Navigating the housing sector in a buyers' market
For two consecutive years the South African property sector has been slanting in favour of buyers, and as we ease into 2019, this is set to continue. This is known as a buyers' market and it takes place when the supply of properties outweighs the number of buyers on the market, or in other words when the ratio between supply and demand is uneven to a point where it favours buyers.
In this situation, sellers are somewhat desperate to find a buyer, while buyers have an array of properties to choose from to suit their preferred price, size and location.
Advice for buyers
In this market, the greatest tool that buyers can use to their advantage is the art of negotiation. They have more flexibility to negotiate towards a price that best suits their budget and since finding a serious buyer is hard to come by, sellers are most likely to settle on a lower than desired price.
The buyers' market is expected to last throughout the year and even going into 2020. The reason for this is due to the high costs of living as a result of tax increases, fuel hikes and bad credit ratings which is preventing people from acquiring home loans to purchase a home in their name.
In this situation, buyers who can afford to purchase a property will have a better chance of negotiating towards a lower selling price and securing a potential bargain. Furthermore, with less disposable income and the high costs of living, more properties will end up repossessed by the bank or distressed as many owners will be unable to pay their monthly home loan repayments. In this case, buyers may have the opportunity to snap up property that is well below the market price.
However, although buyers can now save big, this does not mean that they should hastily enter into a purchase agreement. They will first need to realistically consider their financial situation and budget wisely before deciding to buy.
Advice for sellers
With the odds currently stacked against sellers, they will have to navigate the market prudently if they are to make the most of the current conditions. Furthermore, it becomes imperative for homes to be priced right at market-related prices and not too high to avoid the scenario of it languishing on the market for too long.
A property valuation will determine the correct selling price - for this, it is best to employ the expertise of a professional real estate agent who will undertake market research when arriving at an optimum price. An agent will also help assist with other tasks such as guiding sellers through the negotiation process and implementing effective marketing techniques to sell a home in the quickest possible time.
Remember, agents are an invaluable asset at all times, but their importance is magnified during challenging conditions.
Although buyers are reaping the benefits of a buyers' market particularly with regards to negotiating, they still need to do so wisely. While sellers are advised to seek the expertise from a trusted real estate agent for guidance and advice. In the end, the property market will always go through phases but its resilient nature will ensure continued strength regardless of changing economic conditions.
Author: De Lucia Group