With the feverish bidding of the first quarter cooling, the market appears to be stabilising at a more sustainable level.
Property stock levels are still well above last year, but the sales confirmation rates appear to be steadying, having remained in the mid to high 60% range for the past few weeks.
Falling below the February high of 87%, the confirmation rate shows signs that the market could be easing into what market pundits say is a more typical and healthy state.
Auction Alliance’s 560 auctions over the last three months generated a confirmation rate of 67%. In the same period last year they achieved a 56% clearance from 1382 auctions.
The market was getting ”quite quirky” and, although recently there have been fewer bidders at the top-end residential sector, there were still some big results for commercial properties.
It was rare to have 25 bidders for a large shopping centre, like the one in Durbanville, which ended up selling for R33 million, above a market anticipation of R25 million to R30 million.
You can try to read the tea leaves but it’s just really property specific.
A block of flats in Rosebank, Johannesburg went for R11,5 million, above a price achieved last year of R6 million. Of the eight properties over R25 million that were auctioned in July, five were sold.
The market was ”somewhat fickle”, with some properties selling for above-average prices, while others were going at the bottom of their market range. What makes certain properties more appealing was either being one-of-a-kind, having unique features or a reliable income.
If, however, there are two or three similar properties for sale at the same time, it’s very probable that buyer competition will be reduced.
We have reached the same situation as in the late 1990’s where good property is good and attracting strong demand and properties in marginal areas, over capitalised, or attracting no income, are poor. There is now a clear distinction between the two categories. Buyers are looking for the right type of property and when they find it, they will pay high prices.