With interest rate hikes around the corner, the increase in petrol prices and those talking emigration, sellers are becoming more negotiable.

So says Jonathan Smiedt, CEO and national auctioneer of the ClareMart Auction Group, who also believes that many sellers who are overextended with the rate increases are keen to sell to avoid foreclosure. "This has clearly been shown at our recent auctions where most sellers are accepting offers and have become more negotiable," says Smiedt.

The affordability factor, as Smiedt calls it, has now set in.

"This means people will attend an auction to see what a property is going for. An investor might be willing to pay R6m but not R7m for a property, and will buy at that price but the days of sellers asking a massive premium and achieving it are over," explains Smiedt.

"There is money out there and investors who are looking to buy, but they now want a fair market price and sellers cannot expect the same prices of a year ago," says Smiedt.

The current macro economic environment is causing stress in all property sectors, but reports of residential markets falling by 40% are totally outrageous, says Smiedt. It is generally understood that markets are quick to react negatively with an interest rate hike and there maybe more increases in the distance, but the Reserve Bank has stated its case and strategy well in advance and many people have factored this into their price when buying.

"The markets are volatile and the residential market is becoming unpredictable and tight to say the least, but talk of a price drop down by 40% is pushing it and irresponsible."

However, Smiedt still believes that the commercial property market will still weather the storm and yield results for investors and developers leading into 2009, despite any increase in interest rates. "We have been seeing the smart money shifting to the commercial and industrial sector for the past few months and we expect this trend to continue," says Smiedt.

Sellers in this sector have realised the importance of correcting their price expectations, according to Smiedt, and deals are concluded faster. It's not sellers "taking what they get" as some people in the industry are reporting, but simply sellers adjusting to local, national and international trends.

"In this country we are way below international property values. So why fuel the panic?" says Smiedt.

Property24 23/06/2008