Inflexibility wont sell properties
The property market is turning but things are still a far cry from being a sellers market and the warning from the property experts is that 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 sellers 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 but never the twain shall meet if they both stubbornly cling to their respective pricing points of view.
He says theres no question that the market has perked up compared with the doldrums of a year ago, but that its a far cry from the 25-30% annual growth seen at the height of the last property boom.
Thats notwithstanding the latest FNB House Price Indexs year-on-year report which indicates that house price deflation continues to diminish at a steady pace.
The bank believes that year-on-year house price deflation will probably be a thing of the past before year-end and that this is a strong sign that the positive impact of lower interest rates is starting to be felt in terms of residential market performance.
Our view is that the market is roughly in equilibrium, in other words moving sideways at the moment and in such a market, deals are best facilitated by compromise.
Nor is this scenario likely to change overnight, Kotzé says. 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 its expected that market growth will gradually return to the historical trendline.
So 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.
Article by: www.era.co.za