South African property catapulted into a realm of high demand, high returns and high general interest during 2004 and kept its idyllic state until the recession in 2008 brought about the reality of high debt-to-disposable-income ratios, affordability levels and lack of liquidity and therefore lending appetite from financial institutions.
But while the market conditions may have changed since the recession hit, there is still demand for property, returns to be made on property investments for the savvy buyer and a good level of general interest, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
“During the boom years, making a fortune on real estate investments, and turning them over quickly, was relatively easy. While returns may not be as high as they were during the boom period, not much has changed as property remains a solid asset class showing sound long term returns,” says Goslett.
While in the boom era people doubled, tripled, and quadrupled their money just by living in some of the country’s hot growth spots, and a few of the lucky ones sold out at just the right time. Today property owners are wondering if they missed the right time to sell their home.
“As a homeowner, your property forms an integral part of your investment portfolio,” explains Goslett “and the property market is one that should be approached with a buy-and-hold attitude in current market conditions. Homeowners who hang onto their properties for the long term can rest assured that they will in all likeliness be rewarded with sound returns, despite the market's ups and downs. Remember also that a home is where you live which makes its value in your asset mix much more than just a number on a piece of paper,” Goslett says.
But things change: lifestyle requirements vary and accommodation needs change. But, Goslett says that by holding onto your property investment for as long as possible and moving only when your needs change, you will spend less on the costs associated with moving and will score on the appreciation growth that real estate has realised over the period of your ownership.
Whatever your reasons for moving, you are first going to have to sell your current home. So just how do you know when it is the right time to put your home on the market? Goslett says there are several important factors to consider when choosing the best time to start the selling process.
“Sellers generally want to sell their home for the highest price possible in the shortest amount of time possible,” says Goslett. “With that in mind, sellers should consider that home buying tends to follow seasonal patterns, with the busiest time for home purchases falling between spring and summer, with winter traditionally the slowest period for home sales across the country.”
Furthermore, sellers should also pay attention to the economic indicators and the cyclical property trends. Goslett says that South Africa is currently in a buyers’ market, meaning there are more houses available for sale than there are buyers to purchase them. “With an excess of homes for sale, buyers have the upper hand in price negotiations because of the strong competition for their business. If you sell during a buyers’ market and lower your asking price, remember that you will also receive the same benefit when you look to purchase a new property.” Goslett adds that correct pricing is one of the single most important factors sellers need to take into consideration in the current market.
He warns that the buyer’s market we are currently experiencing won’t last forever, but also notes that the right time to sell a home will obviously not be the same for everyone. “At the end of the day, sellers need to judge how much time they have to sell their home and decide if they want to sell quickly or hang on in an attempt to sell the home for the very best price they could possibly hope to achieve. The time versus price decision can only really be made once you have decided when you would need to move and its only after you have determined your preferences, that you can assess current seasonal and market trends in order to get your timing right,” Goslett concludes.