New optimism in the market once again leads to overpricing, says APFK MD
it has to be admitted that the recession probably has another nine months
to run, Anne Porter Knight Frank, the Claremont headquartered estate agency
(with a fast growing Atlantic Seaboard branch), is finding that optimism
is now returning to the residential property sector, says Lanice Steward,
the companys MD.
While this new optimism is very welcome, says Steward, it has, predictably, caused some sellers once again to try and set unrealistic prices - as was so often done when the previous boom tailed off.
Serious residential sellers, says Steward, have come to accept that there has been zero growth in home market prices for some 18 months and since the peak period of late 2007/early 2008 certain homes have, in fact, actually dropped in value.
As before, says Steward, the temptation to overprice is increased by a small handful of unscrupulous agents who deliberately over-value property so as to secure the mandate - and later come up with a range of apparently plausible reasons why the high price cannot be met. This tactic, in our experience, often results in the home eventually selling below its true market value.
Home sellers, says Steward, must get their agents to justify their valuations by producing the sales figures recently achieved in similar properties in the area.
It is, she says, surprising how often even reputable agents cannot do this.
The Cape residential market, adds Steward, is moving, but it is significant that the FNB property economist, John Loos, has shown that 26% of sales today are as a result of people downscaling to cope with the current more stringent economic times, while a further 19% are downscaling so as to be able to embark on a new life stage - which usually means retirement or semi-retirement.
Obviously with so large a percentage of the market (45%) downscaling rather than buying up, the conditions are not yet ripe for price rises - even though these will inevitably eventually come. Sellers must bear this mind when they are trying to establish the correct price at which to market their home, says Steward.
Article by: www.anneporter.co.za