Anon, as someone who has contributed updates about various properties I monitor, I can report...absolutely nothing.
The market is in total gridlock. The estate agents and John Loos would have you believe that we've been ticking up nicely but that we're not slowing down. From my observations I can confirm that yes, a tiny number of cash-rich buyers have been competing for a tiny number of properties, driving up prices.
However, these tiny numbers are irrelevant to the market as a whole. Everyone outside the cash-flush 1 percent are waiting: sellers are waiting for the mythical upturn (which is never coming), buyers are waiting for the mythical crash (which is also never coming).
I have no idea how long this deadlock is going to last. I do not believe that there is any more up-side left to inflate. It's possible we'll see one more rate cut in the next few months, but the last few (that have taken us down to record lows) have failed to fire a renewed bubble, so there is no reason to believe that one more cut by 0.5 percent will do anything but lure in the very last of the fools into the bull trap.
Likewise, the inevitable rate increases will do little. So far South Africa has proved very different to other bubble countries in that our bubble has barely deflated. I believe this is because South Africans are profoundly stupid with their money (our national obsession with new cars and gambling prove this). Even though millions of home-owners are in deep doo-doo, they would rather sacrifice their kids' educations or their life savings than sell their "dream home" and scale down.
I believe that as the rate increases start happening (1 percent by the end of the year? 2 or 3 percent by the end of 2011?) most over-stretched home-owners will simply run up even bigger debts and give up various luxuries, instead of unshackling themselves from their bricks-and-mortar prisons. Nobody will lower their asking prices ("I'm not just going to GIVE it away!") but over the coming years inflation will eat away at value until we have returned to historical means with a 30-40 percent drop in real value.
In short: if you're looking for a blog with lots of cool graphs showing plunging values and skyrocketing repossessions, rather follow the UK, US, Chinese, Irish or Spanish markets. If you're looking for a long, boring flatline, as inflation strangles stubborn specuvestor homeowner-ists to death, this is the place for you.
Urm, okay- let’s chat then. There is a difference between refusing to sell a depreciating asset because you're stubborn and being bankrupt. The reason the UK, Ireland, US etc. are putting on such a spectacular show is because their economies are contracting along with incomes and employment levels in a sudden, dramatic way. In SA this process has been underway for at least 20 years- it’s normal. For the 40% of the workforce with crappy insecure jobs, no jobs and extreme poverty, economic collapse has already arrived. Count in their dependents and we’re talking about more than half the population. Geddit? For more than half of South Africans the economic apocalypse isn’t a threat. It’s here. Old news. Everyday reality. Now, I’m sure some of you are thinking, “fuck the poor” as many Suburban Nietzcheans are prone to do but keep in mind there’s no way to insulate yourself completely from this kind of fallout and here I have to tip my hat to the people (public and private sector) running this country. They truly are masters of social control. If any country in Europe was facing the kind of problems we were there would be politicians and CEOs swinging from lamp posts, yet somehow there is no revolution, no insurgency or terrorism, virtually no credible politically motivated threats to the ruling classes. IMO the black factions in our government/business elite have preempted any threats in that domain by manufacturing/evolving the Malema phenomenon. They are way ahead of anybody in this dept! The reason for promoting black nationalism is simple: If you’re a rich black tenderpreneur and you realise mass unrest is inevitable, what kind of unrest/uprising would you prefer? One based on race/ethnicity or one based on social/class issues? The former lets them keep their gains while eliminating their white competition while the latter sees them potentially lined up against a wall and shot. Not a hard choice.
What does this have to do with housing? Not sure, but a glut of cheap, decent housing would go a long way to getting this country back on track.
Benny you certainly hit the nail right on the head there. Although I don't think the "Malema phenomenon" was designed to place economic blame on a single race. I personally think money talks, and white people have money, which means white people control the situation as the poor threaten the very security of the rich and wealthy. Ever noticed that Kebble, Shaik, Lolly Jackson, and so forth all know each other.
There's nothing that rich people fear more than losing their cash, so they do what it takes to protect their assets. If buying Zuma a BMW will do so, who are we to complain?
And some think the world would be better off if the DA was in power. How many rocks will be thrown and tyres burnt then? Uprisings? No thanks. They will then have a reason, and all they need is a reason.
Speaking of which, our beloved president is not a stupid man. He knows he is losing support, as did Mbeki, and even some have recently dared to openly bad mouth Mandela. The 40% sitting in the shack does nothing but wait for the chief to provide, and he can't, so he creates Malema to silence the masses by reflecting their irrational ideologies, keep them hoping that one day ... just maybe ... if they kept voting ANC ... they just might ...
I always wonder why nobody questions the reason for the Pres of the ANCYL and the Pres of the ANC, saying two different things. Don't you think these guys maybe sit down once in a while and chat to each other over tea? Zuma even invited Zapiro over for tea, why not Julius? I bet you if Verwoed was still alive, he would have got some tea.
Julius is 28 years old, a log time to live, meanwhile Zuma will enjoy the fruits of a second term. SA will be calm and peaceful for the most part. White people will keep their assets and we all might just have egg on our faces for so openly hating the very man protecting us.
What this has to do with the property market I'm not too sure either. Bean Counter is right, it's dead out there, we got to talk about something.
A very interesting thing is happening is South Africa. Not only is there is the huge divide between the wealthy established white families and the masses living in squalor but there is also fast emerging an "underclass" of young, educated and poor who will never be able to afford to get onto the property ladder. Stuck in a cycle of paying off university debt and earning crap salaries, these educated have-nots will have no choice but to seek greener pastures abroad. People don't realise the big bad picture of pricing young people out of the property market.
The total number of liquidations recorded for June 2010 increased by 21.9 percent (from 311 to 379) compared with June 2009, Statistics SA says.
The highest numbers of liquidations during the first six months of 2010 were related to businesses in the financing, insurance, real estate and business services industry (953 cases or 46.2 percent of liquidations) and the wholesale and retail trade, catering and accommodation industry (584 cases or 28.3 percent of liquidations), Statistics SA said.
Personally, while I do believe property is currently overvalued in SA, I don't believe the youth are priced out of the market. I think the game has just changed, and people's strategies need to adjust with it. Most people in their 20s / 30s considering buying property are been given advice by their folks, the baby boomers in their 50s / 60s who played an old version of the game. The advice is simple: go to school, go to varsity for 4 years, get a job, get married, buy a house, have kids and live in the same house for 40 years, then retire to the coast and die.
These are the same people that believed a standard pension fund will be enough for retirement, and that's all most of them have. They think their house is their biggest investiment - In the words of Robert Kyosaki - "If your house is your greatest asset you own, you are in BIG trouble"
Anyway, the young need to adapt, and understand that with changing times, comes a changing economic environment, and that includes working with asset classes. 40 years ago there was no sectional title, today it's the building blocks of the property ladder. Young people, when they start working, should buy a small flat asap, pay it off and move upwards after a couple of years. By the time they get married and start spawning they will have a decent sized place. It's the only way.
The problem is dealing with the bottom feeders. Estate Agent comm, Lawyers fees, and Transfer Duty needs to seriously be adjusted if SA want a recovery in the market. The youth have no problem saving up a deposit, but when you have to save for 6 months just to pay a lawyer to fill in a couple of forms, it's not worth it. It's robbery actually.
I hope (as do most on this forum i suppose) that the property market gets bent over, pants pulled down, and driven even deeper into the doldrums. I'm tired of these worthless smug bottom feeders driving their X5s as if they actually earned them.
10 comments:
What's happened to the interesting updates on certain properties and the graphs? This site is degenerating into a chat site.
Anon, as someone who has contributed updates about various properties I monitor, I can report...absolutely nothing.
The market is in total gridlock. The estate agents and John Loos would have you believe that we've been ticking up nicely but that we're not slowing down. From my observations I can confirm that yes, a tiny number of cash-rich buyers have been competing for a tiny number of properties, driving up prices.
However, these tiny numbers are irrelevant to the market as a whole. Everyone outside the cash-flush 1 percent are waiting: sellers are waiting for the mythical upturn (which is never coming), buyers are waiting for the mythical crash (which is also never coming).
I have no idea how long this deadlock is going to last. I do not believe that there is any more up-side left to inflate. It's possible we'll see one more rate cut in the next few months, but the last few (that have taken us down to record lows) have failed to fire a renewed bubble, so there is no reason to believe that one more cut by 0.5 percent will do anything but lure in the very last of the fools into the bull trap.
Likewise, the inevitable rate increases will do little. So far South Africa has proved very different to other bubble countries in that our bubble has barely deflated. I believe this is because South Africans are profoundly stupid with their money (our national obsession with new cars and gambling prove this). Even though millions of home-owners are in deep doo-doo, they would rather sacrifice their kids' educations or their life savings than sell their "dream home" and scale down.
I believe that as the rate increases start happening (1 percent by the end of the year? 2 or 3 percent by the end of 2011?) most over-stretched home-owners will simply run up even bigger debts and give up various luxuries, instead of unshackling themselves from their bricks-and-mortar prisons. Nobody will lower their asking prices ("I'm not just going to GIVE it away!") but over the coming years inflation will eat away at value until we have returned to historical means with a 30-40 percent drop in real value.
In short: if you're looking for a blog with lots of cool graphs showing plunging values and skyrocketing repossessions, rather follow the UK, US, Chinese, Irish or Spanish markets. If you're looking for a long, boring flatline, as inflation strangles stubborn specuvestor homeowner-ists to death, this is the place for you.
@ Bean Counter
How depressing. No bursting bubble and blood in the streets. Tsk Tsk, and I was waiting for the show to start.
Urm, okay- let’s chat then.
There is a difference between refusing to sell a depreciating asset because you're stubborn and being bankrupt. The reason the UK, Ireland, US etc. are putting on such a spectacular show is because their economies are contracting along with incomes and employment levels in a sudden, dramatic way. In SA this process has been underway for at least 20 years- it’s normal. For the 40% of the workforce with crappy insecure jobs, no jobs and extreme poverty, economic collapse has already arrived. Count in their dependents and we’re talking about more than half the population. Geddit? For more than half of South Africans the economic apocalypse isn’t a threat. It’s here. Old news. Everyday reality.
Now, I’m sure some of you are thinking, “fuck the poor” as many Suburban Nietzcheans are prone to do but keep in mind there’s no way to insulate yourself completely from this kind of fallout and here I have to tip my hat to the people (public and private sector) running this country. They truly are masters of social control. If any country in Europe was facing the kind of problems we were there would be politicians and CEOs swinging from lamp posts, yet somehow there is no revolution, no insurgency or terrorism, virtually no credible politically motivated threats to the ruling classes.
IMO the black factions in our government/business elite have preempted any threats in that domain by manufacturing/evolving the Malema phenomenon. They are way ahead of anybody in this dept! The reason for promoting black nationalism is simple: If you’re a rich black tenderpreneur and you realise mass unrest is inevitable, what kind of unrest/uprising would you prefer? One based on race/ethnicity or one based on social/class issues? The former lets them keep their gains while eliminating their white competition while the latter sees them potentially lined up against a wall and shot. Not a hard choice.
What does this have to do with housing? Not sure, but a glut of cheap, decent housing would go a long way to getting this country back on track.
-- So endeth the sermon.
Upper East Side, Upper East Side, Upper East Side... come out, come out whereever you are mariaan!
Benny you certainly hit the nail right on the head there. Although I don't think the "Malema phenomenon" was designed to place economic blame on a single race. I personally think money talks, and white people have money, which means white people control the situation as the poor threaten the very security of the rich and wealthy. Ever noticed that Kebble, Shaik, Lolly Jackson, and so forth all know each other.
There's nothing that rich people fear more than losing their cash, so they do what it takes to protect their assets. If buying Zuma a BMW will do so, who are we to complain?
And some think the world would be better off if the DA was in power. How many rocks will be thrown and tyres burnt then? Uprisings? No thanks. They will then have a reason, and all they need is a reason.
Speaking of which, our beloved president is not a stupid man. He knows he is losing support, as did Mbeki, and even some have recently dared to openly bad mouth Mandela. The 40% sitting in the shack does nothing but wait for the chief to provide, and he can't, so he creates Malema to silence the masses by reflecting their irrational ideologies, keep them hoping that one day ... just maybe ... if they kept voting ANC ... they just might ...
I always wonder why nobody questions the reason for the Pres of the ANCYL and the Pres of the ANC, saying two different things. Don't you think these guys maybe sit down once in a while and chat to each other over tea? Zuma even invited Zapiro over for tea, why not Julius? I bet you if Verwoed was still alive, he would have got some tea.
Julius is 28 years old, a log time to live, meanwhile Zuma will enjoy the fruits of a second term. SA will be calm and peaceful for the most part. White people will keep their assets and we all might just have egg on our faces for so openly hating the very man protecting us.
What this has to do with the property market I'm not too sure either. Bean Counter is right, it's dead out there, we got to talk about something.
oh ... for the guy looking for a graph, check the below link:
http://www.realestateweb.co.za/realestateweb/view/realestateweb/en/page196?oid=62869&sn=Detail
A very interesting thing is happening is South Africa. Not only is there is the huge divide between the wealthy established white families and the masses living in squalor but there is also fast emerging an "underclass" of young, educated and poor who will never be able to afford to get onto the property ladder. Stuck in a cycle of paying off university debt and earning crap salaries, these educated have-nots will have no choice but to seek greener pastures abroad. People don't realise the big bad picture of pricing young people out of the property market.
FIRE in the hole....
The total number of liquidations recorded for June 2010 increased by 21.9 percent (from 311 to 379) compared with June 2009, Statistics SA says.
The highest numbers of liquidations during the first six months of 2010 were related to businesses in the financing, insurance, real estate and business services industry (953 cases or 46.2 percent of liquidations) and the wholesale and retail trade, catering and accommodation industry (584 cases or 28.3 percent of liquidations), Statistics SA said.
http://www.timeslive.co.za/business/article570431.ece/Liquidations-rise
Personally, while I do believe property is currently overvalued in SA, I don't believe the youth are priced out of the market. I think the game has just changed, and people's strategies need to adjust with it. Most people in their 20s / 30s considering buying property are been given advice by their folks, the baby boomers in their 50s / 60s who played an old version of the game. The advice is simple: go to school, go to varsity for 4 years, get a job, get married, buy a house, have kids and live in the same house for 40 years, then retire to the coast and die.
These are the same people that believed a standard pension fund will be enough for retirement, and that's all most of them have. They think their house is their biggest investiment - In the words of Robert Kyosaki - "If your house is your greatest asset you own, you are in BIG trouble"
Anyway, the young need to adapt, and understand that with changing times, comes a changing economic environment, and that includes working with asset classes. 40 years ago there was no sectional title, today it's the building blocks of the property ladder. Young people, when they start working, should buy a small flat asap, pay it off and move upwards after a couple of years. By the time they get married and start spawning they will have a decent sized place. It's the only way.
The problem is dealing with the bottom feeders. Estate Agent comm, Lawyers fees, and Transfer Duty needs to seriously be adjusted if SA want a recovery in the market. The youth have no problem saving up a deposit, but when you have to save for 6 months just to pay a lawyer to fill in a couple of forms, it's not worth it. It's robbery actually.
I hope (as do most on this forum i suppose) that the property market gets bent over, pants pulled down, and driven even deeper into the doldrums. I'm tired of these worthless smug bottom feeders driving their X5s as if they actually earned them.
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