4 to 5 Months to Sell Upmarket Property in South Africa
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If you own a property worth more than R1,2m that you have to sell now, be prepared to wait at least four and a half months to flog it. There is also an 85% chance that you will not get your asking price.
These and other statistics released earlier this week by FNB again underline just how difficult trading conditions in the SA housing market have become. According to FNB's Residential Property Barometer for second quarter 2008, more than 80% of all properties now remain on the market for an average four months, up from an average three months in first quarter 2008. At the height of the property boom towards the middle of 2004 it took only six weeks for the average property to sell.
Lower priced properties of less than R700 000 are still finding buyers within an average 11 weeks. However, more expensive homes are becoming increasingly difficult to sell, with homes priced above R1,2m sitting on the market for 18 weeks on average.
FNB's research, which is conducted on a quarterly basis among 150 estate agents, also shows that the percentage of properties sold at less than asking price rose markedly over the past year - from 70% in second quarter 2007 to 85% a year later.
FNB's data supports the general view that now is not a good time to sell. As Ronald Ennik, an executive director of Pam Golding Properties, puts it: "If you can avoid putting your property on the market, don't sell at this stage. It's simply a market you don't want to be in right now, unless you are forced by circumstances to be there."
Ennik says homes bought in the last two to three years will probably not yield a profit if they were to be put back on the market this year. Absa Home Loans senior property analyst Jacques du Toit has a similar view. "A property owner who has bought during the past two years is set to make no profit, or even a loss, if he sells now."
Buy-to-let investors, in particular, are advised to hold on to their properties if they can afford to. Du Toit says the increase in demand for rental property, means that investors could achieve higher income returns over the next 12 to 18 months. "Investors should therefore look through the current downward cycle and focus on income returns, with a view of achieving real capital appreciation again from 2010 onwards."
Authored By: Joan Muller
Published By: Property24