‘Slow’ property market still full of possibilities say property leaders
Although recent surveys may indicate the Ramaphoria of earlier in the year have worn off stemming more buyers/sellers negative about the local property market, property leaders encourage estate agents to remain alert and informed for opportunities still abound despite the political and economic challenges.
According to FNB’s household and property sector strategist John Loos there has been a weakening of the housing market in the second quarter, indicative of ‘Ramaphoria’ wearing off amid weak economic conditions, the rising cost of living impacting households, an escalation of violent protests over housing and/or poor service delivery and continuing uncertainty about land expropriation.
The observed impact on the housing market in the second quarter have been:
- On average property takes longer to sell (from 14 weeks and 1 day in 1st quarter to 16 weeks and 4 days in 2nd quarter)
- A higher percentage of sellers are asked to drop their selling price (from 91% in the previous quarter to 96%)
- Slowing down of the buy-to-let market
However, it is not all ‘doom and gloom’. Loos says their surveys indicate that Gauteng is still performing better than the coastal metro areas. Also estate agents in lower income/priced areas still provide stronger activity ratings than those in more affluent areas which is understandable given the variety of tax and tariff increases in recent years, which have been more biased against high income earners and higher priced homes.
Property leaders agree estate agents can still perform well, the onus lies with them to remain informed of property market conditions to give their clients, both buyers and sellers, sound advice as well as timeously identify opportunities.
Lanice Steward, Head of Training for Pam Golding Properties comments that it is important for agents, sellers and buyers to realise that markets are dynamic and as a result, there is never an ‘ideal’ time to sell or buy. The other reality is that the market differs between provinces, cities and suburbs. Another consideration with regards to the statistics around a slowing down of the market, is the difference between the original marketing price instructed by the seller, the agent’s figure and the ultimate selling price.
“It is important that the agent gives sound advice backed by current market information when valuing a property so that a realistic market related price is agreed on. They also need to make their seller understand that it is not beneficial to them to overprice their property,” says Steward.
She added that the agent, in all markets, but particularly in the current market, must be price counselling their serious sellers to be market-related and remind them that they will (if applicable) be buying a new property in the same market. If a seller is not serious and is just ‘testing the waters,’ a professional agent will advise them to take their property off the market and return to market when they are committed sellers asking for a realistic market related price.
Steward cautions that sellers also need to be made aware of the upfront costs involved in the marketing of a property. The agency invests these costs and agents invests their time – both on risk. Therefore, it is not unreasonable for an agent to devote his/her time marketing the properties where the sellers are serious and they are able to conclude a sale and earn their commission.
“Finally, the agent needs to explain to sellers that they cannot be held responsible if the market rejects the seller’s asking price, and their role is one of a facilitator and negotiator to conclude an offer to purchase acceptable to both parties. To achieve this, they must give honest and factual based feedback to a seller,” concludes Steward.
Stuart Manning, CEO for the Seeff Property Group says “as estate agents we cannot change the market realities, but what we can do though, is work with what we have and that is a property market that remains full of possibilities despite the economic and political challenges”.
They tell their agents that they need to know their respective micro markets and understand where the demand is in terms of price ranges and ensure that they counsel their sellers to adjust their expectations in line with the market and what buyers will pay.
“Our focus is two-fold: 1) we focus on specialisation in areas and, 2) on price counselling of sellers as we are in a buyers’ market.”
Manning says regardless of the economic challenges, there is always a level of activity in the market as there are always people who need to buy or sell for a variety of reasons. “There is no point in throwing your arms in the air – rather, roll up your sleeves and look for the opportunities, they are there.”
He concludes with saying while the situation currently is no doubt challenging, there are many positives in the market right now including a favourable interest rate. To illustrate the point Seeff recently achieved a record sale of over R50 million for an Atlantic Seaboard apartment.
Paul Stevens, CEO of Just Property comments that not all markets are equal as illustrated in a recent presentation by Private Property indicating significant online activity by first-time home buyers. “Ongoing government support (e.g. FLISP) and an ever-increasing black middle class geared to grow wealth through property mean that it is not all “doom and gloom”. Opportunities exist for agents who can be agile in reaching the right target market on both the “buy” and “sell” sides,” he continues.
Stevens says although there is uncertainty in the market, especially around expropriation of land without compensation, he advises agents to seek well-placed insights so that they can counsel their clients with credibility. “Our agents are briefed regularly by attorneys, who understand this subject and can transfer knowledge in simple, layman’s terms. We cannot be led by propaganda and nay-sayers who are ill-informed and have a responsibility to properly understand the implications of our political landscape on the property market,” he says.
He maintains that property ownership remains at the heart of long-term wealth and investment in property should still be considered as a medium- to long-term option. Agents who understand how property can be leveraged to create wealth will succeed, even in what may be referred to as the “doldrums”. It is still currently a buyers’ market where even with the easing of interest rates, consumers are still feeling the pinch and with the recent increases in petrol prices, inflation rates will possibly start to rise. With this there is always opportunity to pick up well priced properties for buy-to-let purposes.
Stevens says agents should pay attention to the fears of their clients and aggressively build their personal brands and expertise in areas that alleviate these fears. For example, their agents at N1 City, who specialise in property rentals, management and sales in Burgundy Estate in Cape Town, are very successfully leveraging the security- and lifestyle-related needs of their clients. They have penetrated a niche market and everything they do is geared to that specific market.
“Tough times are when we need to market aggressively and add value to our clients like never before as this is when market share can be won. Our colleagues at Private Property predict that the population of estate agents in South Africa will decline significantly in the near future, with the increasing pressure from the Estate Agency Affairs Board (EAAB) and industry to comply with qualification and registration requirements, the presence of hybrid and online agencies and the ease with which clients can access information. Those agents who can rise above these challenges by being more informed, more client-centric and more enthusiastic about following up properly on every lead will succeed now, and into the future. Now, more than ever, agents need to “up their game”, concludes Stevens.
Richard Gray, CEO of Harcourts says although there is no doubt that many agents are experiencing a less active market, there are still many agents and offices that continue to be successful despite external factors.
“It is imperative that agents are equipped with an in-depth market understanding to understand the cycles of their own direct market. With a holistic insight into target markets agents and offices can more successfully develop strategic plans to improve market share in less active environments.
“Agents also need to up their game when it comes to marketing. The market is rapidly evolving and the digital space is dominating activity, agents have to dedicate sufficient time building digital brand awareness campaigns that are effective and provide a sustainable return on investment.
“Lastly, we’ve found that the agents that maintain success despite market fluctuations are the agents that nurture their client relationships and focus heavily on customer experience, this not only ensures clients enjoy world class client service but assists the agent in building a fantastic referral-based sales funnel,” Gray concludes.
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