Recessionary Strategies - State of the market
As you know the recession is biting even deeper and strategies of 3 months ago are no longer relevant. The mere fact that the banks are requiring 25 % equity indicates strongly that they have factored that the market will drop another 25% on top of what the market has already come down i.e. plus, minus 15%.
To my mind that means that the market will come down 40% from the highs of last year which is hugely significant. Take into account that today a man who wants to purchase a R2 million property which is the average selling price in our company will have to earn in excess of R87 000 gross per month in order to qualify and if the market drops by 25% that same person will need to earn R65200 gross which is also no picnic.
There are 60% less buyers in the market than recorded at the same time last year. Attendances at showhouses are generally poor (Echoes of Sharpeville) and only when the Agent has convinced the seller to use the most aggressive parameters i.e. 40% below asking price, does the showhouse receive 10 couples or more leading to a subsequent sale. All the guns are loaded against us in this market and it will take your own courage and perspecuity in order to survive.
This morning I told a member of my own family to drop his price by 25% in order to get a quick sale and I would advise you to tell your clients the same. It's a question of being truthful to your clients to save them severe pain by procrastinating and not accepting the offer today. Today's low offer is tomorrow's miracle price. This market is not going to recover anytime soon.
The tough must get going!
Signed
LEW GEFFEN
Lew must have seen what is happening in the US with massive inventories building up and has decided to take preemptive action.
6 comments:
C.T., I was in Grahamstown 2 weeks ago and the word was ...
"It's different here"
I was the only attendee at 1 show house ... a non descript cluster in an ugly location, asking R 9000
per sqm. Near slums in the gray part of town asking a million, everywhere apart from Rhodes looking under siege, electrfied fences and razor wire just everywhere.
"But we have the students ..."
Ha! I never even thought about the market in Grahamstown. If you're planning on buying a place to rent to students you better assume your maintenance bill is going to be three times higher than usual.
http://www.property24.com/property24/news/FullArticle.aspx?articleid=7678
sorry I meant:
http://www.property24.com/
property24/news/FullArticle.aspx?
articleid=7678
I agree with Geffen, its murder out there. Also his market is the higher end properties, these guys are struggling R1.5 to R5 mil. I suspect very shortly you will be able to pick up a high end home for real value. This market is struggling. However the REAL top end of the market carries on.. these guys are not effected by interest rates.
C.T.,
You must be working overtime at your real job this week ... you've missed the follow up to this story ... son Saul Geffen marginalizing his own father's comments! And some poor sap, a PR flack named Levine being shown the door for having released the memo to the press.
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