Tapping Into the seasonality of property sales

Private Property South Africa
Adrian Goslett

Seasonality is a well-established phenomenon in the global property market and although it follows a different time frame, it is also clearly evident in the local property market.

Seasonality essentially refers to changes in sales volumes and sales prices during the same calendar month from year to year, that reveal a similar magnitude and direction. This seasonality is caused by natural factors, such as the weather; administrative dates such as the beginning and end of the school year; as well as social, cultural or religious traditions, which include fixed holidays such as Christmas.

“Regardless of the overall trend in the property market, or the specific phase of the property cycle in a certain sector of the market, the property market displays seasonality, with higher prices driven by increased activity at certain times of the year. In South Africa, during the spring and summer months, sales activity increases, and as a natural consequence, property prices are firmer on the back of this increased demand. The effect on prices may not always be remarkable – but the effect on sales activity is often quite noticeable,” explains Adrian Goslett, CEO of RE/MAX of Southern Africa.

He adds that two seasonal factors are at play during our spring and summer months. “Firstly, the summer brings lush gardens, green grass and colourful flowers, and this certainly goes some way to create a favourable first impression among potential buyers. Secondly, the school year in South Africa runs from mid-January to early December, and families planning to relocate always prefer to do so at the end of the year, to allow the children to complete a school year at one school and to start afresh at a new school at the beginning of the new year,” he says. But seasonality extends further into other sub-sectors of the market. “In the student accommodation sector, spring brings an increase in activity as students going to university in the new year look for accommodation, and those who have completed their last year of study move away. While many people are on holiday in December, this does not detract from the seasonality of property sales during the summer, but simply shifts the locus of the seasonal upswing to the coastal and holiday towns in the country,” comments Goslett.

Seasonality is not simply a phenomenon of interest to estate agents; it also has implications for buyers and sellers. Prices may not boom during the seasonal upturn during the spring and summer months, but the average percentage by which a seller needs to reduce the asking price to achieve a sale may be noticeably lower than in the winter months. This reflects the increase in potential buyers during these seasonal peaks, and more buyers mean a better chance of selling the property at a higher price. Buyers and sellers who understand the seasonality of the property market are able to make better informed decisions. For example, buyers looking for student accommodation may find few available properties in April when all available student accommodation is fully occupied, but may be able to acquire such a property at a better price at the end of the year when more properties become available as students complete their studies. “Understanding the seasonality of the property industry allows buyers and sellers to maintain a longer-term perspective on the immediate state of a specific property sector. Sellers considering taking a property off the market just before the summer holidays could well miss a sales opportunity given the uptick in interest during this time.

Similarly, buyers should bear the seasonal factors in mind when making an offer on a property, particularly in areas where the effect of seasonality is particularly evident, such as in coastal towns and other holiday destinations,” concludes Goslett.

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