Buyers urged to be realistic with offers as property market rebounds
While the market has picked up significantly and Seeff ended July with the highest sales in six years, buyers putting in low offers are left disappointed, says Samuel Seeff, chairman of the Seeff Property Group.
Contrary to expectation, sellers in many areas are achieving close to and often full asking price in the lower price bands provided that the asking price is set realistically.
This is especially below R1 million where buyers are benefiting from an exemption of transfer duty, the low interest rate and a favourable bank lending climate, but ranging to about R4 million, depending on the area, he says.
When there are discounts, it is only about 5% to 10% and it is only really above the R4 million price band where there is some room for negotiation, but this is highly area dependent.
Luxury areas such as the Atlantic Seaboard, Southern Suburbs, Sandton, Pretoria East, Zimbali/North Coast, and coastal areas such as Plettenberg Bay are all reporting an uptick in activity. Cape Town has seen a renewed interest from foreign buyers with about R175 million in sales recorded over the last month with over R100 million of that on the Atlantic Seaboard, predominantly in Camps Bay and Sea Point, says Ross Levin, MD for Seeff Atlantic Seaboard and City Bowl.
Buyers are predominantly from the UK, Germany, the Netherlands, and other Northern-European countries such as France and Belgium, but also from Russia and there has been quite a few Zimbabwean buyers this year.
In Plettenberg Bay, Kevin Engelsman, licensee for Seeff says the market is robust and there has been an influx of buyers looking to escape to the coast during the Covid-19 pandemic.
Here, too, sellers are achieving excellent prices. There have been two sales above R40 million, both at full asking price. Engelsman warns buyers to be realistic. A recent buyer for example put in an offer of R35 million on a R44 million property, then upped it to R38.5 million but still lost out to a buyer who paid the full asking price.
New properties are attracting the most attention and, in some areas, they are even seeing demand higher than the number of new listings that are becoming available.
Given that sellers only have one chance to create a favourable first impression, the role of an agent is now more important than ever to help sellers "stage" their property in such a way that it will create a strong demand for the property.
For buyers, there has not been a better time to invest in property in over 30 years. The latest interest rate drop has taken the mortgage loan rate to a new historic low of 7% while Ooba reports that the average bank deposit requirement is down y/y to 8.1% (from 13.2%) as at June.
That said, while it is generally a buyer’s market, there are very few desperate sellers. Most sellers are prepared to wait for the right price. Buyers will need to be realistic with their offers or they risk losing out, especially in the low to mid-price ranges, but across the board really.