboard alone amount to almost R900-million for the first six months of this year, up by 35% from just over R600-million during the same period last year and we’re looking to close this year well ahead of last year’s R1-billion achieved in the area.”

This buoyant buyer activity is now also spilling over into the secondary investment and leisure markets, he says. The latest FNB Property Barometer confirms that buy-to-let activity has strengthened for the third consecutive quarter, now accounting for about 10% of all buying activity.

Seeff says the market is now packed with eager buyers – but it is missing the sellers. “With buyer appetite for well-priced homes at a five-year high, this is an unprecedented opportunity for sellers to attract good offers.

“Sellers still waiting and watching need to be mindful that if prices go up, they too will have to pay a higher price for buying.”