So, how’s the market – this is what Seeff North Coast has to say

In real estate we are asked “So, how’s the market?” at least 2 or 3 times a week and at least once at a weekend braai.

The problem with answering this extremely broad question is that it requires a very broad answer and, in truth, one that would take substantial time to do so.

The quick answer would be something generic like “it’s a buyers’ market” or ‘it’s a sellers’ market” and so on.

The question normally comes from someone who is thinking of buying or an owner wanting to know whether all is well with their investment.

But sometimes, like the most recent question put to me, it was because they had seen a year-on-year report on the market in their area, and were wanting my opinion on it.

The report in question was one that came out from Property24 that showed areas along the KZN coastline with anywhere from a 26% decline in average sold prices to a 33% increase from December 2019 to December 2020.

This report is factually correct but you can see where the confusion lies.

What needs to be interrogated is how these figures are produced, and what formulas are used.

Here lies the potential for skewed numbers.

The formula for average sold prices is quite simple: Total Rand value of properties sold divided by the number of properties sold in a given time frame, and that’s your number.

This covers all types of properties and does not factor in whether there are more or fewer sales than usual at different ends of the market.

Take Simbithi Eco Estate for example.

Stats show a 33% increase in prices in 12 months.

However, I can emphatically say prices did not go up 33% in Simbithi last year, although prices did definitely climb in some sectors.

What did happen in Simbithi was that there was an increase in the sale of higher-priced properties and there were fewer sales of apartments and vacant land.

Plug this into the formula and the result is that an increase in price is reported.

The reality is that the only way to assess the market and price changes is to compare like for like, apple with apples.

Simply put, what is the difference in price of similar types of properties selling for today compared with a year ago.

That’s your true answer.

To add to the confusion it is also not unusual for houses, say, to be increasing in price, apartments to be flat and vacant land to be decreasing all at the same time in the same area!

This is something only your trusted expert agent is going to know as your agent should understand the current nuances between different types of properties, areas and even roads and the reasons why.