SA house prices favour buyers

For about three years sellers have called the shots as South Africans scrambled to secure properties with prices surging on the back of slashed interest rates and a stable economy. But now there seems to be buyers’ resistance in certain price categories to high asking prices. Since nominal house price growth peaked at an astonishing 35,5 percent in September and October 2004, the rate has been slowing. Mike Bester, CEO of Realty 1 International Property Group, says South Africa’s residential real estate market has entered a new phase in which properties are not only taking longer to sell than they did a year ago, but are also selling for “tens, if not hundreds, of thousands of rand less than asking price”. According to figures recently released by Jigsaw Holdings that tracked not only the length of time that properties spent on the market but also the disparity between asking and selling prices, properties are now spending an average of 51 days on the market ‘ as opposed to the 39 days reflected during the second half of 2004. The group says properties are also selling for 4,8 percent below asking price ‘ as opposed to the 3,7 percent less recorded in late 2004. Bester says this reflects a changed market that is now being driven by affordability. “Buyers are no longer snatching up properties as soon as they are listed, as was the case when stock levels were at an all-time low. “They are shopping around until they find something within their price range and that offers them value for their money.” Bester says with the number of lower-than-asking-price offers rising steadily, sellers must accept that the “halcyon days of spiralling price growth had ended”. ‘

April 2006
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