Factors To Consider If You’re Thinking Of Selling
There are many factors to consider when it comes to deciding whether to sell your house or hold onto it. These include current real estate market conditions, the costs associated with selling a property, personal financial circumstances, and the physical appeal of the property to prospective buyers, says Paul Stevens, CEO of Just Property.
Unpacking Market Trends
According to the FNB House Price Index, elevated living costs and higher borrowing and debt-servicing costs continue to decrease affordability, particularly among the lower-income groups. The annual growth of the Index fell in May, averaging 1.9% year-on-year, down from 2.1% in April. This stagnation suggests a gradual decrease in the market's buoyancy, with property valuers also noting an increased supply of properties for sale.
This trend arises from homeowners seeking less expensive alternatives due to the rising strain on affordability. This is shown in FNB’s Reasons for Selling, where 24.1% of sellers are downscaling due to financial pressure, down from 17% of sales volumes in 1Q23, higher than the historical average of 18% since 4Q07. Other reasons include downscaling with lifestage (21.1%) and relocating ( 11.6%). Lower-income groups are feeling the strain even further, with 32% of sales being due to financial pressure.
Additional to the increased supply of properties for sale, their time-on-market has extended to 12 weeks and one day (85 days), compared to 75 days in 1Q23.
According to FNB, the rate of mortgage extensions is “moderating steadily”, showing growth of 6.6% year-on-year in March, down from 6.9% in February. This rate still outpaces the post-Global Financial Crisis (GFC) average growth of 3.9%.
Considering Personal Factors
While understanding the market's temperature is crucial, personal circumstances are an equally significant consideration. Stevens recommends asking some key questions: Do you need a larger house? Will holding onto the property cause financial strain? Have you received an offer above the market value of your house? Or, have you found a “bargain” property that necessitates selling your current home to seize the opportunity?
Stevens further suggests assessing the financial implications of selling, such as agent commissions and costs associated with securing finance for any subsequent property purchase. It's important to realise that changes in income or financial standing may influence whether you qualify for the same bond amount as when you purchased the property.
Preparing the Property for Sale
If your decision sways towards selling, certain steps can be taken to maximise the appeal of your property without significantly inflating your asking price. A seemingly minor aesthetic update, like a fresh coat of paint or a well-maintained garden, can dramatically enhance a property’s appeal.
Fixing minor issues such as broken door handles and dripping taps or replacing worn and dated fittings can also go a long way in increasing the property's desirability. Even seemingly minor aspects, such as sparkling kitchens and bathrooms and a lack of clutter in living rooms and bedrooms, can significantly shape a potential buyer's perception.
One way to amplify these aspects is by investing in professional property photography. High-quality, attractive photos can significantly enhance a property's online presence, casting it in the best possible light to potential buyers. Home staging, the art of making a house look as appealing as possible without undergoing significant renovations, is another option to consider.
Balancing Upgrades and Cost
While making upgrades can increase a property's value, it's important to strike a balance. Additions like built-in cupboards, solar panels or enhanced security measures can substantially add to the value of a property, but they should be aligned with the ceiling value of the property and the character of the neighbourhood. For example, installing expensive countertops and appliances may add little value to a studio apartment in a student-oriented building.
The decision to sell your house or hold onto it in anticipation of a better price should be based on a thorough understanding of market trends, personal circumstances, and the potential value that can be derived from the property, says Stevens.
“It's highly advisable to consult an area expert in order to fully understand your property's current value, and to prepare for the possibility that your property might not sell as quickly as you hope. Remember, today's buyers are well-informed, and overpricing is usually the prime reason a property doesn't sell,” Stevens concludes.