That run up since 2001 is looking mighty scary. It's also interesting to note that the index only grows by compounded annualised return of 1.72%. So much for property being a great investment.
Update
Compare that graph to this graph depicting the US housing market index (which is currently melting down).
3 comments:
Nice work CT - I will repeat what I said at Moneyweb for the sake of your readers - my first observations are that in the last 40 years the highest real price of SA houses was in 1983 at 154... that is until 2004 - the new high is now 24% higher than any other time in the last 40 years.
Back then the price had gone up 85% from the low 5 years earlier.
Now the price has gone up 162% from the low 8 years earlier.
Back then after a 85% rise it dropped 45% over the next 4 years in real terms.
Today, after a 162% rise ( almost double the previous one) how much will the drop be ? 70% - 80% in real terms doesn't look unfair to me - with inflation of 30% over 4 or 5 years, we will be looking at an actual drop of 40% - 50%.
That pretty much fits in with what I am predicting for the US and UK - so here we have it, the bloody glove - it is going to happen in SA too ... ladies and gentlemen, I rest my case....
I'm from South Africa, currently living in California.
I agree with you cj. We are seeing exactly the same trend here in California. I know this as I am trying to sell my house.
South Africa will go through the same process. Only I think it will be worse, due to the higher expense of credit.
There is a remarkable similarity between the US chart and the SA chart over the same time frame - as this is the case, we can safely assume that when the US house prices dive, as they are starting to do now, SA will do likewise.
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