Home / Spotlight  / Property stats mumble-jumble and how to avoid being led astray

Property stats mumble-jumble and how to avoid being led astray

Pie piper

The modern real estate industry is a vastly different place to that of just a few years ago. Technology has given buyers and sellers unprecedented access to information, and real estate agents are often no longer the primary source of data relating to property investments and sales.

And while this empowerment of the consumer is definitely important it does have certain potential pitfalls that make the role of a qualified and experienced agent more important than ever.

A look at technology’s role in the ever-changing real estate market place

“Our profession has changed,” confirms Schalk van der Merwe, franchisee at Rawson Properties Helderberg. “It’s not just about connecting buyers and sellers and facilitating sales. The real value of a good, modern, real estate agent lies in their ability to interpret market information and apply – and communicate – those findings within a specific context.”

While homeowners can access most municipal, provincial and national property sales statistics online, van der Merwe explains that the reports on offer seldom account for situational influences and aberrations. This “partial picture” can be misleading without contextual interpretation.

“There is almost no information on the reasons behind record highs and record lows, or how those outliers impact the average sales prices and trends in an area,” he says. “Distressed sales, or sales in execution, also affect the numbers. It is information like this that builds a complete picture of the market, and without it, consumers risk making assumptions that could negatively impact the future of their investments.”

Using his home territory of Somerset West as an example, van der Merwe cites statistics claiming property growth of 27.4% from 2014 to 2016.

“That’s a very healthy number, and one that should instil a lot of confidence in sellers in the area,” he says, “but there’s no mention of whether the same figure holds true for full title, sectional title and vacant land. If you dig a little deeper, you’ll see full title properties haven’t performed as well as sectional title, and applying the same rules to both could lead to overvaluation of certain properties.”

Putting things into context

Sorting to contextualise

The general acceptance of decontextualized statistics like the above can present even greater challenges to the market.

“Sellers have seen the average time on market rising from 10 days in the third quarter of 2016 to 55 days in the second quarter of 2017 and are starting to panic about the future of their property investments,” says van der Merwe. “That’s completely understandable, but also largely unnecessary.” He explains that, when taken in context with market performance over the last few years, the seemingly large increase is merely an indication of the normalisation of a strong sellers’ market.

It’s a natural part of the property cycle, and probably overdue in the Western Cape, which has seen property prices bolstered by the high demand created by semigration. It’s definitely not just a reaction to our recent junk status. No market can sustain growth at the rate we’ve been seeing in Cape Town indefinitely, especially not without a similar increase in average income.

According to van der Merwe it is more important than ever to take all available data into account – both current and historic – and then interpret it within your specific situation. An act that takes a lot of knowledge and experience, making it arguably the biggest factor when deciding which real estate agent to use.


Review overview