At anon Above - Does that mean that Joe Mechanic & Jane Nurse, who are both single, and who work for an employer for R 14000.00 per month gross, can now afford to individually(that means without getting married), buy their own 3 bedroomed freestanding fixer-upper property with a garage and a small garden, in a middle of the road area like say Bothasig or Edgemead ???
Ha Ha !! Banks will only allow for 25% of an income of R14 000.00 pm to go toward a bond repayment.
That means R 3500.00 pm bond instalment.
So your 3 bedroomed fixer upper in Edgemead or Bothasig would HAVE to sell at a paltry R 350 000.00 for Joe & Jane to each afford it. Ain't NEVER gonna happen as Bernanke would say !
And that's WITHOUT bond registration fees & conveyancing costs and all other incidentals, and bearing in mind that if that kind of price started becoming the norm, then the fiscus would drop their transfer threshhold to R 300 000.00 in a blink to not lose out on skimming off the citizens.
Unfotunately Joe & Jane are stuffed. It's a caravan park in Noordehoek, or a bachelor flat in Joostenbervlakte extension 24 for each of them I'm afraid. Or get married and each own half a house :)
I'm giving up. I'll never own a house in CT. The price-will-stay-the-same-but-the-value-will-drop-incrementally-at-a-few-percent-a-year scenario seems to be coming true. I'm just going to leave this city and slag it off to everyone I meet, just like all the spiteful saffers overseas. Why is there never any good news these days?
If our government promulgated legislation to make it financially unattractive to own multiple properties (either as a natural person, closed corporation, a trust, or a Pty(ltd)) - then, and only then, would properties start to be unloaded onto the market, making them available, at a lower price, to people who don't(or should I say can't)own a home yet.
SARS could reference the deeds office,as it can our bank accounts, and tax owners of multiple properties progressively more per each property owned, thus making it unprofitable to own a second,third or fourth property.
Home affordability problem solved. Business premise affordability solved.
The terrible news: I am being forced to buy, like, now. The incredible flat I rent is going on the market, and I WANT it. I know prices are going to drop, I know it's a horrible financial decision, but weirdly it's not about money: this place is my home, it's the greatest flat in the City Bowl (IMHO), and I really am willing to lose a few 100k over the next few years in order to keep living here.
So, to all you fellow Crashers, I apologize for selling out!
Now the good news for Anon etc.
As part of my tortured research (many many hours and R1,000 spent on various Lightstone reports) I have found a VERY interesting trend. If you look at price per square meter, and factor in reported CPI inflation, properties across the City Bowl have already started dropping dramatically.
Just one example: in my block the price per square meter was R12,800 (Dec 2007), then R13,884 (July 2008), then R16,666 (Jan 2010), while the latest sale was R14,095 (June 2010). OK, you say, no drops to get excited about.
Until you factor in inflation.
Working backwards, calculating those price-per-m2 figures in today's money, gets you the following:
2007: R17,105 2008: R16,289 Jan 2010: R17,299 Jun 2010: R14,306
My landlord's ASKING price is R15,238 per m2. He's dreaming, of course, like most vendors. I'm going to offer R13,333 - probably too high but I want this place. Even if I'm forced up to R13,900, that's still a 19% drop from peak.
So in short: don't be disheartened. The crash has started (just as your idiot Bean Counter is forced to buy!). Remember: if an asking price has stayed exactly the same for the last two years, it has effectively dropped by 11%. Last three years, 22.5%. Inflation is a wicked little b@stard...
Well either sign a long lease with the current landlord: http://www.vvd.co.za/index.php/faqs-entry/what_does_huur_gaat_voor_koop_mean/
Or low ball the bugger. ;-) I mean surely there must be other places you could happily live in.
Have you looked around? I see plenty of nice houses, apartments, etc - I notice them because I'm more interested in fixer-upper type properties.
I reckon most places are selling at 20-30% below asking. This is based on estate agents, auction houses, and people who've not had the option of staying on the market indefinably.
Sales in execution are 40+% off.
Of course if this is the one you want then ja supply is limited to this one...
Oh dear Bean, the fact that you are giving in and buying is probably a strong signal that the crash is about to unleash it's full fury ... but you know that already.
Interesting little real m2 stats you put together there - looks like a classic peak with a bull trap on the way down and the crash now thundering down.
Don't suppose you have the 2003 figures ? Probably not. If you did, then that would be were we are heading I would say - you could then see the potential downside of your purchase.
@ Anon and Benny, my landlord is an actuary - hellishly good at figuring out when we're all going to die, horrible with almost all other financial decisions. He's a total loose canon: might refuse to budge an inch on his asking or he might sell at the first lowball offer, he's like that.
@ CJ, I'm working on a more thorough list - an average of 5 blocks of flats in my road. Should make for very interesting reading and I'll post the results here when I'm done. As for potential downside to me buying, I'm figuring on a major loss. Kind of worth it, given how much I want this place, but yes, the figures make for truly spectacular reading (so far my rough estimate is that to get to 2003 price/m2 we need to see falls of 50%).
One other point of interest to you guys: within 72 hours I have gone from die-hard property bear to an aspiring buyer, hoping that fall will be contained. I can now speak from first-hand experience of the two TOTALLY different mind-sets. As someone now straddling the fence (and quickly moving into the home-ownerist camp, against my will) I can testify that these two states of mind are each as intense and dogmatic as the other. Whichever side of the fence you sit, you are never going to convert the other. Interesting that my current dilemma features the clash of reason (prices are going to plunge) and emotion (I want this place). I think this might be the basic position of bears and bulls: the former have logic and numbers to back up their position, the latter have nothing but passion and hope.
Oh to be one of the sheeple and to be blissfully unaware of the mess I'm walking into right now!
I feel your pain. I've been preaching the bubble since abount 2004. But I recently bought my first place.
reasons: 1.) Bond only 30% more than rent.
2.) (And this might sound stupid) John Loos says house prices will be falling. If you spend the last 5 years doing the exact opposite of what Loos said you would have been rich my now.
3.) I live in Plett. Because this is a holiday town we've seen huge price drops already. about 40% down from end 2008. And not only holiday homes. just about all the locals are either estate agents or builders, and you know they are suffering.
@ Plett Anon, you raise another of my reasons for buying: rent. When I first heard what my landlord was asking, I went purple and said a lot of rude words about greedy specuvestors. Then I started looking at City Bowl rents in Cape Town, and went even more purple and got even more foul-mouthed.
Basically I discovered that I can either pay X amount on a bond on a property that will lose 30 percent in value (flush it down the loo) and live in my dream home, or I can flush exactly the same amount down the loo renting a vile wind-blasted dump with cardboard walls and no parking. If I'm going to flush a few hundred K, at least I want to flush it down a very lovely loo.
Bean Counter said... "@ Anon and Benny, my landlord is an actuary - hellishly good at figuring out when we're all going to die, horrible with almost all other financial decisions."
Says the buyer ruled purely by emotion and not logic. Sounds like a case of the pot calling the kettle black.
I would tell you when you are going to die but I'll keep you in suspense...
@ last Anon. Really? Seriously? Are your reading skills that impaired that you missed the whole bit where I acknowledged that I was being ruled by emotion and not logic? Come on, buddy, you can do better than that. Must Try Harder.
Also, perhaps try looking up the whole pot-kettle thing, and you'll find it's not really relevant to my landlord.
Sigh. Why is the world so full of idiots (says he about by a depreciating asset)?
Bean Counter said... @ last Anon. Really? Seriously? Are your reading skills that impaired that you missed the whole bit where I acknowledged that I was being ruled by emotion and not logic? Come on, buddy, you can do better than that. Must Try Harder.
You really have an inflated opinion of yourself don't you? In any case, enjoy your little flat.
18 comments:
Apparently(big apparently,)the banks are now also selling in execution and doing "quick sales"?
I'll believe it when I see, and feel the snow falling in Cape Town !!
At anon Above - Does that mean that Joe Mechanic & Jane Nurse, who are both single, and who work for an employer for R 14000.00 per month gross, can now afford to individually(that means without getting married), buy their own 3 bedroomed freestanding fixer-upper property with a garage and a small garden, in a middle of the road area like say Bothasig or Edgemead ???
Ha Ha !!
Banks will only allow for 25% of an income of R14 000.00 pm to go toward a bond repayment.
That means R 3500.00 pm bond instalment.
So your 3 bedroomed fixer upper in Edgemead or Bothasig would HAVE to sell at a paltry R 350 000.00 for Joe & Jane to each afford it.
Ain't NEVER gonna happen as Bernanke would say !
And that's WITHOUT bond registration fees & conveyancing costs and all other incidentals, and bearing in mind that if that kind of price started becoming the norm, then the fiscus would drop their transfer threshhold to R 300
000.00 in a blink to not lose out on skimming off the citizens.
Unfotunately Joe & Jane are stuffed.
It's a caravan park in Noordehoek, or a bachelor flat in Joostenbervlakte extension 24 for each of them I'm afraid.
Or get married and each own half a house :)
I'm giving up. I'll never own a house in CT. The price-will-stay-the-same-but-the-value-will-drop-incrementally-at-a-few-percent-a-year scenario seems to be coming true.
I'm just going to leave this city and slag it off to everyone I meet, just like all the spiteful saffers overseas.
Why is there never any good news these days?
If our government promulgated legislation to make it financially unattractive to own multiple properties (either as a natural person, closed corporation, a trust, or a Pty(ltd)) - then, and only then, would properties start to be unloaded onto the market, making them available, at a lower price, to people who don't(or should I say can't)own a home yet.
SARS could reference the deeds office,as it can our bank accounts, and tax owners of multiple properties progressively more per each property owned, thus making it unprofitable to own a second,third or fourth property.
Home affordability problem solved.
Business premise affordability solved.
OK, first terrible news and then good news.
The terrible news: I am being forced to buy, like, now. The incredible flat I rent is going on the market, and I WANT it. I know prices are going to drop, I know it's a horrible financial decision, but weirdly it's not about money: this place is my home, it's the greatest flat in the City Bowl (IMHO), and I really am willing to lose a few 100k over the next few years in order to keep living here.
So, to all you fellow Crashers, I apologize for selling out!
Now the good news for Anon etc.
As part of my tortured research (many many hours and R1,000 spent on various Lightstone reports) I have found a VERY interesting trend. If you look at price per square meter, and factor in reported CPI inflation, properties across the City Bowl have already started dropping dramatically.
Just one example: in my block the price per square meter was R12,800 (Dec 2007), then R13,884 (July 2008), then R16,666 (Jan 2010), while the latest sale was R14,095 (June 2010). OK, you say, no drops to get excited about.
Until you factor in inflation.
Working backwards, calculating those price-per-m2 figures in today's money, gets you the following:
2007: R17,105
2008: R16,289
Jan 2010: R17,299
Jun 2010: R14,306
My landlord's ASKING price is R15,238 per m2. He's dreaming, of course, like most vendors. I'm going to offer R13,333 - probably too high but I want this place. Even if I'm forced up to R13,900, that's still a 19% drop from peak.
So in short: don't be disheartened. The crash has started (just as your idiot Bean Counter is forced to buy!). Remember: if an asking price has stayed exactly the same for the last two years, it has effectively dropped by 11%. Last three years, 22.5%. Inflation is a wicked little b@stard...
Hi Bean Counter
Well either sign a long lease with the current landlord:
http://www.vvd.co.za/index.php/faqs-entry/what_does_huur_gaat_voor_koop_mean/
Or low ball the bugger. ;-) I mean surely there must be other places you could happily live in.
Have you looked around? I see plenty of nice houses, apartments, etc - I notice them because I'm more interested in fixer-upper type properties.
I reckon most places are selling at 20-30% below asking. This is based on estate agents, auction houses, and people who've not had the option of staying on the market indefinably.
Sales in execution are 40+% off.
Of course if this is the one you want then ja supply is limited to this one...
Regards,
LS
Oh dear Bean, the fact that you are giving in and buying is probably a strong signal that the crash is about to unleash it's full fury ... but you know that already.
Interesting little real m2 stats you put together there - looks like a classic peak with a bull trap on the way down and the crash now thundering down.
Don't suppose you have the 2003 figures ? Probably not. If you did, then that would be were we are heading I would say - you could then see the potential downside of your purchase.
Better hope your landlord doesn't read this blog and put two and two together, BC. Or he will ass rape you (with no lube).
@ Anon and Benny, my landlord is an actuary - hellishly good at figuring out when we're all going to die, horrible with almost all other financial decisions. He's a total loose canon: might refuse to budge an inch on his asking or he might sell at the first lowball offer, he's like that.
@ CJ, I'm working on a more thorough list - an average of 5 blocks of flats in my road. Should make for very interesting reading and I'll post the results here when I'm done. As for potential downside to me buying, I'm figuring on a major loss. Kind of worth it, given how much I want this place, but yes, the figures make for truly spectacular reading (so far my rough estimate is that to get to 2003 price/m2 we need to see falls of 50%).
One other point of interest to you guys: within 72 hours I have gone from die-hard property bear to an aspiring buyer, hoping that fall will be contained. I can now speak from first-hand experience of the two TOTALLY different mind-sets. As someone now straddling the fence (and quickly moving into the home-ownerist camp, against my will) I can testify that these two states of mind are each as intense and dogmatic as the other. Whichever side of the fence you sit, you are never going to convert the other. Interesting that my current dilemma features the clash of reason (prices are going to plunge) and emotion (I want this place). I think this might be the basic position of bears and bulls: the former have logic and numbers to back up their position, the latter have nothing but passion and hope.
Oh to be one of the sheeple and to be blissfully unaware of the mess I'm walking into right now!
Lol BC.
I feel your pain. I've been preaching the bubble since abount 2004. But I recently bought my first place.
reasons:
1.) Bond only 30% more than rent.
2.) (And this might sound stupid) John Loos says house prices will be falling. If you spend the last 5 years doing the exact opposite of what Loos said you would have been rich my now.
3.) I live in Plett. Because this is a holiday town we've seen huge price drops already. about 40% down from end 2008. And not only holiday homes. just about all the locals are either estate agents or builders, and you know they are suffering.
@ Plett Anon, you raise another of my reasons for buying: rent. When I first heard what my landlord was asking, I went purple and said a lot of rude words about greedy specuvestors. Then I started looking at City Bowl rents in Cape Town, and went even more purple and got even more foul-mouthed.
Basically I discovered that I can either pay X amount on a bond on a property that will lose 30 percent in value (flush it down the loo) and live in my dream home, or I can flush exactly the same amount down the loo renting a vile wind-blasted dump with cardboard walls and no parking. If I'm going to flush a few hundred K, at least I want to flush it down a very lovely loo.
Just attended an auctionalliance auction. 313 Empire went for 2.1m + fees. Originally sold for 3.4m in 2007. And that's an awesome flat...
Correction, it was 312 Empire. Overlooking Surfers Corner.
Bean Counter said...
"@ Anon and Benny, my landlord is an actuary - hellishly good at figuring out when we're all going to die, horrible with almost all other financial decisions."
Says the buyer ruled purely by emotion and not logic. Sounds like a case of the pot calling the kettle black.
I would tell you when you are going to die but I'll keep you in suspense...
@ last Anon. Really? Seriously? Are your reading skills that impaired that you missed the whole bit where I acknowledged that I was being ruled by emotion and not logic? Come on, buddy, you can do better than that. Must Try Harder.
Also, perhaps try looking up the whole pot-kettle thing, and you'll find it's not really relevant to my landlord.
Sigh. Why is the world so full of idiots (says he about by a depreciating asset)?
Bean Counter said...
@ last Anon. Really? Seriously? Are your reading skills that impaired that you missed the whole bit where I acknowledged that I was being ruled by emotion and not logic? Come on, buddy, you can do better than that. Must Try Harder.
You really have an inflated opinion of yourself don't you? In any case, enjoy your little flat.
@ Anon Actuary, I sure do and I sure will. Love you. Bye.
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