He predicts that prices could plummet as much as 20-30% in the next two to three years if interest rates do not come down and sentiment about the country remains negative.I think someone is going to be getting a few angry phone calls about straying from the "party line".
If prices drop even 20% there is going to be a world of hurt. South African's have been extracting money from their mortgages at rapid pace, and if prices drop, hell even if they just don't grow and stagnate, those who did will be up shit creek without a paddle to put it mildly.
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After trying unsuccessfully all last year to get even an offer on several properties, this year I dropped my asking price to half. I managed to sell 2, one where I have 100% equity the other where I _thought_ I had 70% equity. More worrisome is that I did not get a single non estate agent response to my FSBO advertisement quoting half off the 2007 listing price.
The middle of the market is absolutely dead. Under a million for a house, under half a mil for an apartment is viable. Township properties can still sell but are overvalued by 100%, judging from the prices I see in Die Kaapse Sonne. The top end is barely ticking over.
But prices are very sticky, as South Africans do not have the realistic option of doing a short sale or walking away from their properties as in the USA or UK. People are really hurting with these interest rates and lack of an emergency exit.
Lew Geffen seems to be the only agent out there in SA willing to tell the hard truth. The others are still in denial or maybe they live in hope that the buying public won't notice that the party is over.
A friend is desperately trying to help one of his employees sell their new car at a bargain rate ... they are building a house and taking the strain. It all seemed so easy when prices kept going up and there was a constant supply of new equity to turn to whenever the cash ran out. As interest rates rise even further and house prices fall, I'm afraid the financial casualties will turn into a torrent.
Boughtmypoints: Wow! A 50% drop in asking price is quite drastic.
I agree that prices are sticky but that's a property of RE markets world wide. The US is now full of people who are chasing the market down.
I have to admit I have no idea what option Saffers have when it comes to doing short sales and the like. What do banks here allow? Is handing the keys back an option?
CJ: I noticed that Geffen is using the current energy crisis and worries over Zuma as reasons for his pessimism. If they weren't present I wonder if he still would think that property prices would drop based purely on affordability..
ct,
The S.A. debt collection industry works cheap. And that includes the lawyers doing their dirty work!
I am reliably informed that if you hand back the keys to your new double cab bakkie, the bank will chase you and your assets down for a summons if you don't pay the inevitable deficiency.
If you mail in the keys to your property, they will still go after you. The development in the USA of the banks paying defaulters to leave without trashing the property is a new one and may take a while to catch on in S.A..
Maybe it will start in the townships where a ZAR 500 000 property can quickly be reduced to ZAR 25 000 plot value.
The 50% drop in asking price was necessary. On one property it brought the price back to the 2005 level, but more importantly to the maximum affordable level for white collar municipal workers. The other property was unrealistically priced by Sotheby's at the higher level. In reality, the haircut was probably 20-30% from the peak of the market.
Anyone here know anything about the
Square on Ninth/Square on Tenth development in Maitland?
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