This is according to Cameron Jansen, broker/manager of RE/MAX Central, who said there seemed to be a large disparity between what sellers think their home is worth and what buyers in the current market are prepared to pay for homes.
“Buyers are aware that market conditions are in their favour and as such are looking for a bargain where possible, often putting in offers that are between 25% and 30% below the seller’s listing price,” said Jansen, noting that this trend was prevalent in the low-income as well as the luxury market. “Apart from the fact that the trend is placing pressure on sellers to lower their price, estate agents also have to do a lot of negotiating between buyers and sellers to try and narrow the gap and find a price that is acceptable to both parties.”
Jansen said that from a rand value perspective the luxury market has felt the effect the most. “I have seen high-end homes go to market at around R4m and receive offers starting from R3m to R3,2m. The result of this is that the luxury market has slowed significantly with sellers opting to rather hold onto their homes than sell for between R800,000 and R1m less than what they want.”
Jansen said it was important to remember that if the reason for selling is to buy another home, the consumer is selling and buying in the same market.
“While they may be losing 20% on the sale, they will be gaining the 20% when buying. So if the reason for selling is to buy, then go for it,” he said.
House prices in Gauteng’s three major metros in Q1 2017 saw the City of Tshwane at 4.21%, Ekurhuleni at 3.92% and Joburg at 3.41% year-on-year, according to FNB statistics.
Some of the downward pressure on asking prices in the lower to middle price categories may be due to the large percentage of first-time buyers in the metro: 27% of total home buyers in Joburg are first-time entrants, while 21% of Tshwane buyers are new entrants.
According to FNB, homes in Gauteng traded at a quicker pace than in other regions across the country, with homes spending an average of 12 weeks on the market in Q2 2017.