The residential property market in South Africa remains weak as our economy struggles to come to terms with underperforming SOE’s, growing unemployment and poor business confidence. South Africa has been here before and whilst most are confident that our economy will recover, it’s not helping sellers in the short term.
Property, not unlike most markets, behaves in a rational manner and no matter what your aspirations are as a seller you generally can’t beat the market as it responds to supply and demand and sets prices based on economic realities.
For those seniors needing to sell the family home in order to scale down, liberate capital, or move into a retirement village, this isn’t good news.
Sellers are holding onto the aspirational price for their homes, even though the market is giving them clear evidence that they are overpriced by 10 – 20%. Those who can afford to wait tend to take their homes off the market. There are others who face challenges other than financial ones, needing to move for family, health or other reasons, making the sale of the family home even more stressful.
Here is some advice to help seniors win in the face of a soft property market…
- Manage uncertainty
No-one knows how long the market will take to recover, so if your intention is to wait for a price lift, make sure that the non-financial consequences of your delay do not outweigh the benefits. Your perception of the value of your family home if often driven by emotion, rather than reality, and you could end up far worse off by waiting. Make sure that you are advised by a trustworthy real estate agent.
- Strive for a neutral outcome
If you are planning to sell and buy in the same market you should strive for a neutral outcome. In other words, if you need to accept a 15% discount on your family home you need to match this. as best you can, with a discount on the home you purchase. It is difficult to get this right if you are buying down as the price adjustment of more expensive homes will be greater than the smaller home you are scaling down to. Nevertheless, the possibility of a relatively neutral outcome is possible.
- Consider the Life Right option
Life rights models are an alternative option to having to buy traditionally. To time with the property dip, leading retirement developer, Evergreen has recently introduced a pricing option that allows purchasers to emerge cash neutral. It is one way to win in a depressed property market.
Many purchasers, who do not wish to wait for the soft market to strengthen, are finding Evergreen’s flexible pricing extremely valuable.
Being able to purchase an Evergreen Life right, at a reduction of 10 – 20% of the list price, will enable you to reduce the selling price of your family home by 10 – 20% and remain cash neutral.
This is achieved by offering reduced prices on new Evergreen homes, offset against a reduction in the terminal capital due to your estate when the Life Right terminates.
So, while you probably can’t beat the property market, you can still win if you consider an Evergreen Life Right, and our partnership for life promise of great physical security, financial peace of mind, continuous care facilities and a sense of community.