It's Saturday and the open thread. Also... WP JOU LEKKER DING!
14 comments:
Bean Counter
said...
Crunched my inventory numbers for the first time in 6 weeks, and guess what? Nada. Niente. Zip. Nothing moving. No sales from over 100 randomly picked Cape Town properties. About five have been taken off the market (not sold), and one ludicrous Camps Bay mansion has dropped its price by a couple of mil.
I simply do not believe that the market is picking up in SA. The more I look at the gridlock the more I am convinced that the much-hyped "rising prices" are a statistical glitch, the result of a few expensive properties selling to cash buyers who have called the bottom.
I see Allan Gray has joined a few other financial big hitters in calling an L-shaped recovery - equities to move sideways for a decade or more. Is this the way SA property is going? Gridlock with the stupid and the greedy refusing to "just give the place away", prices slowly returning to normality and real value as inflation chips away?
I think potential homebuyers are getting the message that our present economic troubles aren't just a blip on the golden stairway to Free Market Paradise. But who can say for sure? Hard data is thin on the ground. I personally know at least 2 individuals that are renting out their mortgaged homes, renting cheaper, alternative space for themselves while they hope the market recovers so they can unload their investments without taking a massive hit. Both these people work IT/Web freelance and they are kakking off, with no money for any luxuries and sometimes not even food. One of them bums shares a flat with a restaurant waiter and depends on the leftovers his new best buddy brings home after his shift. He has a BMW, but hardly any money for petrol to put in it. The other one, a chick, moved in with her boyfriend while she rentss out her kenilworth studio flat. she told me she would love to break up with the guy but then she would have to move her stuff on to the sidewalk. They eat lentils and pasta most nights.
Benny, Your friend should consider getting rid of the BMW but then he probably owes more on it than he can get for it.
I was recently looking for an apartment to rent or buy in the Cape Town city bowl. I am a so called first time buyer. In the few months that I was looking, I also noticed that all of the places that were for sale are still for sale now... at the same prices.
So I made the realisation:
Why should I buy a disgusting bachelor flat when I can rent a 2 bedroom flat with an amazing view for less outlay per month?
Yes, I know that renting is not ownership but I doubt if I bought something now I would make any money in the next few years.
I think people have realised this as the rental market is very strong at the moment. If you see something you like you gotta take it ASAP.
I don't think it is normal for rentals to be 20-30% of the bond repayment costs. That shows that something is out of whack.
Good to have you back Bean Counter - there certainly seems to be a concerted effort by the property folk to hype the market back up.
At the end of the day one has to return to the real price graph that we published here on the 29th May 2007. The updated version went up to 211 and has now dropped to 180. It is still much higher than the previous peaks. It needs to fall back to 90 to hit norm and about 73 to account for overshoot.
How people could possibly think there is a bottom already is a total mystery to me.
I wish you were right, CJ Said, but I am afraid only in your dreams will prices ever be that low again. And the electricity and increased labour costs will not help your prediction either.
Is it just me or is there suddenly a fresh gush of bad economics news all over the MSM?
Fresh waves of unemployed going off benefits in the US (7000 a day - the mind boggles at the knock-on effects for families, mortgages, etc); another major fall predicted in US house prices (11 percent still to go, which might leave Navada and Florida looking at 60 percent drops in total).
In SA and the UK they're suddenly talking about weak Christmas sales, and I'm also starting to smell desperate word-spin in all the articles about how our "property market is booming" - when you read between the lines all they're saying is that auctioneers are making a killing as people unload at well below what they wanted.
Is this the beginning of the next down-slope that will end in CJ's 60 percent total fall in SA prices? Dunno, but boy is this getting interesting again.
For those of you planning long term property investments be sure to see if your bargain will still be there as sea levels rise over the next 50 years or so. http://flood.firetree.net/
Obviously not something to worry about for the next few years, but don't bank on being able to leave a house in Muizenburg village to your children. Other totally screwed areas include Fish Hoek, Milnerton and Blouberg. The South Peninsula seems to lose all road access in a worst case scenario.
I agree with Bean Counter, the "real" economy seems to be in a pretty bad shape and all this "green shoots" talk seems like an attempt to hype it up into shape, at least for the time being. But here is what's interesting:
While the real economy and ordinary folks are hurting pretty badly, there is also tons of money sitting in cash or cash-like assets. This is the money printed by governments and "earned" by various folks like bankers, finance people, military contractors, etc., etc., in the past 20 or so "boom years".
So while ordinary folks are thinking how to survive until the next paycheck, the wealthy folks are desperately thinking where to invest the money that they have so that they don't loose to inflation (I am not that wealthy but I also have some money sitting in cash-like assets and there is not a day goes by that I don't think about this issue). I believe the recent stock market and rand "rally" is the result of this desperation. But I also think the overall economy is too weak to sustain it. In essence, the stock market is like a pyramid scheme now: your only hope is to sell at the top.
There are quite a few smart folks on this blog so I want to ask you: how do you think this will all play out? Where do you think all this cash is going to go?
I imagine local stackmarkets will implode along with the Great Sucker's rally in the west. There isn't anyone who can really predict the twists and turns that the economy is going to take in the near term but the ultimate destination isn't in doubt: Global Neo-feudalism. Lefty types and anti-globalisation activists have been saying this for years but if you dig around it turns out even the little yuppie financial types agree with them.
Read this Citibank report from 2006. http://www.scribd.com/doc/6674229/Citigroup-Mar-5-2006-Plutonomy-Report-Part-2
In short, the idea is that globalization will continue to accelerate income concentration at the expense of the bottom 90% of the population in developed countries (winner take all). The good side (as they see it), is that the spending of the top 10% might become sufficient to supplant the demand generated by the bottom 90% (that spending is already 40% of all US consumption). If this does occur, the result would be a seamless transition to a new social order of globally competitive elites and a vast pool of undifferentiated global labor (available at the same normative price). This should come as no surprise to anyone living in South Africa. Downward preasure on wages for the majority will continue to grow. Employment will continue to stagnate and our human capital will continue to erode. Market logic simply can't come up with any other outcome. The Trade Unions and the lefties know this of course so don't expect them accept becoming serfs quietly. Whatever you might think of Communism you have to give Karl Marx credit for predicting/explaining this perfectly. He was 100% in favour of free markets and deregulation. Not because he thought they would uplift the proles but because he believed they would make their lives so unbearable that they would eventually be forced to rise up and overthrow the Elites. The diffirence now is that the proles aren't even workers anymore. Most will admit that a society dominated by farmers, metalworkers and builders will at least be able to keep the light on (and c'mon, the Soviet Union did at least achieve industrialised Superpower status dispite all it's horrors) but what chance a society dominated by the long term unemployed? Diffirent story.
Personally I'm keeping my assets in phisical gold. It might not rise to the crazy hights of US$5000 like some say, but it pretty much guaranteed to keep most of it's present value, (unlike paper money/stocks/bonds etc.) I'm teaming up with some like minded friends and saving for farmland out in the sticks, as far as possible from concentrations of hungry poor people.
Hey Benny, sea level rise is a pet interest of mine, done some research and spoken to some interesting oceanography boffins at UCT.
The site you link to is way cool but the reality is FAR more extreme than the little blue blobs show. A lot of people think that a sea-level rise of 5 meters will just mean a different beach, with houses starting further back. They don't understand that by the time the oceans have risen 5 meters the human race will be in such chaos that home prices and suburban life will long be a thing of the past. For example: a 1-meter rise in sea levels will displace 13 million Bangladeshis. If we're lucky those 13 million will squeeze into other parts over over-crowded Bangladesh. If we're not lucky they'll spill over the borders, crossing into India or elsewhere, causing major economic and humanitarian crisis. And that's just one country. Make no mistake: a 1 meter rise will cause wars. 2 meters will destroy entire countries. 5 meters, and its all over. Not physically - there'll be plenty of dry land - but economically we won't survive.
The key to remember is that for every 1 meter the sea level rises, the horizontal reach of the waves is increased by 7 meters. In other words, the level goes up by 1 meter, the waves come an extra 7 meters inland. Given that the waves are already munching away at the Milnerton golf course (the cart track has already collapsed onto the beach), we'll only need a tiny rise to do some serious damage to our gently sloping shorelines.
The other major impact that slightly higher sea levels have is higher water tables. Raise the level by 2 meters on the site, and those little blue blobs start growing INLAND at places like Kommetjie, Westlake, and along the Liesbeek near Obs. Basically the low-lying areas turn into marshland. When there are floods (Cape Flats, anyone?) there's nowhere for the water to run off to, and the damage is much worse.
OK, end of lecture. But yes, you'd be INSANE to buy anywhere in Milnerton and surrounds, Noordhoek, Fishhoek or Westlake. Farmland in the sticks might be the right option!
Fuc. The doomsday scenarios are really piling up. I don't recall the future being quite such an alarming place when I was a young lad. Everything was supposed to be so new and shiny, we were all destined to look like models and live to 120 while we lazed around our IKEA pods and tried to figure out what to do with all our leisure time. "Computer, please bring the bubble car round. I'm late for the beach orgy," type of stuff.
These days a blog about property price collapse can't cover all the flavours of apocalypse we're staring in the face right now.
I just want to remind those who are planning for their dream holidays. If you are going to stay in cape town, then call cape reality international just to book your accommodation. Find luxury vacation holiday villas and more
14 comments:
Crunched my inventory numbers for the first time in 6 weeks, and guess what? Nada. Niente. Zip. Nothing moving. No sales from over 100 randomly picked Cape Town properties. About five have been taken off the market (not sold), and one ludicrous Camps Bay mansion has dropped its price by a couple of mil.
I simply do not believe that the market is picking up in SA. The more I look at the gridlock the more I am convinced that the much-hyped "rising prices" are a statistical glitch, the result of a few expensive properties selling to cash buyers who have called the bottom.
I see Allan Gray has joined a few other financial big hitters in calling an L-shaped recovery - equities to move sideways for a decade or more. Is this the way SA property is going? Gridlock with the stupid and the greedy refusing to "just give the place away", prices slowly returning to normality and real value as inflation chips away?
I think potential homebuyers are getting the message that our present economic troubles aren't just a blip on the golden stairway to Free Market Paradise. But who can say for sure? Hard data is thin on the ground. I personally know at least 2 individuals that are renting out their mortgaged homes, renting cheaper, alternative space for themselves while they hope the market recovers so they can unload their investments without taking a massive hit. Both these people work IT/Web freelance and they are kakking off, with no money for any luxuries and sometimes not even food. One of them bums shares a flat with a restaurant waiter and depends on the leftovers his new best buddy brings home after his shift. He has a BMW, but hardly any money for petrol to put in it. The other one, a chick, moved in with her boyfriend while she rentss out her kenilworth studio flat. she told me she would love to break up with the guy but then she would have to move her stuff on to the sidewalk. They eat lentils and pasta most nights.
Ps. Not judging these guys, they are my friends. the "bums" was meant to be be in the sentence about begging food. Typo
Benny,
Your friend should consider getting rid of the BMW but then he probably owes more on it than he can get for it.
I was recently looking for an apartment to rent or buy in the Cape Town city bowl. I am a so called first time buyer. In the few months that I was looking, I also noticed that all of the places that were for sale are still for sale now... at the same prices.
So I made the realisation:
Why should I buy a disgusting bachelor flat when I can rent a 2 bedroom flat with an amazing view for less outlay per month?
Yes, I know that renting is not ownership but I doubt if I bought something now I would make any money in the next few years.
I think people have realised this as the rental market is very strong at the moment. If you see something you like you gotta take it ASAP.
I don't think it is normal for rentals to be 20-30% of the bond repayment costs. That shows that something is out of whack.
Fascinating video...link from UrbanSurvival
http://www.silverbearcafe.com/private/10.09/journal.html
Good to have you back Bean Counter - there certainly seems to be a concerted effort by the property folk to hype the market back up.
At the end of the day one has to return to the real price graph that we published here on the 29th May 2007. The updated version went up to 211 and has now dropped to 180. It is still much higher than the previous peaks. It needs to fall back to 90 to hit norm and about 73 to account for overshoot.
How people could possibly think there is a bottom already is a total mystery to me.
I wish you were right, CJ Said, but I am afraid only in your dreams will prices ever be that low again. And the electricity and increased labour costs will not help your prediction either.
Is it just me or is there suddenly a fresh gush of bad economics news all over the MSM?
Fresh waves of unemployed going off benefits in the US (7000 a day - the mind boggles at the knock-on effects for families, mortgages, etc); another major fall predicted in US house prices (11 percent still to go, which might leave Navada and Florida looking at 60 percent drops in total).
In SA and the UK they're suddenly talking about weak Christmas sales, and I'm also starting to smell desperate word-spin in all the articles about how our "property market is booming" - when you read between the lines all they're saying is that auctioneers are making a killing as people unload at well below what they wanted.
Is this the beginning of the next down-slope that will end in CJ's 60 percent total fall in SA prices? Dunno, but boy is this getting interesting again.
For those of you planning long term property investments be sure to see if your bargain will still be there as sea levels rise over the next 50 years or so.
http://flood.firetree.net/
Obviously not something to worry about for the next few years, but don't bank on being able to leave a house in Muizenburg village to your children.
Other totally screwed areas include Fish Hoek, Milnerton and Blouberg. The South Peninsula seems to lose all road access in a worst case scenario.
I agree with Bean Counter, the "real" economy seems to be in a pretty bad shape and all this "green shoots" talk seems like an attempt to hype it up into shape, at least for the time being. But here is what's interesting:
While the real economy and ordinary folks are hurting pretty badly, there is also tons of money sitting in cash or cash-like assets. This is the money printed by governments and "earned" by various folks like bankers, finance people, military contractors, etc., etc., in the past 20 or so "boom years".
So while ordinary folks are thinking how to survive until the next paycheck, the wealthy folks are desperately thinking where to invest the money that they have so that they don't loose to inflation (I am not that wealthy but I also have some money sitting in cash-like assets and there is not a day goes by that I don't think about this issue). I believe the recent stock market and rand "rally" is the result of this desperation. But I also think the overall economy is too weak to sustain it. In essence, the stock market is like a pyramid scheme now: your only hope is to sell at the top.
There are quite a few smart folks on this blog so I want to ask you: how do you think this will all play out? Where do you think all this cash is going to go?
Anonymous Coward
@ Anonymous Coward
I imagine local stackmarkets will implode along with the Great Sucker's rally in the west.
There isn't anyone who can really predict the twists and turns that the economy is going to take in the near term but the ultimate destination isn't in doubt: Global Neo-feudalism. Lefty types and anti-globalisation activists have been saying this for years but if you dig around it turns out even the little yuppie financial types agree with them.
Read this Citibank report from 2006.
http://www.scribd.com/doc/6674229/Citigroup-Mar-5-2006-Plutonomy-Report-Part-2
In short, the idea is that globalization will continue to accelerate income concentration at the expense of the bottom 90% of the population in developed countries (winner take all). The good side (as they see it), is that the spending of the top 10% might become sufficient to supplant the demand generated by the bottom 90% (that spending is already 40% of all US consumption). If this does occur, the result would be a seamless transition to a new social order of globally competitive elites and a vast pool of undifferentiated global labor (available at the same normative price).
This should come as no surprise to anyone living in South Africa. Downward preasure on wages for the majority will continue to grow. Employment will continue to stagnate and our human capital will continue to erode. Market logic simply can't come up with any other outcome. The Trade Unions and the lefties know this of course so don't expect them accept becoming serfs quietly.
Whatever you might think of Communism you have to give Karl Marx credit for predicting/explaining this perfectly. He was 100% in favour of free markets and deregulation. Not because he thought they would uplift the proles but because he believed they would make their lives so unbearable that they would eventually be forced to rise up and overthrow the Elites. The diffirence now is that the proles aren't even workers anymore. Most will admit that a society dominated by farmers, metalworkers and builders will at least be able to keep the light on (and c'mon, the Soviet Union did at least achieve industrialised Superpower status dispite all it's horrors) but what chance a society dominated by the long term unemployed? Diffirent story.
Personally I'm keeping my assets in phisical gold. It might not rise to the crazy hights of US$5000 like some say, but it pretty much guaranteed to keep most of it's present value, (unlike paper money/stocks/bonds etc.) I'm teaming up with some like minded friends and saving for farmland out in the sticks, as far as possible from concentrations of hungry poor people.
Hey Benny, sea level rise is a pet interest of mine, done some research and spoken to some interesting oceanography boffins at UCT.
The site you link to is way cool but the reality is FAR more extreme than the little blue blobs show. A lot of people think that a sea-level rise of 5 meters will just mean a different beach, with houses starting further back. They don't understand that by the time the oceans have risen 5 meters the human race will be in such chaos that home prices and suburban life will long be a thing of the past. For example: a 1-meter rise in sea levels will displace 13 million Bangladeshis. If we're lucky those 13 million will squeeze into other parts over over-crowded Bangladesh. If we're not lucky they'll spill over the borders, crossing into India or elsewhere, causing major economic and humanitarian crisis. And that's just one country. Make no mistake: a 1 meter rise will cause wars. 2 meters will destroy entire countries. 5 meters, and its all over. Not physically - there'll be plenty of dry land - but economically we won't survive.
The key to remember is that for every 1 meter the sea level rises, the horizontal reach of the waves is increased by 7 meters. In other words, the level goes up by 1 meter, the waves come an extra 7 meters inland. Given that the waves are already munching away at the Milnerton golf course (the cart track has already collapsed onto the beach), we'll only need a tiny rise to do some serious damage to our gently sloping shorelines.
The other major impact that slightly higher sea levels have is higher water tables. Raise the level by 2 meters on the site, and those little blue blobs start growing INLAND at places like Kommetjie, Westlake, and along the Liesbeek near Obs. Basically the low-lying areas turn into marshland. When there are floods (Cape Flats, anyone?) there's nowhere for the water to run off to, and the damage is much worse.
OK, end of lecture. But yes, you'd be INSANE to buy anywhere in Milnerton and surrounds, Noordhoek, Fishhoek or Westlake. Farmland in the sticks might be the right option!
Fuc. The doomsday scenarios are really piling up. I don't recall the future being quite such an alarming place when I was a young lad. Everything was supposed to be so new and shiny, we were all destined to look like models and live to 120 while we lazed around our IKEA pods and tried to figure out what to do with all our leisure time.
"Computer, please bring the bubble car round. I'm late for the beach orgy," type of stuff.
These days a blog about property price collapse can't cover all the flavours of apocalypse we're staring in the face right now.
Hello all,
I just want to remind those who are planning for their dream holidays. If you are going to stay in cape town, then call cape reality international just to book your accommodation. Find luxury vacation holiday villas and more
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