Shortage of properties on sale

Property buyers, buoyed by the more positive mood in the market, are finding that there is something of a stock shortage in some respects, even at this early stage of the recovery cycle.

This is due to large numbers of sellers now withdrawing their properties from the market in anticipation of receiving a higher price "down the road".

Buyers can find ample stock, wide choice and value in recently completed sectional title and cluster developments.

While we have what amounts to something of a shortage of pre-owned freehold properties we have precisely the opposite in the case of cluster and sectional title projects where developers with long lead times were hard hit by the recent property market recession.

Whereas property supply and demand usually works in tandem across all categories, there is now a divergence which works to the advantage of buyers.

Nor is the situation likely to change in the short term, he believes in that the supply of cluster and sectional title units is likely to remain in surplus for the immediate future, despite a lack of plans passed and new building activity.

There is therefore a brief window of opportunity for buyers to acquire such properties, probably at good prices, before supply moves into general equilibrium across the board once more. 

On the other hand as far as freehold properties are concerned, sellers may be over-optimistic about the likelihood of obtaining higher prices later, particularly if they make the mistake of returning to the market in say, six to nine months time, expecting to see a significant increase in the general level of prices.

The joker in the pack on this scenario is what is likely to happen to the market post-World Cup when the euphoria dies down and the country's economy has to re-invent itself.

Then of course there is the ever-present possibility that interest rates may increase again. There are already hints in the media that the current low levels of interest rates may not last much longer as the economy recovers.

Finally of course there is the old property adage that if you sell at a particular stage of the market cycle, you will also be buying into prevailing market levels and that, all things being equal, there is no particular advantage to be had from delay.

*Gerhard Kotzé is CEO of the ERA South Africa property group

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The reality Renting is presently much cheaper than buying and house prices will be falling 60% real in the years to come. I see no need to rush to buy. I suspect that all those holding back will be rushing for the exits when they realise that their price increases . .more are not going to happen. Over at Capetownbubble.blogspot.com a Durbanville resident has tracked a few recent sales - the pattern for sales and offers were 35% lower than the estate agents original price and 7 % lower prices than 3 years ago. A very small sample, I agree, only 3 houses, but an indication that the crash is still quietly underway. . .less by CJ Says on March 11 2010, 08:44 Find this comment inappropriate? Report it

Shortage?? What rubbish Once again - Realesteteweb sets the standard for junk reportage. There is a vast stock of properties for sale - many agents no longer put boards up as it makes the whole area less attractive. Just take a look at Camp Bay, once invested . .more with thousands of agents. Now half are out of business. . .less by Mike R on March 11 2010, 09:26 Find this comment inappropriate? Report it

Not sure @CJ I ain't mocking you, just have been observing the market crab sideways for a while now. CT has the anomaly areas of the city bowl and the atlantic seaboard - asking prices are still what they were 2 years ago and with their still being strong demand, . .more properties are getting snapped up at inflated prices. My question is: How many owners in these areas are at risk of default? The auctions in the premium areas I have been to have been much more realistic in terms of final price, but then in the post-auction negotiation the prices moves up as people perceive the value in offering between market price achieved at the auction and asking price, usually finishing somewhere between the two. Post world-cup is going to be a very interesting place in South Africa. . .less by JDog on March 11 2010, 09:42 Find this comment inappropriate? Report it

Yawn... CJ you still at it are you? When are you going to wake up and realise that the rental market and the property sales market are 2 different things. Its like comparing car prices vs taxi fares. Move it along please, lets hear something new. How about a rental market graph . .more showing the rise of rentals vs inflation since 1972 ? What I can tell from my experience as a current buyer, is that picking up bargains is becoming a lot more difficult and we have had to shift our marketing strategy to stay ahead of the game. It amazes me that these so called "couch experts" seem to think that they will just sit and wait and then, when they think the time is right they will have the pick and choice of property vs people like myself who are in all the agents little black books, spend big money on marketing to distressed sellers, work with the attorneys and banks yet we are finding picking up bargains is not as easy as it was before...? . .less by Brennan on March 11 2010, 09:47 Find this comment inappropriate? Report it

Rising Prices the REALITY Nothings changed.......The sad reality for people who ca'nt afford to buy real estate is that prices are rising fast...forever excluding them from participating in the growth in the economy...and subjecting them the vagaries of inflation...the rich . .more (landlords) get richer and the poor (rental serfs) get poorer....its been like that for centuries . .less by CJs Landlord on March 11 2010, 09:52 Find this comment inappropriate? Report it

@CJ My bond repayment in R2k less that the rent would be on a similar house. Just saying. by GL on March 11 2010, 10:07 Find this comment inappropriate? Report it

@ cj Says Reality is that renting will always be cheaper than buying, keep renting sucker!!! just pay on time and look after your landlords asset by dfb on March 11 2010, 10:13 Find this comment inappropriate? Report it

Well CJ You will be right when the cycle is down and wrong when the cycle is up. Doen't really matter where the market is when you buying your home. Only matters when you in it for profit. I would rather rent from the bank, coz in essence that is what . .more you do when you get a bond. But look at rental increases and see whether your 5% escalation in rent compars with bond payments. Long term is it safer to save up a huge deposit then buy your self a roof over your head. . .less by Mthoko on March 11 2010, 10:31 Find this comment inappropriate? Report it

Political Enivironment With turmoil in the SA Political environment there is no clear direction to the growth and leadership of this country. The Malem'A** and Zum'A** bring a cloud of uncertainty to the future. Once you factor this into your decision to purchase property, I . .more think you will definitely want to wait.....property prices are going South. In the short term renting would be a much better option.... and if Malem'A** does what he says he is going to do in his recent statements about the boer .... you can happily pack your bags and go to the nearest airport without having to worry about selling your property. . .less by Marky on March 11 2010, 10:41 Find this comment inappropriate? Report it

STOP AND THINK RATIONALLY ABOUT CJ'S COMMENTS Consider this: Let's say you know how to make mega bucks and other people don't. Will you share your information contineously and free of charge with the rest of the world, or will you keep quit like a mouse and keep it to yourself? . .more I wonder. The fact that CJ keeps on "keeping on" tells me that he is desperately trying to convince himself by trying to convince the world. I am sure that his excuse will be that he is merely educating the stupid masses or something to that effect. Ok CJ. You are right. Everybody else is wrong. You have all the answers. We, on the other hand, know nothing. We salute you most learned one. You may rest know. . .less by JP on March 11 2010, 11:34 Find this comment inappropriate? Report it

Shortage of houses????? Hehehehe, Gerhard just take a drive down your road by ea on March 11 2010, 12:29 Find this comment inappropriate? Report it

cj says is actually a property mogul He just wants all us landlords to panic on his "advice" so that he can snap up more properties for his portfolio. - youre not fooling me "Cj says" by dfb on March 11 2010, 12:38 Find this comment inappropriate? Report it

CJ's right... and has been for awhile. Property is going south after the WC. Everyone I know who has a spec prop is holding out for the WC. by and Zen... on March 11 2010, 14:58 Find this comment inappropriate? Report it

Out of work, can't get a loan and need a house... Properties in elite areas are moving back to pe "pop" levels. Secondary areas seem to be under ongoing pressure. This is probably due to the bond qualifiction requirements. Given that there is no guarantee that you will be granted a bond if . .more you sell and wish to buy elsewhere, I am not surprised that sellers are holding on to their valuable credit lines. Since houses are selling way below replacement and people still can't afford them; we are probably at the beginning of a sustained rental bull market. This will in turn set the scene for higher property proces down the line. . .less by THRESHOLD on March 11 2010, 17:52 Find this comment inappropriate? Report it

Hehehehe! Sunday open house at a Twane skuldbult area I asked the agent if the market would die down after SWC? Answer: Nah, is dead now, half of RSA population not credit worthy. So, when you buy it, you own it for life of building. by RandomNumberZero on March 11 2010, 20:29 Find this comment inappropriate? Report it

@C.J. says Gotta agree with this bit of C.J.'s wisdom , when you say "Renting is presently much cheaper than buying" you are right, when I say "Renting is ALWAYS much cheaper than buying" Im right too if we take a short term 1-4 year view. The way this works . .more is my folks bought a house in Blairgowrie in 1972 for R18 000. When they bought it it would have been far cheaper to have rented the house. Today they get R 7600 in rent for it whereas if someone bought it from them the bond would probably be in the region of R10 000. So its still cheaper to rent rather than buy (the fly in the ointment here is at the present rent the original "more expensive to buy than rent" bond would be paid off with 2.36 months rent) And that is the way the property game works C.J., 60% drop in prices? Naaah your dreaming/wishing (this would make owning almost 50% cheaper than renting at current rentals and it just aint going to happen!) See real life example above bond (less 60%) = R4000, rent = R7600.......something wrong with the logic here I think. perhaps you can explain it with a graph? . .less by andrewa on March 11 2010, 22:50 Find this comment inappropriate? Report it

renters are like gypseys and should be crushed renters only think about tomorrow they have no long term plans, they just drift. You landlords make long term plans and would make good socialists as we like making plans. by stalin on March 12 2010, 08:22 Find this comment inappropriate? Report it

@andrewa Adjust your folks 18000 for inflation and see where you come out. then work out what they actually paid the bank and work out what that would be today. you think they have made money on their house? all they did was have forced savings by bbflames on March 12 2010, 09:55 Find this comment inappropriate? Report it

LOL Good to stir up the hornets nest every now and then. Just telling you what's happening in Durbanville - don't kill the messenger. A little tip for residential renters - negotiate. You are in a strong position. In the higher rental . .more market 33% of tenants are behind on their rent and 20% have simple stopped paying. On my office I have a 1% increase a year for the next 2 years. For my home I had no increase for 2 years. Was a bit miffed that a 10% increase was now wanted. But in fairness, the landlord recently spent a months rent on maintenance. Even so I negotiated. Got the increase down to just over 3% this year and the same next year. A total of a 7% increase in rent over 4 years - I can live with that. Kind of stuffs up the Buy to leters cash flow charts, but what the heck. I see the couple in the UK who had 900 homes are bailing out, saying buy to let is over. They almost got wiped out but were saved because interest rates were reduced to half a percent. If they go back up to 3.5% they hit negative cash flow. If house prices fall 15% more they hit negative equity. They are OK for the moment but I would say it doesn't look good for them. No wonder they are bailing. . .less by CJ Says on March 12 2010, 12:02 Find this comment inappropriate? Report it

@andrewa That's precisely how it works. Renting is ALWAYS cheaper than buying, and always will be. @bbflames; precisely. Forced savings. Nice thing is it all works out hubbly-bubbly as father time moves on. Bonds go down, rents go up, and after 20 years . .more you have an asset worth a few bar. What have you got after 20 years of renting? Maybe Cj Says can fill you in on that small detail. With a chart, of course. . .less by Randlord on March 15 2010, 18:13 Find this comment inappropriate? Report it

Well, Randlord I pay a third of what Mr Buyer pays so that gives me a fair bit of extra dosh. I can choose to invest that, plough it into a business or spend it on wild women ... all good options that are far better than handing it over to the bank as interest. by Cj Says on March 15 2010, 19:24 Find this comment inappropriate? Report it

Dear C.J. NOT if you rent from me you dont.................with interest rates as they are at the moment you would be paying 70% of what Mr Buyer would, any other landlords care to comment? (R7 500 per month for a R1 000 000 property, less rates but plus lights . .more water sewerage and rubbish disposal)............see Trafalgars etc average cap rates for details in Johannesburg ;D . .less by andrewa on March 16 2010, 21:50 Find this comment inappropriate? Report it

Renting VS Buying Look at a five year period people .... If you rent you have nothing ... If you buy you have cash to invest into your next property you buy. paying a bond does not require discipline because you are legally binded to pay it, but . .more renting and investing your excess cash requires you to be extremely disciplines and intelligent enough to understand investments which lets all agree, a vast amount of the population in SA is not. So ... buying is better for the larger part of the population ...and for those who can afford it. Most people will argue without even having the credibality to be able to afford a property that pays back high returns ... . .less by Victor on May 10 2010, 20:55 Find this comment inappropriate? Report it

Secunda I live in secunda and I know someone who is paying a bond on a house of R7000.00 a month and is asking R8500.00 to rent her place. Funny enough she is getting what she wants .. by Victor on May 10 2010, 20:57 Find this comment inappropriate? Report it

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