Greedy’ sellers learn it’s a buyers’ market

SELLERS in Durban’s residential property market are being too greedy and are trying to sell their properties at unrealistic prices. Because of this, the percentage of sales taking place below asking price in the greater Durban area is nearly 80%, according to data service provider PropValues.

PropValues is a tool used by estate agents to compile comparative market analyses in order to allow them to set market-related prices.

PropValues director Scott Allnatt says the residential property market is “no longer a sellers’ market”.

“It is a buyers’ market and a lot of the sellers are still being greedy and are not accepting the prices estate agencies are recommending,” says Allnatt.

He says although property prices are not dropping, the rate of growth is slowing and sellers have to be more realistic in their asking prices if they want to make a quick sale.

“The market has slowed and there is no longer a buying frenzy and they (sellers) are overpricing their properties.”

Allnatt says year-to-date figures show that of the 2646 units sold between January and the end of July this year, 79% went for below their listing price while only 567 or 21% sold for their original listing price or above.

He says buyers now have more bargaining power. “Demand is low at the moment and supply is high and that creates a buyers’ market,” he says.

Property has become relatively expensive during the boom years and this has been exacerbated by rising interest rates, says Allnatt.

Property prices have also been rising at a greater rate than the rate of remuneration. This has also caused demand to drop off, says Allnatt. Buyers now have a greater selection of stock to choose from.

Lew Geffen, chairman of Sotheby’s International Realty SA, says there is a certain amount of truth in what PropValues is saying but that there is a lot of differential between the listing price and the selling price in any market. “But it is not a sellers’ market any more. It is a realistic market. There is still demand but not at insane prices,” he says.

He says there are less sales in the market because of the “affordability factor”.

“There is overbloated stock that is not selling.”

Herschel Jawitz, CE of Jawitz Properties, says the information from Durban is what “we are seeing in most other parts of the country”.

“The gap between original listing price and final selling price is widening.

“This is especially true in the luxury end of the market, where houses are priced at R3m and above.

“Buyers are also being more circumspect and doing a lot more research in determining relative value between different properties,” says Jawitz.

Article by: Nick Wilson - www.businessday.co.za