South Africa’s property market has been taking undeniable strain as challenging economic conditions continue to erode buyer activity and affordability. According to Roger Lotz, franchisee for Rawson Properties Helderberg, the effects can be clearly seen in decreasing unit sales, and stagnating – or even declining – property values.
“Mortgage volumes are down to below pre-pandemic levels, despite approval statistics hovering around 80% from lenders,” he says. “This shows just how far demand has fallen, partly because of higher-than-expected interest rates, but also because of ongoing challenges like loadshedding and escalating costs of living.”
While all signs point towards interest rates stabilising before a slow decline towards the end of 2024, it’s anyone’s guess when South Africa’s other economic woes will resolve. As a result, Lotz says demand and therefore property prices are unlikely to pick up significantly in the short term – apart from a small potential boost over the traditionally busy summer season.
“This is obviously not a great situation for sellers, who have every right to be disappointed at the turn in market conditions,” says Lotz. “What concerns me even more, however, is the prevalence of agents taking advantage of this disappointment by overvaluing properties in order to secure mandates from sellers who don’t know any better.”
Lotz says there is growing data and evidence of this overvaluation trend.
“These aren’t just mistakes from inexperienced agents,” he adds. “Principal agents sign off on these figures – and you don’t get to be a principal agent without a very solid understanding of pricing trends and the consequences of unrealistic pricing.”
For sellers, those consequences typically include longer times on market, and lower eventual sales prices due to the stigma attached to overpriced and slow-moving listings.
“These aren’t risks sellers can afford to take in the current market,” says Lotz, “and an ethical agent would never advise them otherwise. To do so for personal gain – to secure a mandate – is simply unconscionable, and gives our industry, which is already very tough and highly scrutinised, a dishonest and untrustworthy name.”
While honest conversations about pricing aren’t easy under current circumstances, Lotz says they go a long way towards building trust between sellers and their agents. This, in turn, enables more confident decision-making when difficult choices need to be made.
“In most cases, a seller’s home is their biggest financial asset,” says Lotz. “There’s no room to play around with that. They deserve truthful guidance to help them optimise that investment’s performance as best as possible in the current conditions.”
As such, Lotz says it’s a real estate agent’s duty to broach those hard topics, and to substantiate their recommendations with genuine and up-to-date evidence to help sellers understand the market they’re entering into.
“Any agent who can’t or won’t do that is not an agent you want on your team,” he concludes. “Not in the best of times, and certainly not right now.”
