Be realistic when pricing your home for sale

Be realistic when pricing your home for sale

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It is a known fact in the property industry that a well-priced home will sell quickly. Often, the seller wants a higher price for their property but if the buyers don’t see the value for their money, they won’t make an offer. A house that doesn’t sell will end up sitting on the market for months, eventually forcing the seller to accept a much lower price.

Buyers need to believe that a property is worth their money and considering that most homes extend into the millions of rands, these buyers have the final say in whether or not a property will sell. Being realistic about the asking price may be a hard pill to swallow, but it will lead to a quicker sale and a higher chance of fetching the asking price.

Average property asking price in South Africa

Nationally, the asking price for property has been more realistic in the first quarter of 2018 than in previous years. This has meant that the average amount of time that properties have remained on the market has shortened to 14 weeks and one day. Last year, this average stood at 17 weeks and two days.

According to John Loos, an FNB household and property strategist, the percentage of sellers who had to drop their price has improved from 95% to 91% in 2018. This also ties in with the statistics indicating that property asking prices have become more realistic.

First-time home buyers still on the decline

FNB reports that the number of first-time home buyers as a percentage of total home buyers has continued to decline from last year. In the last quarter of 2017, 20.3% of home buyers were first-time purchasers but this has fallen to 17.6% in the first four months of 2018.

Loos states that first-time home buyers do not appear to be as optimistic about the future of the country and the economy as current property owners. “We had recently believed that the level of first-time home buying was beginning to stabilise, but it appears that such a belief was perhaps premature,” he says.

This gradual decline first began in the second half of 2014 as a result of the interest rate hike earlier in the year. The continued weakening of the South African economy and a loss of faith in the government aggravated this decline further. “As yet, we haven’t seen a convincing reversal of that broad trend,” says Loos.

Reasons for the decline in first-time buyer percentages

First-time buyers are more sensitive to the economic and interest rate cycles than repeat buyers due to their weaker financial stability and dependence on credit for home purchases. Young aspiring buyers are also renting for longer or living with their parents to cut costs and save some additional income in the current economic climate.

Gauteng boasts a higher number of first-time buyers than the national average while the Western Cape is much weaker. Greater Johannesburg has 21.6% first-time buyers and Tshwane has 30.8% of buyers purchasing homes for the first time. Cape Town only has a 6.5% first-time buyer rate due to higher average property prices than any other province.

In general, the initial asking price for properties has a significant impact on the rate of first-time buyers. These potential purchasers are far more picky about their properties as they are generally in a weaker financial position than wealthy repeat buyers.

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Author: Seeff