South Africa has joined other countries around the world and caught the World Cup bug, with shock exits keeping us glued to our screens. This combined with strong winter rains in the Western Cape, driving the dreaded “Day Zero” out for 2 more years at least, has led to more optimistic banter in offices and homes around the province and country. This is in line with long-term forecasts for our country with many analysts now saying that even though “Ramaphoria” may be short lived, the longer-term trajectory of SA is decidedly better than 1 year ago. That being said, some recent data (and our own experience) is seemingly testing the resolve of our “optimism”. Year on year GDP numbers declined markedly by 2.2%, while stock markets and property markets have noticeably flattened. This gives us the indication that we are currently in or approaching the “lows” of the market (all asset markets are pointing this way) with the medium term looking brighter from a growth perspective, barring another global slowdown.
In this market, in many cases residential sellers are battling to get any offers close to expectation. The market has gone quiet for many Sellers especially those still living the dream of 2016 and 2017. Despite this, Claremart has continued to receive market related sales confirmed on a non- suspensive basis and if Sellers are willing to consider other sales options than what they are currently involved in, the auction model is a cost-free alternative that renders results in a 4-5 week process.
Another consideration, given current conditions, is that sellers are often kept waiting many months or longer before achieving an acceptable deal. It is important in these times that sellers are aware that the days of listing and selling at inflated prices are over.Although we are still doing sales at above expectation from time to time, the prices achieved on auction are generally slightly below seller’s expectations, however very much market related. Bearing in mind that these offers are on a secured, non-suspensive basis, most sellers are willing to drop slightly in order to sell now, rather than wait another 3,6 or 12 months for an offer that clears all the usual financial hurdles, with no guarantee that the market will not dip further. There is also the time value of money to consider and the “bird in the hand” saying where auction sellers are advantaged by receiving clean deals, as opposed to options involving sales of houses, finance and other suspensive conditions that in many cases never materialize.
On the Commercial / Investment side we are still seeing a good demand for blocks of flats and primely situated and tenanted buildings, however we have seen a slight decline in demand in certain properties and areas. This means that your average seller might need to be a little bit negotiable. CBD properties are still in high demand, as we have noticed from a few key sales over the past few months. Buyers wanting to purchase in specific high growth or key established areas, are having to still pay a premium, despite the general down turn in market conditions.
Despite the climate described through this message, Claremart continues to see strong sales at our auctions and are confident that we will ably navigate this market, providing sellers and buyers with fair and market related offerings.
Have a great month and we hope to see you on the auction floor soon!
Andrew Koch & MC du Toit