Just about everyone knows that the real estate market is cyclical – or that there is sometimes more demand for homes than the supply of properties for sale, and sometimes an oversupply because demand is low.
During the latter part of this cycle you will often hear people say that there is a “buyers’ market” in real estate – because it is obviously easier for buyers to negotiate a favourable deal when there are many homes on the market and only a few people willing or able to buy.
On the other hand, says Berry Everitt, MD of the Chas Everitt International property group, the first phase of the cycle is usually termed a “sellers’ market” – because an excess of demand over supply means the power is in the hands of sellers and makes it easier for them to negotiate higher prices for their properties.
“And that is where the South African property market as a whole is said to be right now, with a large number of prospective buyers and insufficient supply to meet the demand.”
“However, it is extremely important to understand that real estate markets are never homogeneous – and that conditions in local sub-markets or ‘pockets’ can be totally different to those in a neighbouring town or even the next suburb.”
So, he says, while it may be said that homes are on average selling faster and for higher prices than they did a few years ago, that might not be the case in a specific location where there is perhaps still an oversupply of homes resulting from the Great Recession. For example, in some small coastal towns in South Africa, buyers are still able to negotiate hard for the homes they want and may even find a “bargain”.
“By contrast, there are some high-demand pockets of the market now where it is extremely difficult for buyers to find homes for sale and there is such fierce competition for anything that does come on to the market that sellers often receive several offers and may even end up getting more than their original asking price.”[clickToTweet tweet=”The South African property market has a large number of prospective buyers & insufficient supply to meet the demand.” quote=”The South African property market has a large number of prospective buyers & insufficient supply to meet the demand.”]
Writing in the latest issue of the Property Signposts newsletter, Everitt says it must be emphasised, though, that this is not necessarily the norm.
“The effects of new developments, interest rates, consumer confidence, rising utility costs and unemployment are different in every area, which means that the balance of real estate power is different in every area – and is constantly shifting.”
“For this reason, it is pointless to try to “time” your home sale or purchase in terms of the prevailing view of the market as a whole. You should rather try to establish who currently holds the power in the particular area in which you are interested, so you can make the smartest offer or set the correct asking price for your property – at the time that best suits your personal circumstances.”
And the very best way to do that, he says, is to seek the advice of a properly qualified and experienced estate agent who knows that particular real estate “pocket” in detail and is in touch with what is happening there on a daily basis.
This article “Where Is The Power In Your Market?” was issued by Chas Everitt SA – http://www.chaseveritt.co.za/