Low interest rates, strong demand from buyers and a shortage of stock has been the driving the sellers’ market up until 2015. This market imbalance has meant that, despite a slow economy, double digit price growth has been recorded, especially in major metros such as Johannesburg and Cape Town.
“The market in 2016 has started to shift to reflect the state of the economy, the current rising interest rate cycle and the relatively low levels of consumer and business confidence,” said Herschel Jawitz CEO of Jawitz Properties.
The competition is not only between buyers but also between sellers competing for fewer, more cautious buyers. Those who are in the market are quality buyers looking to buy. However, the key decision-making criteria is value.
The implication is that in the short-term the price gap between buyers’ sense of value and sellers’ expectations may widen and the time homes are on the market will lengthen. “We are definitely seeing the first signs of a more balanced market between buyers and sellers from what was clearly a sellers’ market,” said Jawitz, explaining that the price at which a property will change hands will largely be determined by the willingness of sellers to understand and accept the shift.
According to Jawitz, sellers who are willing to listen to the market will have the advantage in 2016 since the relationship between time on the market and price is not a positive one. “The longer a property stays on the market, the further the final selling price is likely to be from its true value.”