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Bugle Sales Talk Editorial

Bugle Sales Talk Editorial

Author: Andreas Wassenaar
Date: 2016-01-22
The activity level by price segment within the property market is always of interest to property professionals and the recently published estate agent survey report by FNB provides excellent insight into how the different segments of the market behave. The activity levels have been dominated by the lower income brackets while the high net worth, upper income and even now the middle income brackets have all experienced a notable drop off in activity levels.

When it comes to estate agents citing stock constraints within a market segment, it is clear that these constraints are most noticeable in the lower income segment with 22.3% of the agents surveyed reporting stock constraints in that segment, against the only 16.1% of agents in the high net worth market segments. The one measure of price realism that I like to follow is the average time a property remains on the market before a sale is achieved. The lower income segment saw the average time a home remains on the market decline even further in the 4th quarter of 2015 to a lowly 8 weeks. The high net worth segment in comparison recorded an average time of 19 weeks and 2 days. The upper income market segment however was holding up well with an average time on the market of 11,9 weeks. The middle income segment was not far behind with an average time of 9,8 weeks. The flip side of the price realism measure is the percentage of sellers that have to drop their asking price in order to achieve a sale. The high net worth segment records the highest measure here with 89,8% of sellers having to drop the asking price in order to sell. The upper income segment sellers had to drop their prices 87,3% of the time and the middle income segment is close behind at 85%. The lower income market segment sellers had to drop their prices 81.8% of the time.

An interesting change has occurred in the measurement of the percentage of sellers selling in order to upgrade. Across all the segments the trend has peaked and the measurements seem to be moving gradually lower. This means that fewer people will be selling in order to upgrade and the seller's in the higher priced market segments will have less of a boost from buyers migrating out of and upwards from the lower segments. The sellers selling in order to downscale due to a life stage change make up as much as 25% of all sellers across the board, and according to market segment as many as 30% of all sellers in the high net worth bracket sell in order to downscale due to life stage. They no longer want or need a large and costly home due to children having left home, or because they are ageing and running a large home becomes a costly hassle. In a community like Zimbali that is now 20 years old, this change of the guard is evident with younger buyers replacing the ageing owners that are moving from their relatively large homes to smaller more manageable properties.

Thankfully the down scaling due to financial pressure measurement remains similar across all the segments, being between 12% and 15% and averaging 14%. This measurement is well off the peak experienced at the height of the 2009 recession and there is no indication currently that we are heading back towards those days.

Emigration as a reason for selling remains relatively low at 4,4% and as expected is highest in the high net worth segment and lowest in the lower income segment.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.

Andreas Wassenaar

Principal - Seeff Dolphin Coast

Cell: 082 837 9094

andreasw@seeff.com