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Almost 10% of sellers ‘lose’ on the sale of their home

This house recently sold for R47m and was a record price achieved per square metre on the Apostles side of Camps Bay, which has traditionally attracted slightly lower sale prices than the wind-free Glen-side, closer to Clifton.

In April 2017 some 9.8% of total home sales were below their previous purchase price. Breaking this down further, 7.5% of resales were more than 5% below, while 2.2% of sales were 0% to 5% below previous purchase prices.

This is according to FNB data which shows almost no noticeable increase in sellers losing more than they bought for.

“Over the last decade-and-a-half, August 2009 was the month where the highest estimated percentage of total properties were being resold at below their previous purchase price since a previous high early in 1999,” said John Loos, FNB’s household sector strategist, noting that 23.4% of all property sales registered in April 2009 sold for less than they were purchased for originally. “The country had just lived through a recession, and interest rates had peaked in mid-2008, and this was the lagged impact of those economic events on the housing market. It was a period of widespread financial stress among households, and many had previously bought homes at ‘astronomical highs’ around 2006/7 at the back end of the property bubble.”

Can rental income loss ever really be justified?

What are the causes of price deflation when reselling?

  1. Genuine market price deflation can be the cause in weak economic or rising interest rate times, such as in 2008/9, or a specific area can fall from favour and even go into decay.
  2. A home may have originally been purchased at an “incorrectly” high price which was above the true market value at the time. Establishing the true market price is tough in a market where each home’s characteristics differs in some way from the next.
  3. Financial stress of the owner can lead to a deterioration in the property due to lack of maintenance and upkeep, or can cause a very hasty sale at below “market value”.


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