Inflexibility won’t sell properties

Monday, 19 October 2009
Inflexibility won’t sell properties


The property market is turning but things are still a far cry from being a seller’s market and the warning from the property experts is both buyers and sellers need to be realistic in their pricing if the deals are going to happen.
Gerhard Kotzé, CEO of the ERA South Africa Property Group says buyers have sensed an improvement in the market and are prepared to make offers but are still looking for bargains.
“On the other hand, some sellers wrongly believe that a seller’s market has already arrived and that they can ask for prices that are 20 - 30% higher than a year or so ago.
“There is a middle ground for both buyers and sellers right now and as the poet said, ‘never the twain shall meet’, if they both stubbornly cling to their respective pricing points of view.

“There’s no question that the market has perked up compared with the doldrums of a year ago, but it’s a far cry from the 25-30% growth we saw at the height of the last boom.

“That’s notwithstanding the latest FNB House Price Index’s year-on-year report which indicates house price deflation continued to diminish at a steady pace.

“The bank believes that year-on-year housed price deflation will probably be a thing of the past before year-end and that this is a strong sign the positive impact of 500 basis points’ worth of interest rate cuts since December 2008 is starting to be felt in terms of residential market performance.

“Our view is that the market is roughly in equilibrium, basically moving sideways in other words and in such a market, deals are best facilitated by compromise.

“Nor is this scenario likely to change overnight. A reality check with economists suggests there will be no sudden market surge.
“Rather, they predict a slow, steady recovery during 2010 and beyond and technically it’s expected that market growth will indeed gradually return to the long term historic ‘trendline’ in due course.
“Looking further ahead, the market should continue to strengthen, although hopefully at a steady rate rather than at the unsustainable pace we saw previously.
“The message right now is that, while correct property pricing has always been relevant for buyers and sellers alike, this golden rule should not be overlooked as the market adjusts to new realities. Inflexibility in either camp will kill many a deal” says Kotzé.

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