Home sellers warned: Tread carefully around cautious buyers
Interest rates have dropped by a total of 1,5 percentage points over the past year and salaries have started to rise faster than inflation, but property sellers should resist the urge to raise their asking prices now in the belief that buyers will be willing - or able - to pay more. They should rather focus on the fact that demand is rising, and the opportunity this creates for them to sell quickly and move on to their own new homes.
That’s the word from Stephen Whitcombe, MD of leading Johannesburg property group FIRZT Realty, who says that most prospective buyers are still extremely price sensitive at this stage, primarily because they want to be sure they can comfortably afford the monthly bond repayments on a new home in addition to their other financial commitments.
“The past few years have taught consumers the dangers of over-extending themselves when interest rates are low and not leaving themselves enough leeway to cope with rapid rate hikes that create a heavy debt load and make it very difficult even to afford necessities such as food, transport, utilities, healthcare and education.
“Indeed, many households have experienced really tough times due to the prime interest rate having risen by 4,75 percentage points between November 2021 and May 2023 and staying at 11,75% until July 2024. They still have high levels of debt and even now are spending an average of 70% of their net income on debt repayments, according to the latest DebtBusters report.”
Meanwhile, he notes, the new Cost of Living report recently published by the Competition Commission reveals the huge increases in the cost of basic goods and services that households also had to face between 2020 and the end of 2024. “General inflation over that period was bad enough at 28%, but the cost of electricity went up 68%, while water prices rose by 50%. Primary healthcare costs rose by 33%, transport costs by around 35% and education costs by between 37% (primary) and 42% (secondary).
“Food costs also soared, but salaries only increased by about 25%, with the result that consumers were literally getting poorer by the year.”
This situation has fortunately begun to turn around, says Whitcombe, with the average net salary increasing by 4,3% in the first nine months of 2025 compared to the same period of 2024, while the average inflation rate for 2025 is expected to be between 3,8% and 4,0%.
“Consumers are slowly starting to gain ground and to feel somewhat more in control of their finances. This is reflected in the 2025 Sanlam Financial Confidence Index, which shows a rise from 47% to 53% in the past 12 months.”
It is also reflected, he notes, in the latest Absa Homeowner Sentiment Index, which covers the third quarter of this year. This shows that overall confidence in the real estate market is at 85% - and that 75% of potential buyers believe that now is a good time to buy property, compared to only 67% who believed that two years ago. Among those who are currently renting, the percentage that would like to buy and become homeowners has risen from 69% to 75% over the past 24 months. And more good news for both private sellers and developers is that positive market sentiment among buy-to-let investors now stands at 84%, the second-highest level since 2015.
“In short, demand is rising and there are definitely many more prospective buyers in the market than there were at the start of this year. But many are still very cautious about making long-term financial commitments, and there is still a large supply of homes for them to choose from.
“Consequently, our advice to home sellers as real estate professionals is to price conservatively and always try to offer the best value for money in their area. This will attract maximum buyer attention and substantially increase the chance of a swift and successful sale.”
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