I am of the opinion that there is no bubble bursting anytime soon. Sure not much is selling, but that also tells you that people are not prepared to budge. Why would they? Rentals are increasing exponentially. I know this for a fact because I've been renting in the Cape Town CBD/City bowl for the last 5 years. It's getting to the point where buying might be an option in a year or two if prices remain static.
I tend to agree. I've been watching from afar (currently working in Canada) waiting for the bubble to pop...
At this stage I really doubt there will be a bubble price burst. Yes there will be price pressure and inflation will make prices more affordable over time. But if you are actually waiting for a 30% price collapse, it's not going to happen.
I'm thinking of moving back to CT in 3 yrs time so I would LIKE to see prices fall but I doubt it will happen.
About 45% real price fall guaranteed - no ifs or buts - it WILL happen because that is what the real graph says.
The boom bust cycle returns to where it started - always does always will.
The only questions are time frames and nominal falls. These depend on inflation. Low inflation means nominal falls or a very long static market with no price increases for a decade or two.
@ Anon and Jules - oh ye of little faith! We are at the end of a classic bull trap and you guys are thinking like classic bull trap doubters! Believe me and CJ: everything is going EXACTLY according to the old bubble models.
I don't think we're going to see a plunge - South Africans are too stupid to know enough to panic, and our media is 100% in the pocket of the estate agents - but we will definitely see inflation eating into value.
30%? Maybe. Buy any time in the next three years? You have to be absolutely insane.
The bubble has burst! Especially top-end property.It's just that auction prices are not being reported, and foreclosures are being very quietly dealt with to avoid a stampede. Estate agents and colluding media are keeping this under wraps. I am buying a house that is in an insolvent trust for more than 30% below "market value", and market value is at least 10-15% below where it was in 2007. That's just an example. The other popping sound has come from the coastal holiday house market. POP!!!! Check out the stretch of coast from Pringle Bay to Shelley Beach - carnage I tell you.
A friend of mine is just getting rid of a CT commercial property he had bought in 2007. He bought for 900k and has been offered 700k pre-auction. Factor in some inflation as well and it sure looks to me like the bubble has burst.
I think if you like to peruse a glossy looking for property bargains you will be in for a disappointment. Looking for love in all the wrong places.
Now the Auction houses are pressurising the Law Reform Commission to "revisit" the powers of a Sheriff to sell in execution.
They want to take over that function because "The sheriff is letting go of the properties far too quickly and at too low a price thus hindering the chances of the seller from recouping his/her loss"
And guess what ? I think the Auction Houses will get it right with their financial muscle and lobbying power.
"House sales have risen by 30% year-on-year according to figures released by Lew Geffen of Sotheby’s International Realty who claim that the South African residential property market has emerged from the global economic downturn unscathed." - Property24, 20 October.
Now, I'm wondering, what toxic mix of lies, stupidity and journalistic incompetence are we seeing here? Is this a 30% increase on September 2009, in which case it's a rise from a tiny number to a small number? Or is this number just sucked out of Lew's thumb?
Haven't done the numbers for Remax or PrivateProperty yet, but I can report that of the 276 properties I monitor on the Seeff website, 31 were taken off the market in the last month, and just 4 were sold. Oh, and 12 reduced their asking prices between 4% and 17%.
Of course, the bigger picture is still pretty interesting: if sales are picking up, it means more people are encouraged to put their places on the market (estate agents always say 'boards breed boards'), which finally breaks the deadlock, which tips prices towards the edge...
11 comments:
I am of the opinion that there is no bubble bursting anytime soon. Sure not much is selling, but that also tells you that people are not prepared to budge. Why would they? Rentals are increasing exponentially. I know this for a fact because I've been renting in the Cape Town CBD/City bowl for the last 5 years. It's getting to the point where buying might be an option in a year or two if prices remain static.
I tend to agree. I've been watching from afar (currently working in Canada) waiting for the bubble to pop...
At this stage I really doubt there will be a bubble price burst. Yes there will be price pressure and inflation will make prices more affordable over time. But if you are actually waiting for a 30% price collapse, it's not going to happen.
I'm thinking of moving back to CT in 3 yrs time so I would LIKE to see prices fall but I doubt it will happen.
About 45% real price fall guaranteed - no ifs or buts - it WILL happen because that is what the real graph says.
The boom bust cycle returns to where it started - always does always will.
The only questions are time frames and nominal falls. These depend on inflation. Low inflation means nominal falls or a very long static market with no price increases for a decade or two.
@ Anon and Jules - oh ye of little faith! We are at the end of a classic bull trap and you guys are thinking like classic bull trap doubters! Believe me and CJ: everything is going EXACTLY according to the old bubble models.
I don't think we're going to see a plunge - South Africans are too stupid to know enough to panic, and our media is 100% in the pocket of the estate agents - but we will definitely see inflation eating into value.
30%? Maybe. Buy any time in the next three years? You have to be absolutely insane.
The bubble has burst! Especially top-end property.It's just that auction prices are not being reported, and foreclosures are being very quietly dealt with to avoid a stampede. Estate agents and colluding media are keeping this under wraps. I am buying a house that is in an insolvent trust for more than 30% below "market value", and market value is at least 10-15% below where it was in 2007. That's just an example. The other popping sound has come from the coastal holiday house market. POP!!!! Check out the stretch of coast from Pringle Bay to Shelley Beach - carnage I tell you.
A friend of mine is just getting rid of a CT commercial property he had bought in 2007. He bought for 900k and has been offered 700k pre-auction. Factor in some inflation as well and it sure looks to me like the bubble has burst.
I think if you like to peruse a glossy looking for property bargains you will be in for a disappointment. Looking for love in all the wrong places.
Now the Auction houses are pressurising the Law Reform Commission to "revisit" the powers of a Sheriff to sell in execution.
They want to take over that function because "The sheriff is letting go of the properties far too quickly and at too low a price thus hindering the chances of the seller from recouping his/her loss"
And guess what ?
I think the Auction Houses will get it right with their financial muscle and lobbying power.
From what I can see the Sheriff auctions are proper auctions ie best price wins.
The others, with their fake bids and "final price subject to approval" are just scams to fool the sheep.
"House sales have risen by 30% year-on-year according to figures released by Lew Geffen of Sotheby’s International Realty who claim that the South African residential property market has emerged from the global economic downturn unscathed." - Property24, 20 October.
Now, I'm wondering, what toxic mix of lies, stupidity and journalistic incompetence are we seeing here? Is this a 30% increase on September 2009, in which case it's a rise from a tiny number to a small number? Or is this number just sucked out of Lew's thumb?
Haven't done the numbers for Remax or PrivateProperty yet, but I can report that of the 276 properties I monitor on the Seeff website, 31 were taken off the market in the last month, and just 4 were sold. Oh, and 12 reduced their asking prices between 4% and 17%.
Of course, the bigger picture is still pretty interesting: if sales are picking up, it means more people are encouraged to put their places on the market (estate agents always say 'boards breed boards'), which finally breaks the deadlock, which tips prices towards the edge...
Anybody read this?
http://blogs.forbes.com/investor/2010/10/19/where-is-the-housing-recovery/?boxes=Homepagechannels
Any comments?
Hi Bean Counter
177 properties I'm impressed but wonder where you get the time?
I've notice a lot more boards lately but had attributed this to two factors.
1. It's summer and thus peak selling season.
2. The time it takes for a house to sell is measured in months so the boards stay up for longer.
Either way there is more choice and thus leverage for the buyers to pick and negotiate for lower prices.
Or to look at it the other way more supply which means sellers need to compete by lowering prices.
Regards,
LS
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