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What can we expect by the end of 2019 for Plett's property market.

Category Property Sales in Plettenberg Bay

Plett first quarter property sales - down 27,47% on 2018 (by volume) - what can we expect by the end of 2019?

Looking at Plettenberg Bay sales over the past two years makes for interesting reading, says Rob Mckee.

He ponders whether history needs to be referred to in order to predict future trends for 2019: 

2017

2018

Variance %

Variance units

Total sales

642

577

-10%

- 65

R0m-R2m

455

374

-18%

- 81

R2m- R 5 m

136

153

+13%

+17

R5 m- R 10m

45

34

-24%

-11

R10m >

16

16

No change

No change

With only one sector showing a marginal level of positive activity (R 2m - R 5m), is this sector poised for a repeat performance in 2019 or can we expect other sectors to claim the top spot?

With no airline servicing Plett we can forget about enticing active company execs to our neck of the woods and with foreigners only making up fractional percentage of sales, this sector is also not poised for growth - would you blame overseas investors for not flocking to our shores in these times?  

Despite the predictable positive hype often pronounced by some industry big wigs, statistics tell the full story- so what can we expect for 2019 in Plett?

Having just extracted sales figures for the first quarter of 2019 and seen a drop of 27,47% in sales (by volume) - all does not bode well if this decline persists for the remainder of 2019.

My caution to sellers. Be very realistic when pricing your property, if you genuinely intend selling.  

Let's look at the price categories where sales took place (2017/8).

Clearly, the R 0 m - R 5m sector is where the action was (and more particularly the R 0m - R 2m band) where over 90% of last years' sales took place and a similar pattern in 2017 (92%).        

So, where will buyers be coming from in 2019?

I predict the volume of foreign buyers falling, the percentages from the other provinces remaining static, and only a marginal increase from Gauteng - and then only if bond rates drop significantly and they are able to offload their homes in order to afford to retire to Plett.

An interesting sector worthy of a closer look would be local Plett property owners.

Are they in fact sustaining the local market by selling and buying locally to downscale?  If this is in fact the trend, now would be the time for developers to start developing top- class affordable 60 plus lifestyle projects with all the "bells & whistles" - on site medical facilities etc. - think Val de Vie near Franschhoek?

Two other factors need to be considered both of which could impact on sales volumes and prices achieved:

Which to choose - "the agency or the agent" and "sole mandate or multi-list" Clearly, these are two "hot topics".

According to the EAAB at a recent roadshow, it looks as if legislative amendments will finally see draconian action being taken against the "hoards" of companies masquerading as estate agencies and one can assume that these so-called agencies are heavily, if not totally populated by the current 22,000 registered interns.

As a professional property educator, I see their role (interns), as being vital to the continued growth of the industry - but think of the havoc they could cause by overpricing properties simply to gather stock to sell - if not carefully guided by their mentors - as legislative requirements insist?

Then of course, the endless debate arises as to whether a sole mandate trumps having as many agencies as possible marketing the property.

My experience of all the years is clearly one where a sole mandate in the hands of a local experienced agent (with an established track record), is the obvious choice - since the property will not be marketed at different prices by different agencies and generally the price will be carefully considered based on a solid comparative market analysis.

Any agent who knowingly overprices a property does so in contravention of the EAAB code of conduct and faces sanction. This often occurs simply to secure a listing and it distorts the market.

It is also worth remembering that should an agent fail to deliver on promises made in their presented marketing plan, the seller can simply give them 20 business days' notice and cancel the mandate (natural persons selling and a reasonable cost to cover expenses incurred applies.)

The case for a sole mandate is even more justifiable based on the fact that in a static / declining market there are not many agencies that would refuse to split commission with another agency should they be in a position to introduce a well- qualified purchaser, so the seller wins both ways - he gets the property listed at a market related price and does not suffer the risk of "double commission claims" and not having a single agent taking total responsibility for the property.

I look forward to seeing whether the above predictions play out at the end of 2019!

Rob Mckee is a professional real estate educator with over 33 years of experience in the property industry and is semi- retired in Plettenberg Bay   

(Sources Lightstone and other local data)

    

Author: Rob Mckee

Submitted 07 Aug 19 / Views 268