Every cloud has a silver lining.... an expression that has been around for decades and one that makes more sense than you would imagine. The idiom is a metaphor for optimism in the common English language.
The phrase is as true today as it was the day it was coined. The cloud I am referring to is the global economic situation. The outlook isn't rosy, the Europe economy is in a shambles and people are questioning the future of the Euro which was hailed as the future when it was introduced to world financial markets in just 1999. America may possibly be heading into a 'double dip' recession and everyone is sitting on the edge of their seats to see what's going to happen.
What does that all mean for us? Well it means that our economy isn't doing as well as it could be either. People don't have the disposable income they had a few years ago and the banks seem loath to lend, and probably for a good reason. Even closer to home it means our housing market has slowed. The June FNB House Price Index shows slight acceleration to 2.6% year-on-year growth from a revised 1.8% in May. Adjusting the nominal growth rate with inflation, real house prices have declined at a rate of -2.5% per annum as at May 2011.
So, where's this silver lining?! I'm going to outline a few...
Your house price has dropped and so has everyone else's. Now, you may be wondering how this could possibly be a good thing... well it is if you are looking to trade up. Typically people generally sell their houses to buy a bigger one; it's the nature of the property ladder. Now, the hard part is getting your head around the fact that you aren't going to get the price you had hoped for your house. You are going to have to be realistic to sell but if you are able to do that then there is a good chance you will profit by buying up. How? Take a look at this example...
Let's say your home value is down 20 percent from R 1,000,000 to R 800,000. But don't forget that in today's buyer's market, higher priced homes are also dropping in price.
For argument's sake, let's say that a R 1,500,000 move-up home has also dropped 20 percent in value and now sells at R 1,200,000.
If you sold your home today for R 800,000 and purchased the larger house for R 1,200,000 the difference in price would be R 400,000.
But if you waited to recoup the 20 percent value on your home and sold it at R 1,000,000 chances are that same move-up home would also move up in price to R 1,500,000.
That's a R 500,000 price difference between the two homes.
So by selling today, you would actually save R 100,000.
Makes you think, doesn't it? The message is simple: sell realistically and buy realistically and you can make money from the current dip in the property market.
That's not the only glimmer of hope. The other is that a slower property market means you have the ability to differentiate your home from those around you if you want to sell. Generally buyers in this market are more astute and take longer over their searches – they do not feel as rushed to make decisions as the properties are on the market for longer. That gives them the opportunity to be more thorough in their searches; they get to more properties and look more carefully.
This has meant that sellers who are willing to take on board some constructive feedback and present their houses to the market better have a greater likelihood of selling their houses than those that don't. They also have a better chance of getting a higher price. This trend towards making properties more saleable has actually created a new type of business in the UK. There is a group of professionals that call themselves "home doctors" who specialise in going to sellers homes and fixing them to make them more attractive to buyers. Links to some of their web pages are at the bottom of the page.Declutter
According to the Telegraph it is a view echoed by Simon Buhl Davis, head of Interior Services, a department set up in 2008 by leading estate agent Savills in response to the recession-hit housing market. "Frankly," he says, "some properties are unsellable in their current state and would hang around in this market for a very long time, without a decent makeover."
It doesn't need to be a huge overhaul but a couple of subtle changes can make a huge difference. "The majority of houses that have been lived in for any length of time have a lot of clutter" says local Interior designer Lauren Scott she continues to add that "just decluttering and depersonalising a house make a huge difference to its appearance – get out a box for the old family photographs and little knick-knacks and put them away until you get into your new spot. It will make the place a lot more appealing to prospective buyers."
A little colour here and there can also lend a hand as well as a potted plant or two. The fact that there are small, cost effective ways of making a house that much more saleable has been identified by Avidity Real Estate who are the first local firm to offer a free interior design consultation to anyone who signs a sole mandate with them.
The fact is that if you are serious about selling your house and buying another there is a silver lining to the recession. So have an early spring clean, buff up and look on the brighter side of the property market!
We hope you have enjoyed this, the second quarterly property focus which HiltonVillage.co.za will publish seasonally, penned by Andrew Morphew of Avidity Real Estate. We look forward to hearing your feedback.
Thank you Andrew!