Homeowners Struggle to Sell Properties Amidst South Africa’s Economic Challenges

In the current economic climate, South African homeowners find it increasingly difficult to sell their properties. A combination of high interest rates, stagnant economic growth, and rising living costs has created a challenging environment for the real estate market.

High Interest Rates

One of the primary factors contributing to the sluggish property market is the high interest rates. The South African Reserve Bank (SARB) has kept interest rates elevated in an effort to control inflation. While this is a necessary measure to stabilise the economy, it has made borrowing more expensive. Potential buyers find it harder to secure home loans and those who do face higher monthly repayments. This scenario reduces the pool of qualified buyers, leading to longer listing times and forcing sellers to lower their asking prices to attract interest.

Rising Living Costs

The cost of living in South Africa has been rising, further squeezing potential homebuyers’ budgets. Basic necessities such as food, fuel, and utilities have significantly increased prices, leaving less disposable income for savings or mortgage payments. For many, the priority has shifted to maintaining their current standard of living rather than investing in new property.

Market Adjustments

Given these economic pressures, the real estate market is undergoing noticeable adjustments. Sellers are often compelled to reduce their prices to meet the market demand, which has been sluggish. According to recent reports, property values in some areas have stagnated or even declined. Moreover, the market has seen an increase in the number of properties listed, creating a buyer’s market but making it harder for individual sellers to stand out.  High interest rates, economic stagnation, rising living costs, and broader economic uncertainties, all contribute to a difficult market environment. As potential buyers become more cautious and financially strained, sellers have little choice but to adjust their expectations and strategies.

Selling with a deficit

Sellers often have to decline an offer from a willing and able Purchaser because the price is too low to cover the Seller’s expenses relating to the property such as the commission due to the Property Practitioner, the outstanding bond amount, arrears rates, taxes, utilities, home owner’s association or body corporate levies, and other disbursements.

When receiving instructions from a homeowner to attend to the transfer and registration of his property where the purchase price is insufficient to cover all the expenses on the property, we at Burden Swart & Botha Inc, on behalf of the homeowner, negotiate with the Bondholder to accept a lower settlement amount on the bond for the sale of the property to proceed.  There are various factors that the Bank will consider when receiving an offer with a deficit.  With our years of experience and knowledge, we can motivate to the bank to favorably consider the offer for the transaction to proceed.

Do not despair if you are struggling to sell your property at a price sufficient to cover all your expenses.  Make contact with our conveyancers to discuss your unique situation.

With our follow-up blog, we will discuss whether a homeowner may sell his property after legal action has been instituted against him, or even after the property has been attached by the Sheriff.