Sell while you can, weak economy favours buyers
For those looking to transact over the coming months, it is important to note that we are generally still seeing the outlook for the property market as favouring buyers. With the economic growth forecast for the year now adjusted to just 0,7%, the banks expect the buyer’s market conditions to remain throughout the year and into the early part of next year.
Given the continued weak economic outlook and pressure on inflation due to the petrol price and other cost hikes along with the challenges faced by the rand against major currencies, the expectation is also that the South African Reserve Bank will likely step up an interest rate hiking cycle, possibly as early as November.
A recent FNB House Price Index shows that house price growth continues to slow, standing at around 3.5% which, when adjusted for inflation, actually shows prices are declining. At the same time, some 93% of sellers have to drop their price to conclude a sale. The bank also advises that the average time that it takes to sell a property has weakened further form 16 weeks and 4 days in the second quarter to 17 weeks and 6 days in the third quarter.
That said, the arrival of summer always brings renewed hope of a busier selling season, especially in the high demand areas with good access to schools and business nodes. The summer also tends to bring more visitors to show houses, and while mindful of the challenges facing the market, there are always selling opportunities for serious sellers.
Despite the challenges, the banks are still reporting a positive lending landscape with growth in mortgage loans in the residential sector still evident. It is a good time to buy and we believe that serious buyers will take advantage of the opportunities offered by the current market.
Sellers though need to be mindful of the market challenges and guard against overpricing as this will simply deter buyers. If you are serious about selling, then you need to put your property on the market at a realistic asking price. At the same time, you should consider all serious offers.