TAKE ADVANTAGE OF A BUYER'S MARKET!
Category August 2019
From business news headlines to dinner party chatter, it's all about the deflation of property prices and the big volume of properties for sale. There is talk of bubbles bursting and buyer's markets but is this really the situation?
And what does any of this mean for homeowners, for buyers and for sellers?
There is no doubt that the volume of property sales has slowed down in the Cape Metropole. Data from Property 24 shows a steady downwards trend from 8 042 houses sold in 2015 and declining as follows:-
2016 - 7693 houses sold
2017 - 6892 houses sold
2018 - 6014 houses sold
2019 - 3630 houses sold as at August 2019.
And what about property prices achieved?
Data from First National Bank's property trend analysis and Moneyweb show the average house price in the Western Cape in 2015 was R1 258 000 and in 2018 was R1 460 223. Data from Property 24 for house prices achieved in the Cape Metropole only to August 2019 reveal an average sold price of R975 000.
In the middle of this year, the City released its Municipal Valuations updated and increased from 2013 as the City took into account the value increases seen over the period 2015 to 2018. However, the property market was negatively impacted by the load shedding experienced last summer as well as pre-election jitters, both of which contributed to a general economic downturn.
The municipal valuation of a property in the City is now much closer to the real market value of the property than we have seen at any time and as such is a useful indicator for the stable homeowner as a guideline for capital investment when considering renovations and improvements.
FNB data showed that the average property price in relation to the average per capita income in 2018 was in a ratio of 6,6 which made it difficult for first time homeowners to enter the market. 2019 is showing a ratio of around 4.4. This means there is greater opportunity and choice for first time buyers.
We are seeing delays where homeowners are selling in order to buy a bigger property but require a minimum cash profit in order to upgrade. That cash portion is often the difference between the price desired and what buyers are prepared to pay. And buyers are generally looking at a number of properties before committing to an offer.
Where to from here?
In January 2018 South African Market Insights predicted a bubble and warned buyers against purchasing particularly a second property for either rental income or with a view to selling for a profit in a year or two later. The data shows this was a warning to heed. But equally there are predictions that the market is reaching the bottom now and that base on historic property cycles 2020 will show an improvement with values increasing above 2018 values during 2022. Only time will reveal the truth of these predictions and patterns.
In conclusion this market could be viewed as one of great opportunity or a time to sit tight. Either way, it's a perfect time to chat to one of our agents for a realistic valuation and to know your position in these times.
Author: Bronwen Woodward