I have lived in many different neighborhoods in and around Cape Town. Bellville, Cavendish, Camps Bay, Sea Point, and Kuilsriver. The SA property market seems to revolve around two things...square meters and which side of the boerwors highway you are on. In my opinion, from the places I have lived and visited, the build quality in Bellville and Kuilsrivier and Durbanville far exceeds that of those in town. I think the homes are newer, but they also seem to be owned by fewer people. In any case, the homes out North are much cheaper as far as square meters go, and in my opinion much better built, and in my opinion the neighborhoods are much safer. My question is this: does anyone think there will be a migration out of Cape Town and into the Northern Suburbs? Should we all brush up on our Afrikaans? This gentrification of areas outside major city limits is not something new...could it happen in Die Kaap?
I remember a few years back when Woodstock Upper was becoming gentrified. The build quality of these extremely old homes was, to say the least, horrendous. Yet they kept being bought up and the prices were jacked up out of the roof to insane levels. I think these folks, who are putting up with the hectic crime in those places, are second guessing themselves, and I think the next wave of gentrification will be somewhere like Bellville. Id trade Cavendish for Tiger Valley any day.
I think anybody with any sense would rather use their money to buy a ticket to the UK rather than buy a house in the North suburbs, which would be a better move than buying in the city, or the South suburbs. And I also think that this culling of estate agents should be done by bullets rather than by letting the market do its thing to the property industry.
I've been attending repo and distress auctions as often as i can and am seeing this wierd trend evolve.
At these auctions, cash buyers are falling over themselves to buy property resulting in some properties being knocked down at full normal selling price and the auctioneers commission must still be added on. In general, prices are up at these auctions.
On the flip side, prices continue to drop all over in the normal traditional markets with sellers struggling to get decent prices.
It seems as if the cash buyers at these auctions have lost touch with reality and are just buying at any cost.
Maybe the market is about to turn for the better? Interest rates are set to hit 10% this yea, if not lower, making the affordability of homes more attractive to buyers. If the banks let loose the purse springs then we could see a recovery next year.
I still dont believe how there can be so many naieve people in SA, and their reactions of denial to the prop market is proof of this. If there are still people out there who are buying property as investments and who still think the market is going to turn around at any moment, that means that there is something seriously wrong with their heads. The whole world is about to crumble! Any delay of the inevitable meltdown is because the leaders of SA are in denial. Or maybe they are trying to act as if nothing is happening while they manipulate the market and move their money into foreign currency or whatever, just to save their asses. Either they are stupid or just very selfish and corrupt, and we all know that they are both. Lets wake up and save what we can of our livelihood while we still have a chance. Perhaps instead of investing in other properties we should invest in higher walls and sharper razorwire to barricade our homes. I am going to increase the value of my home by building on a granny flat and adding two more pit bulls.
Property prices are simply too high compared to income. A home should cost around 3-4 times household income. Instead, we are seeing homes that cost 10+ times household income. This impending disaster is what I think this blog is all about. People will start losing their jobs pretty soon. That will lead to foreclosures. That will lead to banks folding. Its happening in the US and UK and it happened in Japan two decades ago. We have the ability to see into the future almost, yet we are walking of that same plank!! Its scary to see so many people that are oblivious to what is happening-some are still thinking the soccer world cup will save SA!!!
Its simple, homes in SA rose toooo quickly. They approximately tripled in roughly a decade. They need to come down, and they will. People who read this blog should be looking for advice to save themselves and brace for the impact rather than looking at this blog to see little glimmers of hope and optimism. BTW, I think any optimism in this blog is being written by some stressed out estate agents who think they can turn things around with their idiocy.
SA is run by incompetent crooks. We dont have the cash for a bailout. At our nation's foundation are class and race issues that still have not been resolved, and in my opinion can't be resolved, and they will blow us all to hell when the economic collapse lights the fuse.
Anon # 4, why the regular ramping of Tokai? Are you an estate agent in the area? And as for prices holding their value, I'm afraid you're talking complete rot. A mate of mine just bought a place in Perth Rd (next to the golf estate) for R3.1 million. This after the seller had dropped his price from R4m to R3.7m, and finally said he wouldn't go under R3.5m.
I told my mate he's still caught a falling knife (he could have picked it up for R2m in 2011) but still, I hope that gives you some idea of where you can stick your ideas about Tokai.
bean counter, no i am not an estate agent. the houses that were sold recently by myself and a friend of mine were sold for the asking price! you are very wrong
The crime in Tokai is bad. On top of this the only decent school in the area is Reddam where snorting coke and shagging your classmates are recognised extra-mural activities. Its the school for the newly moneyed who are soon to be the newly liquidated.
I agree with Bean Counter, that dude must be an estate agent telling little greedy lies. Is there a way to screen these dudes out? I agree with Anon #1 that the North suburbs are probably the best deal and the best neighborhoods. That is, if you can face going to the Spur and having to explain multiple times that your Afrikaans isn't worth a flip!
Bean Counter, what do you think the best suburbs for that sweet family life are in CT?
Okay, after reading these comments I can see that there are many people with a bad taste in their mouths from this whole property bubble. I for one bought a 3 bedroom cottage in Woodstock Upper 3.5 years ago. The thing is that I LOVED it. But then Ive been having issues with the plumbing and there is water damage to the Oregon pine. Is Oregon pine really that great? Its PINE! Then I got my car stolen. It also seems like much riff raff is moving into the neighborhood. My neighbor got mugged while walking her dog...on a Sunday afternoon! If I could do it all over I would have bought in one of those flat complexes thats behind a wall topped with razorwire in Bellvile and just driven into town for work. I think lots of these Wstock yuppies like myself are looking for a way out. I think this is the new trend.
It is my most fervent hope, the heartfelt wish of a sensible citizen, that all those who continue to drive the property mania (and get others into situattions from which they will never recover), that these people get their heads handed to them on a plate - that they lose everything they have, and live out the rest of their lives in abject poverty and misery
I second Munch. Its absolutely horrible what this market has done, and is doing, to those who are just trying to buy that one home that they will live and die in. Most people spend their whole lives paying off that home and use their equity to send kids to Uni, pay for surgeries, and retire with. Its absolute travesty how this unregulated scene is run by those who have tons of cash to burn. Salaries in this country are so lopsided already. We need strong government regulation because there is absolutely no ethical code in this f***ed up market.
Im fed up with it. I saved for ten years to get my foot in the door. All my toes are broken now. I'm trying to get my foot out of the door, just so I can walk around the rest of my life on a bloody nub.
Tokai Anonymous, I accept that I might be wrong, but I'm afraid basic subtraction sums don't allow much human error. If you're not an estate agent then perhaps you don't know the current reality: that everywhere in Cape Town - perhaps barring the townships and the diplomatic area in Bishopscourt - are on the way down. From an economic point of view Tokai has almost nothing propping up its values: a huge commute to town, no CBD, and the Cape's biggest prison next door. It used to be a quiet little backwater for middle-class teachers and bookkeepers, who liked a ramble in the forest and drove modest cars. Then they built the golf estate, and suddenly everyone thought it was Lower Constantia. It's not. It's Upper Lakeside, and prices will soon reflect that. If your friends managed to sell at their asking price then well done them, looks like they are the winners in the Greater Fool theory.
Last Anonymous, I'm probably the last person you should ask about the sweet family life. I am very happily child-free, and my pet peeve is middle-class South Africa's obsession with living in free-standing houses surrounded by horrible little gardens, or horrible big gardens for that matter. I've lived very happily in some beautiful European and American apartments, which were masterpieces of design compared to the rubbish McMansions we Saffers are gagging for, so if it was up to me we'd all live in 140m2 apartments with communal grounds. You don't need more than that, and it teaches you how to live with your fellow citizens, as opposed to pretending you're English aristocracy with a moat around your castle.
Having said that, I suppose it depends on what you want. If you want to pretend that you're living in Top Billing Land, or in South Africa of the mid-1950s, then it's got to be Newlands, Bishopscourt and the posher parts of Durbanville. Of course, this will instantly make you an incredibly dull person, and all your friends will be plastic surgeons and soccer moms. You might also get very scared when you see a Black Person walking freely in the street.
If you want your kids to grow up as decent human beings, with original thoughts in their heads, and you don't mind a bit of noise, then I suppose there's nothing wrong with the old dormitory burbs like Harfield, Wynberg and Plumstead. I grew up in Kenilworth, boring as hell, but I don't think I turned out too rotten. I also only get mildly anxious when I see Black People, so clearly I was partly integrated into real life.
You seem to know quite a bit about what is going on, hey? When do you think the best time to buy would be? 2 or 3 years from now? When will this bubble bottom out? I guess what I am asking is how much do you think property, as a whole, approximately, should drop before its a good time to buy? 50% perhaps?
Too many Anons to single you out, but to the one who asked me about timing, I know only what I've read in the alternative media and what I've observed for myself tracking prices in Cape Town for the last two years. I'm also hugely grateful to CT Bubble for running this blog, which believe it or not is the only one of its kind in SA (shows how deep in denial we are as a nation).
I think the most important thing to keep in mind is this: historically bubbles take as long to deflate as they took to inflate. I think the common consensus is that our bubble inflated from about 2000 to 2007, which means if it follows historical trends it should take about seven years to deflate. In short, we should bottom out in about 2014.
HOWEVER the response to this bubble is unprecedented. The international banking system is determined to re-inflate everything as quickly as possible (hence the "quantative easing" going on in the UK now, which is basically printing money to kick-start inflation). This incredibly short-sighted response from governments will almost certainly re-inflate the bubble at some point, but how much - and for how long - remains a mystery.
Ultimately though property always returns to roughly 3.5 times annual income. People need to be able to afford property. If they can't, it comes back down until they can.
I think we're going to drop another 40%. We might drop it by 2012 and then flatline for a while, or it might just slowly tick down and only get there in 2012. But either way I think that anyone who buys a property in the next few years is flushing money down the loo.
For households earning less than 750,000 a year, the average debt is about 135% annual salary.
40% of the 17m credit active consumers are behind with their payments or have defaulted.
There are 1200 forced auctions of repoed houses a month.
35,000 homes are 4 month in arrears.
135,000 homes are up to 2 months in arrears.
100,000 people were made redundant in the last 6 months.
It is pretty obvious where this is all heading. The direction, that is. Where it is all going to end, now that is not so obvious. But I can tell you it is not going to be pretty ... and it is not going to be anytime soon.
Finally the papers had a great quote from Buffet's latest letter - the richest guy in the world, who has lived in his house for 50 years - I quote
"Enjoyment and utility should be the primary motives for house purchase, not profit or refinance possibilities. And the home purchased ought to fit the income of the purchaser. Home purchases should involve an honest down payment of at least 10% and monthly payments that can be comfortably handled by the borrower's income. That income should be carefully vetted"
Now there's a man that talks sense. And that is where property is returning. It will once again be a home, not an investment. 10% down, 3.5 times income.
And it is very obvious that prices need to fall a whole lot further before we get anywhere near there.
i am surprised by a lot of your emails. at the end of the day what is important is to buy a property that you like and spend at least 20 years in it or more. do not buy for an investment. i have friends who live in all parts of the Western Cape and some towns that you mention like Woodstock, tokai,Belleville, durbanville etc...and each of them like their own place, they have made them safe will electric fences etc... and are raising children there. so even if the price of properties goes down, it does not matter for as long as you have a roof over you head and this roof is the one you have chosen to spend most of your life under
Im not saying that the SA prop bubble has nothing to do with greed, but it has a lot to do with safety. South Africans feel very uncertain about their future. There is no security here with the crime and the government and the job market. There is much fear here about the future. The brain drain is a prime result of this. This uncertainty had much to do with the property market boom. People were speculating out of uncertainty of their security in many cases, not just simple greed. Its so unfortunate that many of us who were just trying to buy a home to have a roof over our family's heads will pay such a painful price.\Charles
1. Parklands - I was not surprised to see that 3 bedroom places are starting from R599k! Yep! THREE beds!!! I think investors realise what a hell hole Parklands is with all the pee-pool and are now stuck with crap!!!
Drove through there this weekend and was surprised at how bad that main road is getting. People walking all over like its a township! Such a shame cause I think its a really nice area with all the shops, etc.
2. The fact is that, for those who have no intention of moving out, and can afford their monthly repayments, then they are fine. Its the "investors" that are suffering.
I think anyone who says prices in certain areas are retaining their prices, is delusional!!! Its a country and worldwide issue! Not even the Sandtons or Camps Bays can escape from this mess!!!
Every week, it surprises me that more and more shocking financial news unravels!!! The worst is not over for the world, and give it another 2-3 months to hit our shores!
PS The Tokai dude if a bullshitter! He says that he is not an agent and then says that he a a buddy sold something!??? He says "the houses that were sold recently by myself". Selling 1 house is fine but HOUSES????
Buckle up people... its going to be a bump ride!!!
It is the investors THAT are suffering i am surprised at the grammatical errors in a lot of emails. it should be "it is the investors WHO are suffering" when you talk about people it is ALWAYS "who or whom" but never "that" this is a typical example of how bad education is in this country!
Last Anon, I'm sure you remember what they taught you about people in glass houses...
I've taken the liberty of fixing your post for you, as you are clearly a lover of language.
"It is the investors THAT are suffering [FULL STOP]. I [we use capitals at the beginning of a sentence or for the personal pronoun 'I'] am surprised at the grammatical errors in a lot of emails. It [CAPITAL LETTER, REMEMBER?] should be, [COMMA BEFORE QUOTATION MARKS] "it is the investors WHO are suffering" . [FULL STOP] When [CAPITAL LETTER] you talk about people it is ALWAYS "who or whom" but never "that". [FULL STOP] This [CAPITAL LETTER] is a typical example of how bad education is in this country!"
forget full stops and capital letters. i am talking about GRAMMAR. if people cannot spell and do not know their grammar, this country has no hope. if i was writing a letter i would use full stops comas etc...but it is just an email so it does not matter. however grammar matters as it shows who has been educated and who has not, the same goes for spelling.
When you have horrible grammar and spelling skills, people will not want to do business with you because instead of being able to understand what you offer or need, they are trying to decipher your spelling. Plus bad spelling and grammar looks very unprofessional – they will assume that if you are sloppy in your writing, you will be sloppy in the way you deal with your customers.
Whenxt it posteted thu Emale boute grammerz,,Eyez neerlee flipteded= tHis blargH nott ubuout Gramers ar spellinxt FULCTOP Itz boute proputeez/pettty fux u is.
New blog topic please, whatever is in charge of this blog!
If you are going to buy in Bellville/ Tygervalley I would think twice about buying an apt in the tygervalley waterfront. I would also stay away from a complex called The Peaks, near Tygervalley in area called Rosendal. Very very badly built. Lookout for the huge levies they are paying. High levies means major structural problems that can only be fixed with a rebuild. Check out the history of some of those complexes and see who built those places.
"forget full stops and capital letters. i am talking about GRAMMAR."
Talk about double standards!!! You are a joke! You seem to be one of those tits that always like getting their own way! Well guess what, half your money/investments are down the drain, so you are worth just as much as your future president!!! (Probably less)!!!
Go take GRAMMAR classes and come back. Dont forget to ask the teacher to teach you what CAPITAL LETTERS and FULL STOPS are! *wink*
wow 30plus comments, must be a record. The anonymous thing is irritating me even more now.
You don't have to use a google identity, but it makes it easier to follow if you at least lable yourself somehow and stay anonymous(see below). Use it or don't.
Its my view that in SA we are in the midst of stagflation; the economy is stagnating coupled with inflation, very similar to the 70's actually.
The recent drop in inflation is due to cheaper oil only, everything else is still up. Oil prices are set to rise again because the ZAR is weaker and outputs are being cut ergo the respite in inflation we have is only temporary.
The SARB and Treasury is in a bind because they do not interfere directly with money supply and only use interest rates as their tool. But what do they do? Raise interest rates to trim inflation or lower interest rates to stimulate the economy?
In periods of stagflation house prices do not go up. As I see it the only thin holding up the market here is fear of prices rising again and delusion that prices will continue to rise. The banks are a lot wiser economically and their actions reflect realities.
In my long term and wider view the worlds major fiat money systems which back our currency are at their end and this in itself isnt new, there are hundreds of fiat money systems that have crashed but unfortunately this time it is global. There are many reasons why this is so and one would have to do the research to see but every graph you look at be it money supply, interest on debt, derivatives etc shows death by compounding.
This is bad news for us as we are downwind from the US, Britain, Japan etc and inextricably wound up through the financial markets and through exports and imports. The extreme measures taken by the US and Britain will affect us for sure...but a property boom I dont think so, at best a hedge against inflation but even that might not work out so good.
I have been living in RSA for the past 10 years and I have seen first hand the renter culture here.
Even when property was practically being given away during the turn of the century, the renters would never give up their fags, dumpies and their new Ford Bantams to get on the property ladder, preferring to pay their R 1000 rent rather than take out a R 200 000 bond.
As property prices actually rose beyond replacement value and rental dwellings were rehabbed for owner occupation, these loser renter types started howling about rising rents and being priced out of the property market.
Well they had their chance!
But it looks like another chance is on its way ...
Property is now valued below replacement cost in most of the country. Investing in stands, i.e. building plots, used to be a sure fire way to make money but now houses are selling with little or no value attached to the underlying ground. Meanwhile labour, bricks, cement continue to escalate in price.
My suggestion to priced out renters : purchase an older property, knock down a couple of walls. Live in one half, rent out the other! When you can afford to live in the whole house, kick the tenant out!
37 comments:
QUALITY VS QUANTITY:
I have lived in many different neighborhoods in and around Cape Town. Bellville, Cavendish, Camps Bay, Sea Point, and Kuilsriver. The SA property market seems to revolve around two things...square meters and which side of the boerwors highway you are on. In my opinion, from the places I have lived and visited, the build quality in Bellville and Kuilsrivier and Durbanville far exceeds that of those in town. I think the homes are newer, but they also seem to be owned by fewer people. In any case, the homes out North are much cheaper as far as square meters go, and in my opinion much better built, and in my opinion the neighborhoods are much safer. My question is this: does anyone think there will be a migration out of Cape Town and into the Northern Suburbs? Should we all brush up on our Afrikaans? This gentrification of areas outside major city limits is not something new...could it happen in Die Kaap?
I remember a few years back when Woodstock Upper was becoming gentrified. The build quality of these extremely old homes was, to say the least, horrendous. Yet they kept being bought up and the prices were jacked up out of the roof to insane levels. I think these folks, who are putting up with the hectic crime in those places, are second guessing themselves, and I think the next wave of gentrification will be somewhere like Bellville. Id trade Cavendish for Tiger Valley any day.
I think anybody with any sense would rather use their money to buy a ticket to the UK rather than buy a house in the North suburbs, which would be a better move than buying in the city, or the South suburbs. And I also think that this culling of estate agents should be done by bullets rather than by letting the market do its thing to the property industry.
i think tokai is a good place for families with excellent schools, american embassy and the houses retain their value.
I've been attending repo and distress auctions as often as i can and am seeing this wierd trend evolve.
At these auctions, cash buyers are falling over themselves to buy property resulting in some properties being knocked down at full normal selling price and the auctioneers commission must still be added on. In general, prices are up at these auctions.
On the flip side, prices continue to drop all over in the normal traditional markets with sellers struggling to get decent prices.
It seems as if the cash buyers at these auctions have lost touch with reality and are just buying at any cost.
Maybe the market is about to turn for the better? Interest rates are set to hit 10% this yea, if not lower, making the affordability of homes more attractive to buyers. If the banks let loose the purse springs then we could see a recovery next year.
I still dont believe how there can be so many naieve people in SA, and their reactions of denial to the prop market is proof of this. If there are still people out there who are buying property as investments and who still think the market is going to turn around at any moment, that means that there is something seriously wrong with their heads. The whole world is about to crumble! Any delay of the inevitable meltdown is because the leaders of SA are in denial. Or maybe they are trying to act as if nothing is happening while they manipulate the market and move their money into foreign currency or whatever, just to save their asses. Either they are stupid or just very selfish and corrupt, and we all know that they are both. Lets wake up and save what we can of our livelihood while we still have a chance. Perhaps instead of investing in other properties we should invest in higher walls and sharper razorwire to barricade our homes. I am going to increase the value of my home by building on a granny flat and adding two more pit bulls.
Property prices are simply too high compared to income. A home should cost around 3-4 times household income. Instead, we are seeing homes that cost 10+ times household income. This impending disaster is what I think this blog is all about. People will start losing their jobs pretty soon. That will lead to foreclosures. That will lead to banks folding. Its happening in the US and UK and it happened in Japan two decades ago. We have the ability to see into the future almost, yet we are walking of that same plank!! Its scary to see so many people that are oblivious to what is happening-some are still thinking the soccer world cup will save SA!!!
Its simple, homes in SA rose toooo quickly. They approximately tripled in roughly a decade. They need to come down, and they will. People who read this blog should be looking for advice to save themselves and brace for the impact rather than looking at this blog to see little glimmers of hope and optimism. BTW, I think any optimism in this blog is being written by some stressed out estate agents who think they can turn things around with their idiocy.
SA is run by incompetent crooks. We dont have the cash for a bailout. At our nation's foundation are class and race issues that still have not been resolved, and in my opinion can't be resolved, and they will blow us all to hell when the economic collapse lights the fuse.
Anon # 4, why the regular ramping of Tokai? Are you an estate agent in the area? And as for prices holding their value, I'm afraid you're talking complete rot. A mate of mine just bought a place in Perth Rd (next to the golf estate) for R3.1 million. This after the seller had dropped his price from R4m to R3.7m, and finally said he wouldn't go under R3.5m.
I told my mate he's still caught a falling knife (he could have picked it up for R2m in 2011) but still, I hope that gives you some idea of where you can stick your ideas about Tokai.
bean counter, no i am not an estate agent. the houses that were sold recently by myself and a friend of mine were sold for the asking price! you are very wrong
The crime in Tokai is bad. On top of this the only decent school in the area is Reddam where snorting coke and shagging your classmates are recognised extra-mural activities. Its the school for the newly moneyed who are soon to be the newly liquidated.
I agree with Bean Counter, that dude must be an estate agent telling little greedy lies. Is there a way to screen these dudes out? I agree with Anon #1 that the North suburbs are probably the best deal and the best neighborhoods. That is, if you can face going to the Spur and having to explain multiple times that your Afrikaans isn't worth a flip!
Bean Counter, what do you think the best suburbs for that sweet family life are in CT?
Okay, after reading these comments I can see that there are many people with a bad taste in their mouths from this whole property bubble. I for one bought a 3 bedroom cottage in Woodstock Upper 3.5 years ago. The thing is that I LOVED it. But then Ive been having issues with the plumbing and there is water damage to the Oregon pine. Is Oregon pine really that great? Its PINE! Then I got my car stolen. It also seems like much riff raff is moving into the neighborhood. My neighbor got mugged while walking her dog...on a Sunday afternoon! If I could do it all over I would have bought in one of those flat complexes thats behind a wall topped with razorwire in Bellvile and just driven into town for work. I think lots of these Wstock yuppies like myself are looking for a way out. I think this is the new trend.
It is my most fervent hope, the heartfelt wish of a sensible citizen, that all those who continue to drive the property mania (and get others into situattions from which they will never recover), that these people get their heads handed to them on a plate - that they lose everything they have, and live out the rest of their lives in abject poverty and misery
Does anyone have any ideas on what would happen if banks lowered the interest rates enough to keep these inflated prices up there?
I second Munch. Its absolutely horrible what this market has done, and is doing, to those who are just trying to buy that one home that they will live and die in. Most people spend their whole lives paying off that home and use their equity to send kids to Uni, pay for surgeries, and retire with. Its absolute travesty how this unregulated scene is run by those who have tons of cash to burn. Salaries in this country are so lopsided already. We need strong government regulation because there is absolutely no ethical code in this f***ed up market.
Im fed up with it. I saved for ten years to get my foot in the door. All my toes are broken now. I'm trying to get my foot out of the door, just so I can walk around the rest of my life on a bloody nub.
Tokai Anonymous, I accept that I might be wrong, but I'm afraid basic subtraction sums don't allow much human error. If you're not an estate agent then perhaps you don't know the current reality: that everywhere in Cape Town - perhaps barring the townships and the diplomatic area in Bishopscourt - are on the way down. From an economic point of view Tokai has almost nothing propping up its values: a huge commute to town, no CBD, and the Cape's biggest prison next door. It used to be a quiet little backwater for middle-class teachers and bookkeepers, who liked a ramble in the forest and drove modest cars. Then they built the golf estate, and suddenly everyone thought it was Lower Constantia. It's not. It's Upper Lakeside, and prices will soon reflect that. If your friends managed to sell at their asking price then well done them, looks like they are the winners in the Greater Fool theory.
Last Anonymous, I'm probably the last person you should ask about the sweet family life. I am very happily child-free, and my pet peeve is middle-class South Africa's obsession with living in free-standing houses surrounded by horrible little gardens, or horrible big gardens for that matter. I've lived very happily in some beautiful European and American apartments, which were masterpieces of design compared to the rubbish McMansions we Saffers are gagging for, so if it was up to me we'd all live in 140m2 apartments with communal grounds. You don't need more than that, and it teaches you how to live with your fellow citizens, as opposed to pretending you're English aristocracy with a moat around your castle.
Having said that, I suppose it depends on what you want. If you want to pretend that you're living in Top Billing Land, or in South Africa of the mid-1950s, then it's got to be Newlands, Bishopscourt and the posher parts of Durbanville. Of course, this will instantly make you an incredibly dull person, and all your friends will be plastic surgeons and soccer moms. You might also get very scared when you see a Black Person walking freely in the street.
If you want your kids to grow up as decent human beings, with original thoughts in their heads, and you don't mind a bit of noise, then I suppose there's nothing wrong with the old dormitory burbs like Harfield, Wynberg and Plumstead. I grew up in Kenilworth, boring as hell, but I don't think I turned out too rotten. I also only get mildly anxious when I see Black People, so clearly I was partly integrated into real life.
Hope this helps.
Bean Counter,
You seem to know quite a bit about what is going on, hey? When do you think the best time to buy would be? 2 or 3 years from now? When will this bubble bottom out? I guess what I am asking is how much do you think property, as a whole, approximately, should drop before its a good time to buy? 50% perhaps?
i wonder what the blacks are blogging about.
Too many Anons to single you out, but to the one who asked me about timing, I know only what I've read in the alternative media and what I've observed for myself tracking prices in Cape Town for the last two years. I'm also hugely grateful to CT Bubble for running this blog, which believe it or not is the only one of its kind in SA (shows how deep in denial we are as a nation).
I think the most important thing to keep in mind is this: historically bubbles take as long to deflate as they took to inflate. I think the common consensus is that our bubble inflated from about 2000 to 2007, which means if it follows historical trends it should take about seven years to deflate. In short, we should bottom out in about 2014.
HOWEVER the response to this bubble is unprecedented. The international banking system is determined to re-inflate everything as quickly as possible (hence the "quantative easing" going on in the UK now, which is basically printing money to kick-start inflation). This incredibly short-sighted response from governments will almost certainly re-inflate the bubble at some point, but how much - and for how long - remains a mystery.
Ultimately though property always returns to roughly 3.5 times annual income. People need to be able to afford property. If they can't, it comes back down until they can.
I think we're going to drop another 40%. We might drop it by 2012 and then flatline for a while, or it might just slowly tick down and only get there in 2012. But either way I think that anyone who buys a property in the next few years is flushing money down the loo.
BC
A few interesting SA stats in the Sundays -
7% of SA bond holders are in neg equity
For households earning less than 750,000 a year, the average debt is about 135% annual salary.
40% of the 17m credit active consumers are behind with their payments or have defaulted.
There are 1200 forced auctions of repoed houses a month.
35,000 homes are 4 month in arrears.
135,000 homes are up to 2 months in arrears.
100,000 people were made redundant in the last 6 months.
It is pretty obvious where this is all heading. The direction, that is. Where it is all going to end, now that is not so obvious. But I can tell you it is not going to be pretty ... and it is not going to be anytime soon.
Finally the papers had a great quote from Buffet's latest letter - the richest guy in the world, who has lived in his house for 50 years - I quote
"Enjoyment and utility should be the primary motives for house purchase, not profit or refinance possibilities. And the home purchased ought to fit the income of the purchaser. Home purchases should involve an honest down payment of at least 10% and monthly payments that can be comfortably handled by the borrower's income. That income should be carefully vetted"
Now there's a man that talks sense. And that is where property is returning. It will once again be a home, not an investment. 10% down, 3.5 times income.
And it is very obvious that prices need to fall a whole lot further before we get anywhere near there.
i am surprised by a lot of your emails. at the end of the day what is important is to buy a property that you like and spend at least 20 years in it or more. do not buy for an investment. i have friends who live in all parts of the Western Cape and some towns that you mention like Woodstock, tokai,Belleville, durbanville etc...and each of them like their own place, they have made them safe will electric fences etc... and are raising children there. so even if the price of properties goes down, it does not matter for as long as you have a roof over you head and this roof is the one you have chosen to spend most of your life under
Im not saying that the SA prop bubble has nothing to do with greed, but it has a lot to do with safety. South Africans feel very uncertain about their future. There is no security here with the crime and the government and the job market. There is much fear here about the future. The brain drain is a prime result of this. This uncertainty had much to do with the property market boom. People were speculating out of uncertainty of their security in many cases, not just simple greed. Its so unfortunate that many of us who were just trying to buy a home to have a roof over our family's heads will pay such a painful price.\Charles
Open thread, open thoughts...
1. Parklands - I was not surprised to see that 3 bedroom places are starting from R599k! Yep! THREE beds!!! I think investors realise what a hell hole Parklands is with all the pee-pool and are now stuck with crap!!!
Drove through there this weekend and was surprised at how bad that main road is getting. People walking all over like its a township! Such a shame cause I think its a really nice area with all the shops, etc.
2. The fact is that, for those who have no intention of moving out, and can afford their monthly repayments, then they are fine. Its the "investors" that are suffering.
I think anyone who says prices in certain areas are retaining their prices, is delusional!!! Its a country and worldwide issue! Not even the Sandtons or Camps Bays can escape from this mess!!!
Every week, it surprises me that more and more shocking financial news unravels!!! The worst is not over for the world, and give it another 2-3 months to hit our shores!
PS The Tokai dude if a bullshitter! He says that he is not an agent and then says that he a a buddy sold something!??? He says "the houses that were sold recently by myself". Selling 1 house is fine but HOUSES????
Buckle up people... its going to be a bump ride!!!
Sakkie
It is the investors THAT are suffering
i am surprised at the grammatical errors in a lot of emails. it should be "it is the investors WHO are suffering"
when you talk about people it is ALWAYS "who or whom"
but never "that"
this is a typical example of how bad education is in this country!
Last Anon, I'm sure you remember what they taught you about people in glass houses...
I've taken the liberty of fixing your post for you, as you are clearly a lover of language.
"It is the investors THAT are suffering [FULL STOP]. I [we use capitals at the beginning of a sentence or for the personal pronoun 'I'] am surprised at the grammatical errors in a lot of emails. It [CAPITAL LETTER, REMEMBER?] should be, [COMMA BEFORE QUOTATION MARKS] "it is the investors WHO are suffering" . [FULL STOP] When [CAPITAL LETTER] you talk about people it is ALWAYS "who or whom"
but never "that". [FULL STOP]
This [CAPITAL LETTER] is a typical example of how bad education is in this country!"
QED, baby.
forget full stops and capital letters.
i am talking about GRAMMAR.
if people cannot spell and do not know their grammar, this country has no hope.
if i was writing a letter i would use full stops comas etc...but it is just an email so it does not matter. however grammar matters as it shows who has been educated and who has not, the same goes for spelling.
When you have horrible grammar and spelling skills, people will not want to do business with you because instead of being able to understand what you offer or need, they are trying to decipher your spelling. Plus bad spelling and grammar looks very unprofessional – they will assume that if you are sloppy in your writing, you will be sloppy in the way you deal with your customers.
Whenxt it posteted thu Emale boute grammerz,,Eyez neerlee flipteded= tHis blargH nott ubuout Gramers ar spellinxt FULCTOP Itz boute proputeez/pettty fux u is.
New blog topic please, whatever is in charge of this blog!
Some are bad losers it seems on this site but anyway can we stick to property talk?
If you are going to buy in Bellville/ Tygervalley I would think twice about buying an apt in the tygervalley waterfront. I would also stay away from a complex called The Peaks, near Tygervalley in area called Rosendal. Very very badly built.
Lookout for the huge levies they are paying. High levies means major structural problems that can only be fixed with a rebuild. Check out the history of some of those complexes and see who built those places.
Well at least we don't have to put up with that Tuscanite character here - it's like a safe haven - no fetid estate agents
Anon wrote:
"forget full stops and capital letters.
i am talking about GRAMMAR."
Talk about double standards!!! You are a joke! You seem to be one of those tits that always like getting their own way! Well guess what, half your money/investments are down the drain, so you are worth just as much as your future president!!! (Probably less)!!!
Go take GRAMMAR classes and come back. Dont forget to ask the teacher to teach you what CAPITAL LETTERS and FULL STOPS are! *wink*
Sakkie
wow 30plus comments, must be a record. The anonymous thing is irritating me even more now.
You don't have to use a google identity, but it makes it easier to follow if you at least lable yourself somehow and stay anonymous(see below). Use it or don't.
muizenberg anon
Its my view that in SA we are in the midst of stagflation; the economy is stagnating coupled with inflation, very similar to the 70's actually.
The recent drop in inflation is due to cheaper oil only, everything else is still up. Oil prices are set to rise again because the ZAR is weaker and outputs are being cut ergo the respite in inflation we have is only temporary.
The SARB and Treasury is in a bind because they do not interfere directly with money supply and only use interest rates as their tool. But what do they do? Raise interest rates to trim inflation or lower interest rates to stimulate the economy?
In periods of stagflation house prices do not go up. As I see it the only thin holding up the market here is fear of prices rising again and delusion that prices will continue to rise. The banks are a lot wiser economically and their actions reflect realities.
In my long term and wider view the worlds major fiat money systems which back our currency are at their end and this in itself isnt new, there are hundreds of fiat money systems that have crashed but unfortunately this time it is global. There are many reasons why this is so and one would have to do the research to see but every graph you look at be it money supply, interest on debt, derivatives etc shows death by compounding.
This is bad news for us as we are downwind from the US, Britain, Japan etc and inextricably wound up through the financial markets and through exports and imports. The extreme measures taken by the US and Britain will affect us for sure...but a property boom I dont think so, at best a hedge against inflation but even that might not work out so good.
I have been living in RSA for the past 10 years and I have seen first hand the renter culture here.
Even when property was practically being given away during the turn of the century, the renters would never give up their fags, dumpies and their new Ford Bantams to get on the property ladder, preferring to pay their R 1000 rent rather than take out a R 200 000 bond.
As property prices actually rose beyond replacement value and rental dwellings were rehabbed for owner occupation, these loser renter types started howling about rising rents and being priced out of the property market.
Well they had their chance!
But it looks like another chance is on its way ...
Property is now valued below replacement cost in most of the country. Investing in stands, i.e. building plots, used to be a sure fire way to make money but now houses are selling with little or no value attached to the underlying ground. Meanwhile labour, bricks, cement continue to escalate in price.
My suggestion to priced out
renters : purchase an older property, knock down a couple of walls. Live in one half, rent out the other! When you can afford to live in the whole house, kick the tenant out!
Anon in die Karoo
My suggestion to anon in karoo is stop star gazing and return to planet earth.
It is quite simple. Buying is 3 times more expensive than renting. Why buy ? It is as simple as that.
There will be a time when houses become affordable again. 10% deposit, 3.5 times income. That is the time to buy if you must.
An interesting piece at Yahoo Finance discusses this further -
http://realestate.yahoo.com/promo/5-reasons-renting-still-beats-buying.html;
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