With house price growth at over 12% year-on-year, the Western Cape came out tops in the second quarter of 2016, followed by the Eastern Cape (7,6%), KwaZulu-Natal (KZN) (5,6%) and Gauteng (3%). These stats give a mixed bag of fortunes for real estate industry players, particularly estate agents.
Buoyant prices seem to indicate a great market to be in, but it is not easy for sales professionals to make money here. On the one hand, the Cape Town lifestyle, with access to the sea, mountains, winelands and a tourist-friendly range of restaurants and other entertainment options is pulling migration from Gauteng. The DA led local government structures are robust and service delivery is the best in SA, so infrastructure is well maintained, and progressive. The shortage of land plays a part in pushing prices up, but, unlike other areas of SA, residential expansion has moved towards the Cape winelands which offer truly beautiful surroundings. Wherever you are in Cape Town, the view is likely to be great.
But it’s heaven in hell for estate agents who, one would expect, can easily sell any stock they can sign up, but getting the stock is the challenge. No-one wants to leave Cape Town. The flow of buyers is in one direction; inwards. Few are going in the other direction. And so, it’s the large developments which are trying to provide stock to be sold by only a small number of affiliated or ‘in house’ sales agents, leaving the majority with little to sell. Of course, seeing great price increases and an influx of buyers will bring more sales players into the industry, hoping to capitalise on a perceived bullish market, only to exacerbate the stock shortages by seeing more agents having to claw and scratch to get a sale. With sellers hanging on to ‘get their price’, there is pressure for commissions to be cut, and inevitably, professionalism starts to take a few body blows.
It remains imperative, therefore, for buyers and sellers to look closely at the pedigree of the real estate agency they intend using. Usually, a good mix of agents, with a high proportion of well experienced agents who have many years of activity in the area is a good sign. New agents are also great, provided that the agency is well established, with a lot of depth of experience in the team that can guide and mentor any rookies. Ethics are crucial to the long term survival in this industry, and to the closure of a clean deal without ‘surprises’ that pop up after the sale.
Right now, all indications are that prices will ease nationally, but the Western Cape remains a wildcard, bucking the trend. If you are looking to buy, hanging on to ‘get your price’, may cost you, and stalling your intended purchase will inevitably see other buyers snapping up the stock. The buyers are out there, but they are astute and won’t easily overpay.
Get a good agent, listen to good advice, and make that decision. Life is always better when you are moving forwards, rather than wasting time by playing the waiting game. The best time to buy real estate was always yesterday!