Port Elizabeth Property
Stop Living in the Past
Activity in Port Elizabeth’s property market is rising on the back of renewed commitment by buyers and sellers to leave the past behind.
That’s according to Ian Olivier, principal of one of the city’s leading real estate agencies, Ian Olivier Properties.
Commenting on the uptick in buying action in recent weeks, Olivier says the trend is being driven by people who are determined to get on with their lives. While understandably cautious and price-wary in the wake of the repressed economy, they are nevertheless embracing home ownership as a tried-and-trusted means of long-term wealth creation.
“Show me one person who hasn’t made money on a property bought in a reasonable area seven to eight years ago (widely accepted as the average length of a property cycle), at a market-related price and who hasn’t over-capitalised,” says Olivier. “The problem is that too many sellers are still living in the early-2000s. They won’t accept that the boom is long over and that the value gains made during those years cannot be applied to current market.”
Sadly, he notes, sellers who have priced their homes in accordance with the growth rate of the halcyon years, are doomed to spend months, if not, years on the market until they either drop their prices significantly or withdraw their properties. “In 2004, ABSA recorded unprecedented average house price growth of more than 32 percent. This was followed by a diminishing growth pattern that hit a low of -0.32 percent in 2009. In 2010, the price decline changed direction, as happens in property cycles, and albeit it nominal, average price growth is in positive territory today. This is good news for those who know that it’s when you buy property that you make your money, not when you sell,” says Olivier. “It’s not, however, what the majority of sellers want to hear, hence the proliferation of unrealistically priced houses at the moment.”
Right-priced properties, particularly those up to R1 million, are moving quickly, he says further. His office has sold three homes within two weeks of listing, including a quaint cottage with secure, off-road parking in Richmond Hill, an immaculate family home in Walmer Heights and a solid “fixer-upper” in Newton Park. “All offered better value for money than the competition,” he explains. While big-ticket sales are rarer, he has sold two properties for well over R2 million in recent weeks. Again, he attributes these to correct pricing.
Listings which have lingered unsold for months are also moving – usually as a result of sellers dropping their prices substantially. Olivier’s most recent sale of this nature is a house in prime Walmer which the seller priced at R2, 250 million at the beginning of the year and which has just sold for R1, 650m.
When a major boom is followed by a recession, people tend to focus on the present picture, which is one of slow price growth. Rather they should be looking at the future picture, when their patience will be rewarded with strong, long-term capital growth
And who better to give advice than one of the world’s wealthiest investors, Warren Buffett? In his words: “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”
Written for Ian Olivier Properties by Ingrid Olivier Communications