| Tanya Farber June 10 2008 at 12:25PM | |
While some agents insist homeowners should not be swept up in the panic, others are frank that the property market is in serious trouble.
On Monday, the Cape Argus received an e-mail marked "urgent" from ooba, formerly Mortgage SA, which charged that "recent alarmist forecasts by property market commentators" had caused homeowners "undue concern".
Homeowners, they urged, should not be swept up in the "scaremongering" because the current weakness was only a "short-term situation".
The fracas started with a letter from Lew Geffen, head of Sotheby's International Realty South Africa, to his franchise owners in which he predicted the pending crash at a 40 percent decrease, adding that there were 60 percent fewer buyers in the market now than at the same time last year.
While other industry players have lashed back rejecting his predictions, Maurice Levin, PR manager for Sotheby's, has defended Geffen's claims.
"Lew is not afraid to pronounce that the industry is in a pickle. Many agency bosses talk it up because their livelihood depends on it," he said.
Lee Gautschi, owner of Lee Gautschi Properties, said she was "honestly" not experiencing panic-selling in her market.
She did, however, agree that there was a range of negative factors which had dampened the market.
These included the National Credit Act; hikes in interest rates; and "worldwide political trends of recession" that have had an impact on the local market, resulting in lower prices.
Media reports have also pointed to emigration spurred on by high crime rates; xeno-phobic attacks; and other factors such as power cuts, political dissent and corruption in the ANC.
The FNB Property Barometer has indicated that emigration accounts for 12 percent of the total number of homeowners putting their homes on the market, while 21 percent is made up of sellers downsizing due to financial pressure.
The chief executive officer of the Pam Golding Property Group, Andrew Golding, also tried to quell the myths of a property crash.
"The reality is not as gloomy as portrayed in some of the commentary," he said, adding that the residential property market, particularly the middle-class sector, was "characterised by an under-supply and over-demand".
But Marsha Haupt, sales director at Betterbond, had an opposite view.
"At this point there is more supply than demand," she said.
And, according to a franchise agent who did not want to be named, "if (Reserve Bank governor) Tito Mboweni does increase the interest rate by another 2 percent, there will most certainly be panic selling in seven to nine months, whether that trend has begun or not".
He said many agents were also evaluating properties beyond their scope so that they could secure a sole mandate for themselves. However, once the seller had signed, the price began to fall, with fewer and fewer people at show days.
This echoes what Geffen said in his letter. He said attendances at show houses were generally poor, and that "only when the agent has convinced the seller to use the most aggressive parameters, namely 40 percent below asking price, does the showhouse receive 10 couples or more leading to a subsequent sale".
Geffen went further: "All the guns are loaded against us in this market and it will take your own courage and perspicuity in order to survive."
This article was originally published on page 5 of Cape Argus on June 10, 2008
If you would like to buy or sell property in Cape Town's Overberg region, please visit www.realty1capeagulhas.com.
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