Properties are taking longer to sell as buyers shop around

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 rands less than asking price.

That's according to Mike Bester, CEO of Realty 1 International Property Group, who was responding to figures released recently by Jigsaw Holdings that tracked not only the length of time that properties were spending on the market, but also the disparity between asking and selling price.

According to Jigsaw CEO Neville McIntyre, 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. In addition, properties are selling for 4,8% below asking price as opposed to the 3,7% less recorded in late 2004.

Jigsaw's data, derived from more than 300 offices within the company's blue chip real estate stable, clearly reflected a changed market that was now being driven by affordability, said Bester. He added that this trend was likely to gain momentum in light of diminishing affordability levels.

"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."

For most people, buying a home had become a process that now spanned several weeks if not months, he added. Predicting that house price growth this year would be half of what it was in 2004, when, according to Absa, it peaked at more than 32%, Bester said buyers were also determined to set their own prices.

"They are looking longer, wanting more and increasingly unwilling to pay full asking price." With the amount of lower-than-asking-price offers rising steadily, Bester said sellers needed to accept that the halcyon days of spiralling price growth had ended. Accordingly, if they were serious about selling, they needed to price their homes in keeping with current market trends.

He added that agents had an increasingly important role to play as negotiators who had the interests of both sellers and buyers at heart.

"The time has come for sellers to insist on working with professionals," he said, adding that only in the hands of a professional estate agent could a buyer and seller both enjoy a win-win situation.

"Working with both parties on an offer that initially falls short of the seller's asking price is a challenge that requires high levels of competence from agents with strong negotiating skills and a thorough knowledge of property values in their area," he said.

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