Markets can turn on a dime so sellers should price property correctly

ALTHOUGH sales were down in a number of Cape Town suburbs for the first half of the year compared to last year, the value of sales increased slightly.

However, sellers should not become complacent that property values will continue to spiral upwards indefinitely, says Francois Venter, director of Jawitz Properties.

“For some time now it has been a seller’s market, with the lack of stock enabling sellers to push up prices. However, the property market can turn on a dime, and there are clear signs that buyer demand is slowing,” Venter says.

An exception for the moment i s t h e A t l a n t i c seaboard, where the number of properties that changed hands during the first half of this year was down by four percent, according to PropStats. The value of those sales increased by 12 percent overall, because the average price of properties sold increased by 17 percent from R5.9 million last year, to around R7m.

The same pattern could not be seen, however, in the city bowl where the number of sales went down by 23 percent and the value of sales went down by 17 percent, despite a seven percent increase in the average price.

In the southern suburbs, sales were down by 11 percent but values were marginally up by one percent compared to last year, though average prices went up by 11 percent.

“With the exception of the Atlantic seaboard, where values continue to be buoyant for now, the signs are there that the momentum is shifting, which means sellers should consider quite carefully how they price their properties,” says Venter. “Simply hanging on indefinitely for a higher price is no longer a viable strategy.

In the city bowl, values were down in nine out of 12 suburbs, t h e e x c e p t i o n s b e i n g De Waterkant, Higgovale and Zonnebloem, where there was an upsurge of sales. In the ever popular southern suburbs values were down in five out of 17 suburbs.

“We believe that property prices won’t continue to grow aggressively and that buyer demand will ease in future,” says Venter.

“This i s because buyer income has not kept up with the rise in property prices, which grew above inflation, so there is a slowdown in affordability, coupled with rising costs, slow economic growth and a rising interest rate cycle.”

I n f act, Venter s ays he wouldn’t be surprised to see the supply situation start to normalise as the balance between supply and demand starts to change.

“Property will always be a good investment and prices will no doubt continue their upward trend over the long term. But in the short term, serious sellers should ensure their properties are priced in accordance with market conditions and what buyers are prepared to pay,” Venter says.