Like any free market, property is subject to cyclical highs and lows which can be difficult to predict as a private homeowner. Real estate agents are occasionally attributed with near-magical influence over price ups and downs, but in reality, they have just as much control over which way the market turns as others do.
At the end of the day, agents aren’t the ones choosing what prices to list properties for – it’s the homeowner who makes that final decision. What we can do is make sure our clients – both buyers and sellers – are properly equipped to make that decision well.
To be able to do this effectively, agents constantly stay on top of a multitude of macro- and micro-trends influencing the market. These trends typically fluctuate significantly over time and vary from suburb to suburb and property to property, making it unwise for homeowners to base decisions on clichés like buyers’ and sellers’ markets without deeper insights.
That said, homeowners who would like to get a basic feel for market shifts before chatting to their neighbourhood expert should be keeping an eye out for these three signs.
Time on market
When I list a property, one the first questions I ask the seller is how quickly they’d like to sell because this directly affects where we position their home on the market. As a rule, the fairer the price, the faster the sale. Overpriced homes take far longer to attract offers, and often end up selling below market value because of that.
In terms of trend-spotting, this makes time on market a fairly reliable indicator of an approaching rise or fall in property prices.
If you notice properties lingering longer on the market, it’s reasonable to assume that price growth is slowing, and those properties – which may have been accurately valued a month or two beforehand – are now a little overpriced for the current conditions. Conversely, if properties are flying off the shelves, prices are very likely to start increasing as new listings adjust to the increased buyer appetite.
As of 2018, the average home in South Africa spent 16 weeks on the market – up from 2017’s average of 14 weeks. This indicates a slight oversupply of properties on the market, and suggests slow price growth moving forward.
“Price reduced” tags
Another clear sign of a market contraction is the prevalence of “price reduced” tags. These are a result of sellers adjusting to market conditions that have proven less active or responsive than they were expecting.
This is a good discussion to have with your agent around four to six weeks after launching to the market. They should be able to present you with updated market information, and explain your options when it comes to adjusting your listing price, or accepting the possibility – and associated risk – of a slow sale.
Number of active listings
Supply and demand ratios affect every free market, and property is certainly no exception. The more homes there are available for purchase, the less pressure buyers feel to move quickly and make competitive offers.
It can be difficult to assess how many listings are normal for your area without the help of a professional, unless you’re willing to invest a lot of time in market-watching. If there do seem to be a lot of homes for sale, or a lot of boards on the street poles every Sunday, it’s possible that there’s a local property oversupply and sellers should prepare for slower sales and less exuberant price growth.
While keeping an eye on the aforementioned indicators can be useful for buyers and sellers, it is important to consult a professional before moving forward with any property-related decisions.
You’re never going to get the full picture without the tools, tech and hands-on expertise that a real estate specialist brings to the table. Buyers’ and sellers’ markets come and go, but every market is an agent’s market. Take advantage of our help – our advice is free, so you’ve got nothing to lose – and we’ll put you in the driver’s seat of any market condition.