Most sellers forced to cut house prices

Johannesburg - About 80% of residential property sellers are having to cut their asking prices by between 9% and 12% to make a sale, said Lew Geffen, chairperson of Sotheby's International Realty in SA on Friday.

He said a combination of factors, together with the lack of credit availability, have caused a distinct decline in market activity over the past two months.

"These factors include the extended school holiday period in April and pre-election apprehension, but the most significant is the new mood of debt aversion among potential buyers," he said.

"With household debt levels still high, and fuel, electricity and food costs on the rise, many consumers are extremely wary of taking on any new debt, even when they can qualify for home loans. And this situation is being exacerbated by the prospect of interest rate increases as soon as the end of this year."

He said sellers need to accept that the 2010 Fifa World Cup euphoria and the interest rate cuts late last year, which bolstered the market to the first quarter of this year, have run their course.

"We are now feeling the lingering effects of the recession without any cushion, and this is not the time to stubbornly defend an unrealistic asking price if you need to sell your property."

Most sellers are having to cut their asking prices, and listing times have lengthened again from 5 months at the start of the year to an average of 6.5 months - close to the average of 8 months during the recession in 2009.

"There is, quite frankly, very little to motivate homebuyers at the moment except the prospect of acquiring a 'bargain' - a desirable property at a discount price - and homeowners who must sell should be prepared to be flexible.

"To aggravate matters, banks are stickier than ever, and are loath to grant bonds on properties whose prices are inflated in their opinion."