Things are very different for agents, buyers, sellers after a shocking year.
This year will go down as one of the worst in many for South Africa’s shrinking army of estate agents and the panicky sellers who have enlisted them with offloading their bricks-and-mortar.
Aside from the fall-out of the international credit crises, the nation has had its own series of dramas to deal with – starting from when the lights went out in January, thanks to Eskom incompetence, to this month’s political turmoil.
Amid the changes, the news is not all bad:
The fittest will survive. When it comes to estate agents, order-takers can’t cope, so they are leaving the market. That means buyers and sellers should be left with a more competent group of estate agents, people who work harder for their money. As Dr Piet Botha, chairman of Nationlink, said this week: “When the market was hot and homes were selling before they even reached the market, you didn’t need to worry about getting the best agent – just the cheapest.”
Now you need a top salesperson, he says. “Interview agents rigorously and insist that they present you with proof of their recent successes and a well-conceived marketing plan that goes way beyond the usual internet listing, one or two show days and a tiny weekly advert,” advises Botha.
The survivors will make more money. A smaller pool of estate agents should, theoretically, mean more money because there will be more stock shared among fewer players. What’s more, some of the smarter operators are suggesting some nifty ways for sellers to incentivise estate agents to sell their homes first. Here’s one of Nationlink’s: “You may want to consider offering the agent a bonus if the home is sold within 30 days or at your asking price.”
Financially-savvy investors will live through the tough times. Interest rates have hammered owners and show no sign of easing yet. That means it’s a good idea for property owners to tighten their belts and have cash available for unexpected emergencies. Internationally, it’s becoming cool to be frugal as consumers in many countries grapple with tougher economic times. We have entered an era where it is a case of “goodbye bling, hello thrift”. The “buy now, pay later” culture is over. “That means no more conspicuous consumption, at least for a year or two. Instead we have conspicuous carefulness,” says personal finance advice site Fool.co.uk. Expect people to start bragging about bargains rather than big brands.
Renting, rather than buying, is increasingly attractive. It’s no longer “in” to be a property buyer. Anne Porter Knight Frank managing director Lanice Steward says her agents “come across young, upwardly mobile people who tell us that they prefer to rent at discount rates in a good area rather than compromise with a less attractive home in a not-so-fashionable suburb.”
“This philosophy, in my view, is short-sighted. It is adopted, in most cases, by yuppies who earn good salaries, drive expensive cars and believe they have what it takes to ‘make it’ in today’s commercial world – but the day will come when they rue their decision.
“They will find themselves without a home of their own and condemned to annual rent increases in perpetuity.” Those who skimp and save to get together a deposit, buy a home and then work on it will find that every five to seven years they can upgrade at very little extra cost, predicts Steward.
Speculators look for new hobbies. Also exiting the market have been many speculators who suddenly thought residential property was a get-rich-quick-scheme. Fingers burnt, they are unlikely to return in a hurry.
With property losing its popularity as an investment choice among the masses, investors presumably stand to make more money in the long run. That’s, of course, assuming less stock will be built.
Less residential, more commercial. Developers are switching from residential to commercial as banks pull the plug on funding new residential projects. La Residence in Sandton, where Nedbank’s move irritated estate agents who had already attracted well-heeled buyers, is a case in point. However, FNB also recently revealed that it was withdrawing finance for buyers in new developments. That, in the long run, should be good for residential property prices – rental and on disposal. Supply in certain areas has exceeded demand.
Looking beyond this annus horribilis: the construction sector is under pressure but big developments are going ahead. That suggests that many with money to spend still see good things for the country and their investments.
International investors are making announcements about big property projects on an almost weekly basis. And local hoteliers, like Sun International, report healthy block bookings for 2010 and say they are probably more excited about 2009 when other sporting events – like the Fifa Confederations Cup – will bring additional visitors.
With a new President who quickly moved this week to reassure the nation that economic growth and hosting a successful 2010 are priorities, things are finally looking up for those who are betting on a bright future for South Africa.