I hear the hearsay and am assuming that even though advertised prices are the same as they have always been, and estate agents are as dillusional as they always have been, buyers are paying much less for property. Around 30-50% less. Is this true? When the bubble really hits and the market and marketers become seriously desperate, will these lower 'real' prices be advertised on sites such as Seeff's?
I am trying to put the ole CTPB's rep on the line. Are all of our observations (and hopes) valid?
Would some people who have bought in recent times post a few details about their purchases? Size, price paid, price advertised, agency used?
People must be delusional if they think prices will drop a further 30-50%.
Prices have dropped by 30% since the beginning of last year and the bottom has been reached. Interest rates will be 10% by the end of the year making alot of property much more affordable than before.
Sure the banks want 10% deposit but that wont be a stumbling block to prices.
There is blogs like this one who are being set up by people who have never owned property hence their negative comments re this asset. There is no reason not to buy property and remember, its time in the market that should be important.
Property is down at the moment but will rise again in the future.
Anon#3, thanks for the thoughts. Allow me to consider each one.
1. Prices have dropped by 30% since the beginning of last year and the bottom has been reached.
Prices needed to drop by 50%-60% to be affordable based on incomes. If they've dropped 30% (which they haven't in many areas), then we're still only half way there.
2. Interest rates will be 10% by the end of the year making alot of property much more affordable than before.
Interest rates are meaningless to people drowning in debt and losing their jobs. Lower IRs will help property investors who got rich during the bubble, but for the 46 million South African who aren't rich IRs are irrelevant.
3. Sure the banks want 10% deposit but that wont be a stumbling block to prices.
I hear banks have been asking for 25% deposits, but let's say you're right and it's 10% and that you're looking at a deposit of about R95k on an average mid-section home. Do you really believe that the same South African middle class that can't pay its credit card bills, that's having its car repossessed, that's swamped debt consolidators, has got R95k lying around in the bank?
4. There is blogs like this one who are being set up by people who have never owned property hence their negative comments re this asset.
This is the standard bull response - "You're just jealous because you missed the bubble" - and it's the kind of thing 8-year-olds think up. I have owned property, as I'm sure have most of the people on this blog, but I sold in 2007 when I saw the wave breaking.
5. There is no reason not to buy property and remember, its time in the market that should be important.
Every day there are more reasons not to buy property - every For Sale sign, every car repo'd, every job lost - and those don't even include growing political risks. And as for "time in the market", that little myth has been well and truly nailed.
6. Property is down at the moment but will rise again in the future.
I agree 100%. But the future is an awfully long time. I see no recovery any time in the next three years.
Shew! Looks like you are a jack of all trades... but as we all know, they are usually masters of [fill in the blank].
While all your fools go back and forth; some praying for the property market to go up again, some cursing the market (like my bra Beanie) to go down further cause they are tired of living in their one bedroom, family of five, flat!!!
This is my general take!
1. For those that live above their means/affordability, you deserve what suffering has come your way! I say this only because I could have bought something double or triple what I bought, but I looked at the reasons I needed to own something, the purpose of my investment and also the fact that over and above your bond, you have levies, rates and taxes, water and electricity, etc.
2. Interest rates, interest rates! Beanster is one of those cocky okes that KNOW the answer and tend to generalise... well, let me say that some win and some lose when the interest rates go down! Interest rates help some... but not necessarily all (cause they are already deep in debt!!!)
3. Prices will go up, prices will go down! Thats going to happen, period!!! Beanie again thinks he has the answer that prices need to fall further. I am proud to say I dont know but for those who have the means to invest, and if they really want to, why not? If I need to buy something today, and the price is X, I will buy it. If it can wait, and I come back again, and it is price Y, then its a gamble that I take (prices fluctuate - up or down).
Lets have a healthy debate and not overshadow that YOU have the answers people! So many people with answers, yet so many problems out there!
Saks
PS Beanster, SARS must have lost my number broer. Should I carry on waiting or call them and give them my number again? LMAO
A bit of information needed here guys. As someone who has visted SA a number of times and who has /is considered / considering investing in property there, can someone give me a accurate idea of what has happened or will happen to real estate in the Constantia area over the last 12 months and the next 12 months.
Im drowning in conflicting takes on this so any thoughts are most welcome.
Sakkie, I've never claimed any secret knowledge and I never will. Your guess is as good as mine. But I do believe in the difference between an educated guess and one based on wishful thinking.
I'm also not sure why you resort to rather puerile personal attacks - again, the same reference to some imagined bitterness or material discomfort on my part. How strange! As for wishing prices to fall, I really don't care either way: I rent a beautiful home, have no debt, plenty of assets, and am free to move as I please. I suppose it would be nice to see prices come down a little because it would mean my rent would stay the same for the third years running, but that's a small concern.
As for your points:
1. Very sound, very logical, very pragmatic. I'm not sure I share your schadenfreude about people now in hot water, but your own approach is faultless.
2. You're a clever bloke so obviously you were being ironic when you accused me of generalizing by making a generalization. Yes? Again, we agree on IRs, that they will help some, but not all. It's the 'not all' part that is going to bite us in the bum.
3. Again, I'm assuming you were being tongue-in-cheek with this one: a partisan contribution to a polemical discussion in which you base your opinion on not having an opinion, and ask to have your "take" considered based on your self-confessed ignorance. Quite brilliantly written, sir. Well, I'M proud to say that I DO know - or at least have large amounts of data that strongly suggest - that prices need to fall further. Homes are completely out of reach for FTBs, and until they drop into range, the market is stuffed.
You say, "If I need to buy something today, and the price is X, I will buy it. If it can wait, and I come back again, and it is price Y, then its a gamble that I take (prices fluctuate - up or down)."
I hear what you're saying, but you've let a little word slip under your guard: "need". Need is relative, and ultimately we use it far too loosely. We need to buy food today, and petrol, and gas or electricity. We don't need to buy new cars or overpriced houses. And yet a lot of people think that those are needs. Show me one person who "needs" to buy a house and I'll show you someone who's bought the propaganda and is about to lose a bundle.
I agree, let's have a healthy debate, but let's first just double-check that we all know what a debate is. The last time I checked it worked like this. You have two opposing sides. Each side presents its case with absolute certainty, and attempts to demolish the arguments presented by the opposite side. In the end a winner is decided by a judge or a by an audience: by definition there can never be consensus at the end of a debate. I am happy to debate you until we turn blue in the face, but I think you don't want a debate, I think you want to win me over to your opinion. That's not a debate. That's talking kak in a pub.
@Anonymous looking to Constantia - be careful as there are moves afoot to develop low cost housing in this area - unpredictable result especially with the new government. Crime is also way up here. Focus on Clifton, Frensaye, Camps Bay and City Bowl area rather
just something amusing: Please read that article that describes Chris Pearson's opinion that low house prices are the Agent's and the Bank's fault. I mean I always knew that many of these agents are just morons but I did not know that they are responsible for the downturn now. Also interesting is the statement that the markets all over the world seem to improve, just not here in South Africa. This is just another BS article from a real estate agent. The crisis has just begun to touch this country, I just hope it will not get too bad.
When hyperinflation takes its toll, your precious property will be worth the same number of rand, but the rand will be worth less. Between now and the time the rand depreciates, the market will stabilize, but only because the rich will gobble up properties as investments...often paying for them in cash. The common man will have to wait until their pay increases and when it finally does they can buy again and create a bubble. The rich who own multiple properties will sell because they already live in mansions and then the bubble will burst-hyperinflation-selling-buying-the cycle continues.
One day people will get wind of this and that will be it for rich white crackers in SA.
The same thing is happening globally. The US is desperately trying to keep things afloat, but its a ship that was meant to sink.
I still think the market in SA will come down another 30%. There's just no money and no jobs and all kinds of crime and poverty. We've become accustomed to living the good 1st world life while just outside our burglar bars and fences the streets are filled with starving homeless. Once they get a little motivation and education they will make life hell for the pseudo-middleclass. The UK cannot take us all.
Oi mate. First WOrld Phonies in a Third World Country. SO true. Gentrified little holes in a crumbling block of Swiss Cheese. SA needs to give communism or socialism a shot.
I like to read the comments thAt are optimistic aobut the economy comin back. You can almos see them shakin in their boots! LOL.
30-50% less? In your dreams. What nonsense. There has never been a single house that sold for 30-50% less than what it was bought for. Not for any economic reason that is. Social decline or criminal elements, well ...
Buy a shack if you do not want to pay for a descent house to live in, but forget about getting something for nothing. Please.
'Prices needed to drop by 50%-60% to be affordable based on incomes'! Yeah right. Like farmers are going to drop the price of milk or Checkers their price of potatoes or Toyota their price of cars or Pick 'n Pay their price of clothes just to MAKE IT AFFORDABLE. Ain't gonna happen, sorry. Neither will those with cupped hands get property for 60% less - when it becomes affordable. You are waiting to win the lotto my friend. Sorry, its not gonna happen.
Wow! I feel like I've been smoking the lawn after reading through this lot. Is there a hint of desperation in the air? Are we all comfortably numb? In the world of supply and demand only one thing really matters... can you move that inventory and still make a profit that comes out ahead of the opportunity cost? Our last reail sales slump says no-no to that one. Sure, that 'asset', be it a bullion bar or a vacant plot in Bishop's Court, has a nominal paper value. How liquid is that asset? Can you move it right now and get cash in hand for it? the question is not so much whether that AU bar is worht 350k but rahter whether anyone will part with 450k in cash to own that bar right now?
Like a pc that is rebooted, the global economy is deleveraging easy credit (as opposed to cheap) even those who've borrowed to the hilt have yet to notice that little factoid viz a viz their assumption that the paper value of assets still reflect the real selling value of said assets. By definition that means that it's just become disproportionately difficult to borrow money, or rather the 'vaule' represented by money. Don't take my word for it, go look at the credit spreads on the money market.
In the end, whether you think deflation or inflation is on the cards? I coyldn't care less.. The questionis: Can you move that asset at the selling price you want? And is there a buyer who has the cash to buy it? If yes, then bully for you. I know I'm not buying in Parklands for any price, or anywhere for that matter, not for a while anyway, not till I'm certain of whether we have an aconomy to buy into anyway.
Peter, you say that there has never been a single house sold for 30-50% less than it was bought for. I can show you a bunch in the US, but that's not the point. The point is that right now houses are on the market for 80, 100, 300% more than they were bought for. A 50% drop in prices certainly doesn't imply selling for less than the place was bought for.
As for your second post, it taps into the myth of infinite growth - that prices will always go up, that consumers will always consume more, etc etc. I'm afraid that's simply not the case, and in the next few decades that's going to be made very clear. I for one fully expect to see cars getting cheaper as demand drops. On the other hand, I see food getting exponentially more expensive as demand rises and production gets squeezed. You're right about Checkers. Dead wrong on Toyota.
'A 50% drop in prices certainly doesn't imply selling for less than the place was bought for.'?
I am afraid, then, that I have been debating a different concept. Apologies.
Regarding infinite growth - no. I definately know that the value of property does not always go up. But the myth rather is suggesting that you know what is going to happen to the value of property.
Lastly, inflation (and I do not mean silly monthly CPI figures or weekly moves) determines that the cost of property increases and, unlike oil that is manipulated by demand and production, labour and raw material (70 % of cost) are always creeping upwards because the buying power of your rand contantly decreases.
Peter, I can show you hundreds of houses that ARE selling here in SA for 30% to 50% less than what they were paid for in 2007. Guess what? the bank even financed them at 100% of their original purchase price and are even willing to write off up to 50% of the their shortfall when the property sells for 30% to 50% less today. From a valuation perspective, regardless of whether it was a forced sale of not, let me assure you that when a bank valuer comes around to your house to value it and the neighbouring house sold for this sort of discount, he does not know it was forced. Therefore, very quickly your house too falls in line with the new pricing level - 30% to 50% below what it was purchased for at the peak, or what you thought it was worth at the peak.
There has always been exceptional sales in execution that allowed a good buy. They are far and few between and I am yet to meet one of the few lucky people who managed to be at the right place at the right time. But this is not the price of property falling by 30-50%. Just as much as one liquidated shopping mall means that retail is bad business.
And unless you live in a small mining town where the mine is closing, the value of your house will not fall if your neighbour loses his due to bad debt, don't worry.
I am sorry to hear your insults towards bank valuators. You will be amazed how competent and market wise they are. But even if (this does not happen without a serious criminal investigation) a bank is willing to write off 50%, then it is due to fraud on the side of the buyer - false info, not property prices. And certainly not an everyday occurance.
This does not take away the fact that many properties were put up for sale with unrealistic premiums and inexperienced buyers (like me) paying too much.
But it certainly doesn't mean that we will be able to buy houses for 1/2 price. Like everyone, I only hear of these 'bargains'... because they are not around every corner as the sensationalistic and doomsday crowds report. And I am seriously looking to buy.
It seems to me you are very much 'out of the loop' (although recovery auction programs are littered across the papers). I've found plenty at the Alliance Group auctions.
I have no issues with bank valuers (have done plenty outsourced work on their behalf), it's just that they are so out of touch with the 'cold face' of today's market.
Beanz, my broer... this is an online discussion. If you take it personal, then thats your prerogative! I was not the one convinced that SARS is going to come running after me LOL
I am glad to hear that your assets are working for you. Not bad in a time when the recession has affected every investor... then again, if you dont have property as an investment (which is actually not a bad or good thing, just saying), then it makes me wonder what your magic formulae is for investing? So share some tips for the fans...
As they say "Different strokes for different folks". Its your money and I am glad that you are doing what you feel is best. On my side, the last thing I want is to pay rent at the age of 60. Hence me happy with my purchase. I have many a friend that are like you. Renting, mid-life, saving away. Nothing wrong with that if you ask me... just that the last thing I want closer to retirement, is worrying about a roof under my head that I can call mine and not being evicted or asked to move because the place was sold?!
Last thing I need is online friends Beanz. So I definitely dont want to win you over LOL I guess I'm bringing you back down to reality cause you come across as one of those blokes that KNOW "it" :wink:
I mean you did re-iterate "Well, I'M proud to say that I DO know - or at least have large amounts of data that strongly suggest - that prices need to fall further." You using John Loos' data? Data from the UK? Or US? I cant believe you believe those analysts. I dont rely on peoples stats to tell me what to do with my money. I can think for myself, thank you very much :wink:
And you prove my earlier point "Show me one person who "needs" to buy a house and I'll show you someone who's bought the propaganda and is about to lose a bundle."
21 comments:
Chicken Dumplings says:
I hear the hearsay and am assuming that even though advertised prices are the same as they have always been, and estate agents are as dillusional as they always have been, buyers are paying much less for property. Around 30-50% less. Is this true? When the bubble really hits and the market and marketers become seriously desperate, will these lower 'real' prices be advertised on sites such as Seeff's?
I am trying to put the ole CTPB's rep on the line. Are all of our observations (and hopes) valid?
Would some people who have bought in recent times post a few details about their purchases? Size, price paid, price advertised, agency used?
Thanks
ah, its delusional. I don't want some ass to correct me before I can do it myself. Can we get spellcheck on this mofo?
Respectfully,
Chicken Dumplings
People must be delusional if they think prices will drop a further 30-50%.
Prices have dropped by 30% since the beginning of last year and the bottom has been reached. Interest rates will be 10% by the end of the year making alot of property much more affordable than before.
Sure the banks want 10% deposit but that wont be a stumbling block to prices.
There is blogs like this one who are being set up by people who have never owned property hence their negative comments re this asset. There is no reason not to buy property and remember, its time in the market that should be important.
Property is down at the moment but will rise again in the future.
Anon#3, thanks for the thoughts. Allow me to consider each one.
1. Prices have dropped by 30% since the beginning of last year and the bottom has been reached.
Prices needed to drop by 50%-60% to be affordable based on incomes. If they've dropped 30% (which they haven't in many areas), then we're still only half way there.
2. Interest rates will be 10% by the end of the year making alot of property much more affordable than before.
Interest rates are meaningless to people drowning in debt and losing their jobs. Lower IRs will help property investors who got rich during the bubble, but for the 46 million South African who aren't rich IRs are irrelevant.
3. Sure the banks want 10% deposit but that wont be a stumbling block to prices.
I hear banks have been asking for 25% deposits, but let's say you're right and it's 10% and that you're looking at a deposit of about R95k on an average mid-section home. Do you really believe that the same South African middle class that can't pay its credit card bills, that's having its car repossessed, that's swamped debt consolidators, has got R95k lying around in the bank?
4. There is blogs like this one who are being set up by people who have never owned property hence their negative comments re this asset.
This is the standard bull response - "You're just jealous because you missed the bubble" - and it's the kind of thing 8-year-olds think up. I have owned property, as I'm sure have most of the people on this blog, but I sold in 2007 when I saw the wave breaking.
5. There is no reason not to buy property and remember, its time in the market that should be important.
Every day there are more reasons not to buy property - every For Sale sign, every car repo'd, every job lost - and those don't even include growing political risks. And as for "time in the market", that little myth has been well and truly nailed.
6. Property is down at the moment but will rise again in the future.
I agree 100%. But the future is an awfully long time. I see no recovery any time in the next three years.
Beanster,
Shew! Looks like you are a jack of all trades... but as we all know, they are usually masters of [fill in the blank].
While all your fools go back and forth; some praying for the property market to go up again, some cursing the market (like my bra Beanie) to go down further cause they are tired of living in their one bedroom, family of five, flat!!!
This is my general take!
1. For those that live above their means/affordability, you deserve what suffering has come your way! I say this only because I could have bought something double or triple what I bought, but I looked at the reasons I needed to own something, the purpose of my investment and also the fact that over and above your bond, you have levies, rates and taxes, water and electricity, etc.
2. Interest rates, interest rates! Beanster is one of those cocky okes that KNOW the answer and tend to generalise... well, let me say that some win and some lose when the interest rates go down! Interest rates help some... but not necessarily all (cause they are already deep in debt!!!)
3. Prices will go up, prices will go down! Thats going to happen, period!!! Beanie again thinks he has the answer that prices need to fall further. I am proud to say I dont know but for those who have the means to invest, and if they really want to, why not? If I need to buy something today, and the price is X, I will buy it. If it can wait, and I come back again, and it is price Y, then its a gamble that I take (prices fluctuate - up or down).
Lets have a healthy debate and not overshadow that YOU have the answers people! So many people with answers, yet so many problems out there!
Saks
PS Beanster, SARS must have lost my number broer. Should I carry on waiting or call them and give them my number again? LMAO
A bit of information needed here guys. As someone who has visted SA a number of times and who has /is considered / considering investing in property there, can someone give me a accurate idea of what has happened or will happen to real estate in the Constantia area over the last 12 months and the next 12 months.
Im drowning in conflicting takes on this so any thoughts are most welcome.
Regards
Sakkie, I've never claimed any secret knowledge and I never will. Your guess is as good as mine. But I do believe in the difference between an educated guess and one based on wishful thinking.
I'm also not sure why you resort to rather puerile personal attacks - again, the same reference to some imagined bitterness or material discomfort on my part. How strange! As for wishing prices to fall, I really don't care either way: I rent a beautiful home, have no debt, plenty of assets, and am free to move as I please. I suppose it would be nice to see prices come down a little because it would mean my rent would stay the same for the third years running, but that's a small concern.
As for your points:
1. Very sound, very logical, very pragmatic. I'm not sure I share your schadenfreude about people now in hot water, but your own approach is faultless.
2. You're a clever bloke so obviously you were being ironic when you accused me of generalizing by making a generalization. Yes? Again, we agree on IRs, that they will help some, but not all. It's the 'not all' part that is going to bite us in the bum.
3. Again, I'm assuming you were being tongue-in-cheek with this one: a partisan contribution to a polemical discussion in which you base your opinion on not having an opinion, and ask to have your "take" considered based on your self-confessed ignorance. Quite brilliantly written, sir. Well, I'M proud to say that I DO know - or at least have large amounts of data that strongly suggest - that prices need to fall further. Homes are completely out of reach for FTBs, and until they drop into range, the market is stuffed.
You say, "If I need to buy something today, and the price is X, I will buy it. If it can wait, and I come back again, and it is price Y, then its a gamble that I take (prices fluctuate - up or down)."
I hear what you're saying, but you've let a little word slip under your guard: "need". Need is relative, and ultimately we use it far too loosely. We need to buy food today, and petrol, and gas or electricity. We don't need to buy new cars or overpriced houses. And yet a lot of people think that those are needs. Show me one person who "needs" to buy a house and I'll show you someone who's bought the propaganda and is about to lose a bundle.
I agree, let's have a healthy debate, but let's first just double-check that we all know what a debate is. The last time I checked it worked like this. You have two opposing sides. Each side presents its case with absolute certainty, and attempts to demolish the arguments presented by the opposite side. In the end a winner is decided by a judge or a by an audience: by definition there can never be consensus at the end of a debate. I am happy to debate you until we turn blue in the face, but I think you don't want a debate, I think you want to win me over to your opinion. That's not a debate. That's talking kak in a pub.
@Anonymous looking to Constantia - be careful as there are moves afoot to develop low cost housing in this area - unpredictable result especially with the new government. Crime is also way up here. Focus on Clifton, Frensaye, Camps Bay and City Bowl area rather
just something amusing: Please read that article that describes Chris Pearson's opinion that low house prices are the Agent's and the Bank's fault. I mean I always knew that many of these agents are just morons but I did not know that they are responsible for the downturn now.
Also interesting is the statement that the markets all over the world seem to improve, just not here in South Africa.
This is just another BS article from a real estate agent.
The crisis has just begun to touch this country, I just hope it will not get too bad.
http://property.iafrica.com/propertynews/1621101.htm
Hyperinflation will save the market:
When hyperinflation takes its toll, your precious property will be worth the same number of rand, but the rand will be worth less. Between now and the time the rand depreciates, the market will stabilize, but only because the rich will gobble up properties as investments...often paying for them in cash. The common man will have to wait until their pay increases and when it finally does they can buy again and create a bubble. The rich who own multiple properties will sell because they already live in mansions and then the bubble will burst-hyperinflation-selling-buying-the cycle continues.
One day people will get wind of this and that will be it for rich white crackers in SA.
The same thing is happening globally. The US is desperately trying to keep things afloat, but its a ship that was meant to sink.
I still think the market in SA will come down another 30%. There's just no money and no jobs and all kinds of crime and poverty. We've become accustomed to living the good 1st world life while just outside our burglar bars and fences the streets are filled with starving homeless. Once they get a little motivation and education they will make life hell for the pseudo-middleclass. The UK cannot take us all.
Oi mate. First WOrld Phonies in a Third World Country. SO true. Gentrified little holes in a crumbling block of Swiss Cheese. SA needs to give communism or socialism a shot.
I like to read the comments thAt are optimistic aobut the economy comin back. You can almos see them shakin in their boots! LOL.
30-50% less? In your dreams. What nonsense. There has never been a single house that sold for 30-50% less than what it was bought for. Not for any economic reason that is. Social decline or criminal elements, well ...
Buy a shack if you do not want to pay for a descent house to live in, but forget about getting something for nothing. Please.
'Prices needed to drop by 50%-60% to be affordable based on incomes'! Yeah right. Like farmers are going to drop the price of milk or Checkers their price of potatoes or Toyota their price of cars or Pick 'n Pay their price of clothes just to MAKE IT AFFORDABLE. Ain't gonna happen, sorry. Neither will those with cupped hands get property for 60% less - when it becomes affordable. You are waiting to win the lotto my friend. Sorry, its not gonna happen.
Wow! I feel like I've been smoking the lawn after reading through this lot. Is there a hint of desperation in the air? Are we all comfortably numb? In the world of supply and demand only one thing really matters... can you move that inventory and still make a profit that comes out ahead of the opportunity cost? Our last reail sales slump says no-no to that one. Sure, that 'asset', be it a bullion bar or a vacant plot in Bishop's Court, has a nominal paper value. How liquid is that asset? Can you move it right now and get cash in hand for it? the question is not so much whether that AU bar is worht 350k but rahter whether anyone will part with 450k in cash to own that bar right now?
Like a pc that is rebooted, the global economy is deleveraging easy credit (as opposed to cheap) even those who've borrowed to the hilt have yet to notice that little factoid viz a viz their assumption that the paper value of assets still reflect the real selling value of said assets. By definition that means that it's just become disproportionately difficult to borrow money, or rather the 'vaule' represented by money. Don't take my word for it, go look at the credit spreads on the money market.
In the end, whether you think deflation or inflation is on the cards? I coyldn't care less.. The questionis: Can you move that asset at the selling price you want? And is there a buyer who has the cash to buy it? If yes, then bully for you. I know I'm not buying in Parklands for any price, or anywhere for that matter, not for a while anyway, not till I'm certain of whether we have an aconomy to buy into anyway.
Peter, you say that there has never been a single house sold for 30-50% less than it was bought for. I can show you a bunch in the US, but that's not the point. The point is that right now houses are on the market for 80, 100, 300% more than they were bought for. A 50% drop in prices certainly doesn't imply selling for less than the place was bought for.
As for your second post, it taps into the myth of infinite growth - that prices will always go up, that consumers will always consume more, etc etc. I'm afraid that's simply not the case, and in the next few decades that's going to be made very clear. I for one fully expect to see cars getting cheaper as demand drops. On the other hand, I see food getting exponentially more expensive as demand rises and production gets squeezed. You're right about Checkers. Dead wrong on Toyota.
'A 50% drop in prices certainly doesn't imply selling for less than the place was bought for.'?
I am afraid, then, that I have been debating a different concept. Apologies.
Regarding infinite growth - no. I definately know that the value of property does not always go up. But the myth rather is suggesting that you know what is going to happen to the value of property.
Lastly, inflation (and I do not mean silly monthly CPI figures or weekly moves) determines that the cost of property increases and, unlike oil that is manipulated by demand and production, labour and raw material (70 % of cost) are always creeping upwards because the buying power of your rand contantly decreases.
Peter, I can show you hundreds of houses that ARE selling here in SA for 30% to 50% less than what they were paid for in 2007. Guess what? the bank even financed them at 100% of their original purchase price and are even willing to write off up to 50% of the their shortfall when the property sells for 30% to 50% less today. From a valuation perspective, regardless of whether it was a forced sale of not, let me assure you that when a bank valuer comes around to your house to value it and the neighbouring house sold for this sort of discount, he does not know it was forced. Therefore, very quickly your house too falls in line with the new pricing level - 30% to 50% below what it was purchased for at the peak, or what you thought it was worth at the peak.
propxchanja
There has always been exceptional sales in execution that allowed a good buy. They are far and few between and I am yet to meet one of the few lucky people who managed to be at the right place at the right time. But this is not the price of property falling by 30-50%. Just as much as one liquidated shopping mall means that retail is bad business.
And unless you live in a small mining town where the mine is closing, the value of your house will not fall if your neighbour loses his due to bad debt, don't worry.
I am sorry to hear your insults towards bank valuators. You will be amazed how competent and market wise they are. But even if (this does not happen without a serious criminal investigation) a bank is willing to write off 50%, then it is due to fraud on the side of the buyer - false info, not property prices. And certainly not an everyday occurance.
This does not take away the fact that many properties were put up for sale with unrealistic premiums and inexperienced buyers (like me) paying too much.
But it certainly doesn't mean that we will be able to buy houses for 1/2 price. Like everyone, I only hear of these 'bargains'... because they are not around every corner as the sensationalistic and doomsday crowds report. And I am seriously looking to buy.
Peter,
It seems to me you are very much 'out of the loop' (although recovery auction programs are littered across the papers). I've found plenty at the Alliance Group auctions.
I have no issues with bank valuers (have done plenty outsourced work on their behalf), it's just that they are so out of touch with the 'cold face' of today's market.
Beanz, my broer... this is an online discussion. If you take it personal, then thats your prerogative! I was not the one convinced that SARS is going to come running after me LOL
I am glad to hear that your assets are working for you. Not bad in a time when the recession has affected every investor... then again, if you dont have property as an investment (which is actually not a bad or good thing, just saying), then it makes me wonder what your magic formulae is for investing? So share some tips for the fans...
As they say "Different strokes for different folks". Its your money and I am glad that you are doing what you feel is best. On my side, the last thing I want is to pay rent at the age of 60. Hence me happy with my purchase. I have many a friend that are like you. Renting, mid-life, saving away. Nothing wrong with that if you ask me... just that the last thing I want closer to retirement, is worrying about a roof under my head that I can call mine and not being evicted or asked to move because the place was sold?!
Last thing I need is online friends Beanz. So I definitely dont want to win you over LOL I guess I'm bringing you back down to reality cause you come across as one of those blokes that KNOW "it" :wink:
I mean you did re-iterate "Well, I'M proud to say that I DO know - or at least have large amounts of data that strongly suggest - that prices need to fall further." You using John Loos' data? Data from the UK? Or US? I cant believe you believe those analysts. I dont rely on peoples stats to tell me what to do with my money. I can think for myself, thank you very much :wink:
And you prove my earlier point "Show me one person who "needs" to buy a house and I'll show you someone who's bought the propaganda and is about to lose a bundle."
Such a shame I tell ya, such a shame!
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