After last weeks jaunt into Sunday, we're back at the original Saturday open thread.
9 comments:
Bean Counter
said...
What are your thoughts that we're rapidly moving towards a bear trap / dead cat bounce in the SA property market?
Clearly our market's morale is closely linked to the UK's, and the property-obsessed Brits are falling hook line and sinker for the "green shoots" lie being punted by Gordon Brown and his lapdogs at the BBC. Only a matter of time before our own sheeple start responding to similar "green shoots" nonsense here from cheerleaders like Andrew Golding and Co?
I'm sure the banks' indexes are going to show continued price falls for the next few months, if for no other reason that they've started offering 100% mortgages to buyers at the bottom end of market again (more low-end properties sold = indexes show lower median prices) but South Africans have shown themselves very resilient to logic and economic realities.
Could we see an uptick in prices by the end of the year, setting the suckers up nicely for massive drops in 2010 and 2011?
But everything still boils down to affordability... Take an average family home in an average area (R1 million). Let's say the buyer wants 100% financing at 12% for 20 years. The monthly payment is R11,000. Factor in property taxes and the buyer is on the hook for about R140,000 per year (from post tax income). So the gross earnings needed is over R200,000 per year just for the house. The average middle class family cannot afford the payments on an average house in Cape Town.
I very much doubt that prices can go up - especially with SA not being immune to the world recession. In fact the recession will only start to bite SA in the second half of 2009 and into 2010.
Post World Cup SA will see real estate prices fall.
4 important patterns that are particularly relevant IMHO -
1/ The UK average income to average house price ratio shows that if previous patterns are followed the UK crash has 50% more to go lasting several years. The last crash had 6 blips up. The one they are having presently is only blip number 3.
2/ The SA real price fall needs to drop 63%. We are barely half way there. Our crash started the same time as the UKs so I wouldn't be surprised if we follow them down.
3/ The SA real price will bottom about 3 years after the US real price bottoms according to history. In 1930 economists were saying the worst of the US depression were over - in reality the worst happened in 1932. Likewise those saying the worst is over in the US today are also probably premature.
4/ Then there are the rent / house price and salary / house price ratios in SA which indicate houses are still way too high.
The only slight advantage SA has over these other countries is that we have much higher inflation so our real price can still fall significantly even though nominal falls remain small.
Sorry Sakkie, if SARS haven't called you it's because they think you're small fry. Not earning enough, sorry. But I'm glad it's not only been on your mind but you've been counting the days.
Beanz,no matter what comeback line you have, you know that you are the disgrace of this forum... sies!!! Spreading rumours about SARS... and now lying about SARS!
Sies tog my broer...
Now why dont you take that Opel Corsa of yours and go buy some brown bread from Spar, its on special :wink:
Sakkie, let me speak your language because apparently there's a communication gap here:
I fink dat you can like to fink dat you is more cleverer dan me. But de probleem is dat like all peoples who is dof, you just keeps harping on one line overs and overs again.
Now I am sure dat it are not your fault dat you are a mouf-breaver - siestog, Pappie and Mammie couldn't afford to live anywhere else dan under de power lines, so we can't blame you dat you has got mieliepap between your ears.
But here are an original fought: why don't you tries to contribute somefing worfwhile to dis forum, instead of talking fru your poephoel all de time?
9 comments:
What are your thoughts that we're rapidly moving towards a bear trap / dead cat bounce in the SA property market?
Clearly our market's morale is closely linked to the UK's, and the property-obsessed Brits are falling hook line and sinker for the "green shoots" lie being punted by Gordon Brown and his lapdogs at the BBC. Only a matter of time before our own sheeple start responding to similar "green shoots" nonsense here from cheerleaders like Andrew Golding and Co?
I'm sure the banks' indexes are going to show continued price falls for the next few months, if for no other reason that they've started offering 100% mortgages to buyers at the bottom end of market again (more low-end properties sold = indexes show lower median prices) but South Africans have shown themselves very resilient to logic and economic realities.
Could we see an uptick in prices by the end of the year, setting the suckers up nicely for massive drops in 2010 and 2011?
But everything still boils down to affordability...
Take an average family home in an average area (R1 million). Let's say the buyer wants 100% financing at 12% for 20 years.
The monthly payment is R11,000. Factor in property taxes and the buyer is on the hook for about R140,000 per year (from post tax income). So the gross earnings needed is over R200,000 per year just for the house.
The average middle class family cannot afford the payments on an average house in Cape Town.
I very much doubt that prices can go up - especially with SA not being immune to the world recession. In fact the recession will only start to bite SA in the second half of 2009 and into 2010.
Post World Cup SA will see real estate prices fall.
4 important patterns that are particularly relevant IMHO -
1/ The UK average income to average house price ratio shows that if previous patterns are followed the UK crash has 50% more to go lasting several years. The last crash had 6 blips up. The one they are having presently is only blip number 3.
2/ The SA real price fall needs to drop 63%. We are barely half way there. Our crash started the same time as the UKs so I wouldn't be surprised if we follow them down.
3/ The SA real price will bottom about 3 years after the US real price bottoms according to history. In 1930 economists were saying the worst of the US depression were over - in reality the worst happened in 1932. Likewise those saying the worst is over in the US today are also probably premature.
4/ Then there are the rent / house price and salary / house price ratios in SA which indicate houses are still way too high.
The only slight advantage SA has over these other countries is that we have much higher inflation so our real price can still fall significantly even though nominal falls remain small.
On Friday the Financial Times reported that interest rates will be going sharply up this week in the UK:
http://www.ft.com/cms/s/2/b726b16c-577c-11de-8c47-00144feabdc0.html
I.e. I expect the recent "upturn" will turn out be a blip on the way down...
property schmoperty
Beanie my broer!
While u on the reporting line, did you pass my message onto SARS? Its been about 2 months and I'm still waiting... the tea is getting cold!!!
Sorry Sakkie, if SARS haven't called you it's because they think you're small fry. Not earning enough, sorry. But I'm glad it's not only been on your mind but you've been counting the days.
Beanz,no matter what comeback line you have, you know that you are the disgrace of this forum... sies!!! Spreading rumours about SARS... and now lying about SARS!
Sies tog my broer...
Now why dont you take that Opel Corsa of yours and go buy some brown bread from Spar, its on special :wink:
Sakkie, let me speak your language because apparently there's a communication gap here:
I fink dat you can like to fink dat you is more cleverer dan me. But de probleem is dat like all peoples who is dof, you just keeps harping on one line overs and overs again.
Now I am sure dat it are not your fault dat you are a mouf-breaver - siestog, Pappie and Mammie couldn't afford to live anywhere else dan under de power lines, so we can't blame you dat you has got mieliepap between your ears.
But here are an original fought: why don't you tries to contribute somefing worfwhile to dis forum, instead of talking fru your poephoel all de time?
Soentjies,
BC
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