You are obviously not worried about prices going up but rather if they are going to go down...so why worry, just wait.
When everyone thinks that it cannot get any worse that will be the bottom. Right now most people and newspapers in SA are still uninterested and think it will be over in a few months...that can only mean one thing.
Hi, I am in a similar situation, but have pretty much decided "NO". Do yourself a favour and build a good amortisation spreadsheet showing how much the captital and interest payments are each month, how much you owe for each month of the lifetime of the mortgage you will be taking. Also build in the value of the property when purchased and an assumed annual percentage price increase. Put this against you monthly payments for your mortgage e.g. assumed property value at each month.
Next take your deposit size and an assumed interest rate and put this down as a monthly value invested.
Finally, take an assumed monthly payment for rental as the alternative to buying.
At this point in time, for any given month, you should be able to have a figure based on your starting position (desposit available) to work out whether buy or "save deposit and rent" will leave you better or worse off should you have to sell in any given month. (Appreciation of property price or investment LESS cumulative cost of interest or renting).
I think you will be shocked in the current environment with high interest rates and almost zero property price growth how many years you will have to keep your house before buying leaves you better off!
This property in Oranjezicht was listed for months at 7m and did not sell (see old listing here).
Now it's listed for 8.2m - a whopping 17% increase !
What's going on here? Is the seller just being unrealistic or have they seen a sudden surge in interest in this upmarket CT area, and if so will it sustain over the next 6 months?
A little off-topic but the latest sucker's rally has brought this one to the fore again. My dad (here in South Africa) is happy because stockmarkets around the world are finally 'recovering'. I've tried explaining the collapse thing to him but he accused me of listening to 'communist ideas'. He says your money is always safe in the stockmarket (he's 73) and wants to know when I'm going to start saving for a 'proper pension' and buy a policy. Anyone have any advice about lying to your old parents about what you're really doing with your assets and abandoning the economic model that's seen him retire comfortably in a cement shoebox in the suburbs?
I find it hard to believe the willing denial of pretty much everyone in this global economy. Obama is screwing up the USA's already screwed up economy and the rest of the world is following that idiotic lead duck of a country into what will be the worst economic meltdown of all time. You won't be able to even wipe your ass with the dollar, it will be worthless because dollars are much more uncomfortable than double ply toilet paper.
Money has been spread too thin!!! These speculators and credit bandits should not have been able to do what they did, and now they are getting bailed out with trillions of dollars!!! The assholes are getting away with murder! America and the rest of the world needs to cut back in spending, yet they are doing the opposite and Obama is letting them borrow more money to throw at ridiculous shit. This guy has proven to be amazingly bad so far, and right now everyone people are just blind to simple economics and when it comes down to it, ethics.
Does anyone think that the SA government will come up with a bailout plan and will it be effective? Or does anyone think an economic meltdown will trigger utter chaos in S Africa?
Does anyone on this blog question OBAMA, and what do they think the effects of his actions will be in SA?
Hi, I too am interested in purchasing a property to live in later this year. It is in a new suburb with about 200 new houses planned. Purchase price 3 yrs back was R400000. The price now from agents are between R450000 and R480000. This has been the price for the last 2 years. There are currently 1 agent who has had about 10 of these houses on his books for the last 2 years.
I was approached by someone who wanted to offload their property for R410000 in December last year. Reason I did not take it was because I am stuck on the other side of the country until September.
Will it be best to go to the agent and make an offer of R400000? or do I just take it at R450000? or do I try contacting the owners and negotiate a selling price with them?
I can qualify for a R650000 bond but my wife is very interested in these little houses as it is ideal for my small little family and its close to the kids school.
Below are some news snippets from the US and Britain, note the dates.
Evening Standard - HighBeam Research - Feb 9, 2005 AS MANY as six million people with endowment mortgages may face a shortfall that will leave them in financial difficulty, it is claimed today. ...
Europe Intelligence Wire - AccessMyLibrary.com - Jul 25, 2006 A MORTGAGE crisis is looming for first-time buyers over the aggressive marketing of interest-only and 100pc mortgages by banks and building societies, ...
Independent - May 18, 2007 By Jane Padgham. America's sub-prime mortgage crisis will not harm the broader US economy, the Federal Reserve chairman Ben Bernanke confidently predicted ...
Ok so house prices are still falling there in 2009. What this shows is how long bubbles actually take to wind down...as long as they took to create.
And yesterday the Mainstream Media here has finally stated what this blog has been saying for ages.
SA faces long housing recession Johannesburg - House prices are likely to fall at a rate of double digits in 2009 despite the prospect of another 300 basis points in interest rate cuts, says First National Bank.
FNB property strategist John Loos says the average drop in house prices is likely to exceed 10% year-on-year by mid-2009. And while further rate cuts may well start to stimulate demand for property again towards year-end, any upturn could be short-lived.
Neil, Looks like there is a new estate agent, probably thinks that if she lists it at 8 and then drops a bar negotiating she'll be able to flog it for seven... Other than that, no good reasons. It still looks like a shit house.
http://cluborlov.blogspot.com/ The blog is run by Dimitri Orlov who's claim to fame was witnessing the Post-Soviet Collapse. His book "Reinventing Collapse" predicts the same scenario for the US. He might be wrong of course, but he has great humour and interesting insights that seem a lot more useful than the crazies with their "BUY GUNS- BUY GOLD The Bilderburger Jews are taking over the world!!!" type of stuff you see so much of on US sites.
The reason for asking that you guys speculate on a 8% prime lending is that in my current situation (where I'm staying now) buying would make more sense. I suppose that would be the case for most sub 500k houses/apartments etc.
When you buy a property, it should not be for investment purposes but first of all it should be because you like the place and want to be your own boss (no more landlord to tell you what you can or cant do, have a pet etc...) and instead of paying rent monthly you pay your own bond. At the end you will have something to show.
The difference between the rental and the bond payments for the house I want to buy to live in is less than R1000 with an interest rate of 12% and a 10% deposit. (Current price = R450000.00)
It would make sense to rather purchase than to rent it. I would also have the freedom of making any changes to the property.
20 comments:
Nothing posted - Rather late than never I guess - What are everyones thoughts of buying now to live in?
This will be my first purchase - looking in the 1.5m price range, suburb undecided.
My main concern is paying 1.5m and in six months time its with 1.1m.
Any response appreciated.
Brett,
You are obviously not worried about prices going up but rather if they are going to go down...so why worry, just wait.
When everyone thinks that it cannot get any worse that will be the bottom. Right now most people and newspapers in SA are still uninterested and think it will be over in a few months...that can only mean one thing.
Hi, I am in a similar situation, but have pretty much decided "NO". Do yourself a favour and build a good amortisation spreadsheet showing how much the captital and interest payments are each month, how much you owe for each month of the lifetime of the mortgage you will be taking. Also build in the value of the property when purchased and an assumed annual percentage price increase. Put this against you monthly payments for your mortgage e.g. assumed property value at each month.
Next take your deposit size and an assumed interest rate and put this down as a monthly value invested.
Finally, take an assumed monthly payment for rental as the alternative to buying.
At this point in time, for any given month, you should be able to have a figure based on your starting position (desposit available) to work out whether buy or "save deposit and rent" will leave you better or worse off should you have to sell in any given month. (Appreciation of property price or investment LESS cumulative cost of interest or renting).
I think you will be shocked in the current environment with high interest rates and almost zero property price growth how many years you will have to keep your house before buying leaves you better off!
On a different topic, this one is puzzles me:
This property in Oranjezicht was listed for months at 7m and did not sell (see old listing here).
Now it's listed for 8.2m - a whopping 17% increase !
What's going on here? Is the seller just being unrealistic or have they seen a sudden surge in interest in this upmarket CT area, and if so will it sustain over the next 6 months?
Interested in your thoughts ...
A little off-topic but the latest sucker's rally has brought this one to the fore again.
My dad (here in South Africa) is happy because stockmarkets around the world are finally 'recovering'.
I've tried explaining the collapse thing to him but he accused me of listening to 'communist ideas'.
He says your money is always safe in the stockmarket (he's 73) and wants to know when I'm going to start saving for a 'proper pension' and buy a policy.
Anyone have any advice about lying to your old parents about what you're really doing with your assets and abandoning the economic model that's seen him retire comfortably in a cement shoebox in the suburbs?
Whoops, wrong blog. Sorry guys, this happens when you have several blogger sites open at the same time.
I find it hard to believe the willing denial of pretty much everyone in this global economy. Obama is screwing up the USA's already screwed up economy and the rest of the world is following that idiotic lead duck of a country into what will be the worst economic meltdown of all time. You won't be able to even wipe your ass with the dollar, it will be worthless because dollars are much more uncomfortable than double ply toilet paper.
Money has been spread too thin!!! These speculators and credit bandits should not have been able to do what they did, and now they are getting bailed out with trillions of dollars!!! The assholes are getting away with murder! America and the rest of the world needs to cut back in spending, yet they are doing the opposite and Obama is letting them borrow more money to throw at ridiculous shit. This guy has proven to be amazingly bad so far, and right now everyone people are just blind to simple economics and when it comes down to it, ethics.
Does anyone think that the SA government will come up with a bailout plan and will it be effective? Or does anyone think an economic meltdown will trigger utter chaos in S Africa?
Does anyone on this blog question OBAMA, and what do they think the effects of his actions will be in SA?
Hi, I too am interested in purchasing a property to live in later this year. It is in a new suburb with about 200 new houses planned. Purchase price 3 yrs back was R400000. The price now from agents are between R450000 and R480000. This has been the price for the last 2 years. There are currently 1 agent who has had about 10 of these houses on his books for the last 2 years.
I was approached by someone who wanted to offload their property for R410000 in December last year. Reason I did not take it was because I am stuck on the other side of the country until September.
Will it be best to go to the agent and make an offer of R400000? or do I just take it at R450000? or do I try contacting the owners and negotiate a selling price with them?
I can qualify for a R650000 bond but my wife is very interested in these little houses as it is ideal for my small little family and its close to the kids school.
Any advice would be appreciated.
Anonomous Blue Downs
Hi All,
Thanks for the thought provoking blog. Those of you "in the know" can you help us with some scenario planning?
Here's the scenario: If the prime rate dropped to say 8% would that stimulate some demand for property?
Another way of looking at it is to say: At which nominal interest rates would current asking prices seem more reasonable?
Mr G, Anon et al
Below are some news snippets from the US and Britain, note the dates.
Evening Standard - HighBeam Research - Feb 9, 2005
AS MANY as six million people with endowment mortgages may face a shortfall that will leave them in financial difficulty, it is claimed today. ...
Europe Intelligence Wire - AccessMyLibrary.com - Jul 25, 2006
A MORTGAGE crisis is looming for first-time buyers over the aggressive marketing of interest-only and 100pc mortgages by banks and building societies, ...
Independent - May 18, 2007
By Jane Padgham. America's sub-prime mortgage crisis will not harm the broader US economy, the Federal Reserve chairman Ben Bernanke confidently predicted ...
Ok so house prices are still falling there in 2009. What this shows is how long bubbles actually take to wind down...as long as they took to create.
And yesterday the Mainstream Media here has finally stated what this blog has been saying for ages.
SA faces long housing recession
Johannesburg - House prices are likely to fall at a rate of double digits in 2009 despite the prospect of another 300 basis points in interest rate cuts, says First National Bank.
FNB property strategist John Loos says the average drop in house prices is likely to exceed 10% year-on-year by mid-2009. And while further rate cuts may well start to stimulate demand for property again towards year-end, any upturn could be short-lived.
http://www.fin24.com/articles/default/display_article.aspx?Nav=ns&ArticleID=1518-2386-2401_2490181
Short lived? Yes...when everyone realizes that low interest rates do not a booming economy make.
Anon Blue Downs,
Rent one of the houses!..why pay a premium for something thats devaluing every month? Wait 2 or 3 years and then pick it up for half that
I will take nivaga's advice and check which option would be best.
Anonymous Blue Downs
Neil, Looks like there is a new estate agent, probably thinks that if she lists it at 8 and then drops a bar negotiating she'll be able to flog it for seven... Other than that, no good reasons. It still looks like a shit house.
Ben, what blog were you posting that on?
@ ad
http://cluborlov.blogspot.com/ The blog is run by Dimitri Orlov who's claim to fame was witnessing the Post-Soviet Collapse. His book "Reinventing Collapse" predicts the same scenario for the US. He might be wrong of course, but he has great humour and interesting insights that seem a lot more useful than the crazies with their "BUY GUNS- BUY GOLD The Bilderburger Jews are taking over the world!!!" type of stuff you see so much of on US sites.
The reason for asking that you guys speculate on a 8% prime lending is that in my current situation (where I'm staying now) buying would make more sense. I suppose that would be the case for most sub 500k houses/apartments etc.
Would you guys agree with me?
When you buy a property, it should not be for investment purposes but first of all it should be because you like the place and want to be your own boss (no more landlord to tell you what you can or cant do, have a pet etc...) and instead of paying rent monthly you pay your own bond. At the end you will have something to show.
I agree with Mr G.
The difference between the rental and the bond payments for the house I want to buy to live in is less than R1000 with an interest rate of 12% and a 10% deposit. (Current price = R450000.00)
It would make sense to rather purchase than to rent it. I would also have the freedom of making any changes to the property.
Anonymous Blue Downs
would someone up in here please lick my balls?
2.24 am? you prob licking yours just fine lol
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