“How much will the property sell for?”
Unsurprisingly, this is the most common question both a buyer and a seller ask!
From the perspective of a buyer, there’s no doubt that it is difficult to gauge PNG real estate prices, particularly in the tightly held cities of Port Moresby and Lae. The competition for good houses, apartments and land is fierce and many of them are selling at prices far above the advertised estimated price range. This is, quite naturally, making buyers feel cynical and frustrated.
Buying a home is like no other purchase you’ve made in your life. Homes are not identical, they don’t come with a return policy and they rarely have with a fixed price tag. A house may viewed as being worth far more to a person who wants to live in the same street as their family, who wants their children to be able to walk to a particular school or who has a business just five minutes drive away. All sorts of things influence the value of a real estate in the buyer’s mind.
Speaking with a reputable PNG real estate agent
When a real state agent is approached to sell a home, they are asked for their professional opinion regarding how much a reasonable person would pay for the property. In order to provide the best possible answer to that question, the agent then researches similar properties in the area and what they have sold for.
Unfortunately the Papua New Guinea real estate market has traditionally not been very transparent and there is very little clear data regarding prior sales. Experienced and professional PNG real estate agents will leverage their past sales data, experience and local knowledge to price properties correctly. By contrast, inexperienced real estate agents will be more likely to quote a seller an unrealistically high price, which may then negatively impact your chances of purchasing the property. For this reason, it is advisable to focus on properties that are being sold by reputable real estate agents that have been operating in the PNG, Port Moresby or Lae for some time.
Take advantage of technology
With the advent of new online real estate websites such Hausples.com.pg, more real estate sale prices are being published. Tools such as the Hausples ‘Sold Prices’ page can provide a handy reference to find similar properties to the one you are considering and will give some assistance in predicting the ultimate selling price. You should leverage these to your advantage and get the benefit of adopting technology early.
Speak to your bank
It might seem odd, but banks are often the best source of real estate information. As banks lend large sums of money to real estate buyers, they regularly value homes and other PNG real estate to ensure there is sufficient equity to cover the amount lent to customers.
We suggest approaching your bank regarding your real estate purchase and ask them to provide a pre-approval or full approval for a loan for the property. Part of the bank’s approval process with require the bank to value to the home or asset. You can then use the bank’s valuation as a rough guide for the property. You should be aware however, that there may be cost associated with processing the loan application. As PNG’s largest bank, we recommend speaking with the BSP (Bank of South Pacific) if you choose to apply for a loan approval.
The bottom line
Despite the above, there is no science to the emotion of buying a house or apartment and the value of an established home is not purely based on prior sales data. Logic often flies out the door when dealing with an extremely buoyant and under-supplied real estate market such as that in PNG. This will often cause a buyer to make an offer on a home that is far above what science and logic dictates it would probably sell for.
Ultimately, the seller of the home is entitled to get the best possible price for their property – regardless of what price point has been advertised. There is absolutely no compulsion for a seller to sell at the advertised price. And this is understandably frustrating for buyers. The best advice is to think carefully about how much you’re prepared to spend and – hard as it is to put the emotion aside – stick to your budget.
The current PNG real estate climate is certainly throwing up a fair share of homes being sold for far above the advertised price range. But take heart if you’re a buyer. Properties are continually coming on to the market and you’re sure to find one that suits you emotionally and financially.