Wow, did you see that kitchen, how many variants of beige can you find? If I just think about spending almost 3 Million Euro and getting a kitchen like this!!! Unbelievable
I recently watched the financial crisis documentary Inside Job.
For those who dont know economic and financial history and dont want to spend years piecing the story together this is a great documentary and well produced, it will enlighten you.
In it people will learn why there was a global property bubble and they will also realize why their homes are not worth what they think they are worth. Perhaps they can get a bearing on how to navigate the new decade.
"If the housing market has not been able to produce respectable growth in the low-interest-rate environment, it can only be headed into a period of falling prices, said First National Bank (FNB) property analyst John Loos"
And...
"In [the 4th quarter of 2010,] 46.5% of the total of 18.5m credit-active consumers were more than three months in arrears in their debt repayments."
@Jim: In my opinion, a weak BTL market doesn't always mean that rent will drop due to oversupply. It could mean that rent could in fact rise, along with the interest rates as left over BTL investors struggle to keep their head above the water. I believe that at the moment banks are prepping for the next interest rate cycle. They have had a good few years to sell off the repo's, allow the heavily indebted to catch up, and will ease their lending criteria just in time for the interest rate rise later this year. Thus I think we will see another mini-spike soon. I believe that because middle class South Africans are well and stupid with their money, the market is not dependent on the price of property, but rather on their ability to obtain credit. Which ties in well with Goldilocks' Inside Job. Central Bankers on Wall Street knew what was going on, they knew the recession was on it's way, and according to that documentary they practically planned it. They made the financial situation in the US so complicated only they knew what was happening, and people trusted them. Worse though they trusted the US government who supported it and has since surrounded itself with many people involved in instigating the sub-prime crisis. The banks play with peoples *wants* to such a point that it becomes normal to pay 80% of your salary towards debt, making you a slave to your debt and to the bank. That's where SA is. If banks start with their 100% or 110% bonds BTL will be back in full swing. Property values will rise again and people will become more and more indebted right until the next down-swing. The baby boomers at least come out the other end with a shitty pension and a house. Generation X will come out with nothing but a beaten old X5, and we will have to wait and see where Generation Y goes, provided they don't shoot each other first.
I look fwd to the boomers rotting in old age homes, drooling with their nappies full of day old poop while their brains turn to sponge.
Why honour a generation that fucked up the entire planet and shredded their children's futures so that they could be comfortable? Let them die cold and alone surrounded by their possessions.
I see these interest rate hike predictions here and elsewhere. Let’s think this through even though its late and one shouldnt be thinking about such things at this time of night.
Where is the inflation? Food, electricity and fuel. How are interest rate hikes going to combat these price increases? Will interest rate hikes here stop revolts in the ME and the bombing of Libya? Will interest rate hikes force Eskom to drop electricity prices? No.
Someone explain to me the flow of how rising food or fuel prices cause house prices to go up or credit to expand? Transport costs for bricks and cement? Food for the truck driver? I often see this angle; sort of a one size fits all inflation. No, the rising fuel, electricity and food costs will just depress economic activity even more with less money available for other goods and services.
So with people having less to spend because more is flowing to necessities would the SARB raise interest rates? With people struggling in debt and economic activity depressed what would that do? Consider our banks which are not in good shape besides the MOPE you hear on teevee; reference the article posted above and connect a few dots for one. Consider them with their residential mortgage stuffed balance sheets.
This is not demand pull inflation concurrent with credit expansion and asset price inflation, this is cost push inflation concurrent with deleveraging and asset price deflation. Interest rates will stay the same or even drop to spur economic activity to pay these increased prices.
@ Goldilocks - You are correct, the nature of the inflation is not consumer spending, but rather global factors. However at the same time you seem to give the goverment a lot of credit. Gill might have a brain, but remember Tito? He raised the repo regardless of where the inflation was coming from. The biggest mistake we can make is to assume that the banks are incompetent. While in the US there was fierce competition amongst the banks resulting in them taking on more risk, in SA we have the big 4 price fixing the market and sitting very pretty at the moment. Capitec might change that until Riaan moves onto the A-List and they will join the club. Besides Capitec doesn't do home loans anyway. So you have the CEO's of big 4 probaby tee-ing off at Fancourt as I speak, discussing their next combined move.
I have even less credit for the government than the SARB, banks even less than that :)
Monetary policy at the SARB changed with the IMF running the show there. They dispensed with controlling money supply and now use inflation targeting. Interest rates is the number one tool.
Tito was raising rates in the face of massive M3 growth, M3 is nowhere near the 20 to 25% growth it was in the noughties. This is what the interest rates target; money supply and credit/debt expansion. This was demand pull inflation, now its the opposite.
This isnt a defence of the SARB, just giving people something to think things through instead of listening to these so called economists who are paid to be wrong 99% of the time. The only reason these people make money is because they are part of the herd, they are not the smart money/strong hands on the bubble graph.
16 comments:
What? No comments about the shambles formerly known as the Estate Agency Board?
I wouldn't know where to start with that organisation.
How's Wendy (aka Miz Machanik) these days?
Is the lyin', cheatin' bag o bones in the chokey yet?
She should be... however I fear she may rise from the ashes and do a Marth Stewart. Sometimes a prison sentence can do wonders for your street cred.
http://capetown.gumtree.co.za/c-Flat-House-Real-Estate-vacant-land-properties-for-sale-The-Buy-Of-A-Lifetime-W0QQAdIdZ274151657
Ladies and gentlemen, I present to you... "The buy of a Lifetime".
Whose lifetime would that be? Sol Kerzner? The Sexwales? The Guptas?
I'm trying to ignore the hideous Afro-chic, over-Coricrafted, over-chenilled interiors but I can't.
Any WHO is that luscious blonde depicted rather poorly and ad nauseum in the lounge of horrors?
Could it be Annelien Kriel Bacon Macon what's her new name?
Wow, did you see that kitchen, how many variants of beige can you find?
If I just think about spending almost 3 Million Euro and getting a kitchen like this!!! Unbelievable
I recently watched the financial crisis documentary Inside Job.
For those who dont know economic and financial history and dont want to spend years piecing the story together this is a great documentary and well produced, it will enlighten you.
In it people will learn why there was a global property bubble and they will also realize why their homes are not worth what they think they are worth. Perhaps they can get a bearing on how to navigate the new decade.
Recall this house on the market for R32mil a year or two ago. Then a few months ago Pam Golding claimed they had sold it for R22mil.
Guess the buyer thought better of it.
Yo
House price crash now getting underway in Australia according to reports.
http://globaleconomicanalysis.blogspot.com/2011/04/australian-home-sales-sink-luxury-units.html
Isn't it a bit tacky and unseemly to advertise a R20 million + home on gumtree?
Or is it just sheer desperation?
Even Loos has become sceptical:
"If the housing market has not been able to produce respectable growth in the low-interest-rate environment, it can only be headed into a period of falling prices, said First National Bank (FNB) property analyst John Loos"
And...
"In [the 4th quarter of 2010,] 46.5% of the total of 18.5m credit-active consumers were more than three months in arrears in their debt repayments."
http://www.fin24.com/Money/Money-Clinic/House-market-struggling-due-to-debt-20110410
Being a renter myself, what should i expect from this?
With rates going up and a lower supply of rented space, should I be expecting a big rent increase next year?
http://www.property24.com/articles/buy-to-let-property-market-stays-weak/13402
The survey estimates that the buy-to-let segment of the market remains weak at just eight percent of total house sales.
During the property boom in 2004 the buy-to-let market represented about 25% of total buying.
@Jim: In my opinion, a weak BTL market doesn't always mean that rent will drop due to oversupply. It could mean that rent could in fact rise, along with the interest rates as left over BTL investors struggle to keep their head above the water. I believe that at the moment banks are prepping for the next interest rate cycle. They have had a good few years to sell off the repo's, allow the heavily indebted to catch up, and will ease their lending criteria just in time for the interest rate rise later this year. Thus I think we will see another mini-spike soon. I believe that because middle class South Africans are well and stupid with their money, the market is not dependent on the price of property, but rather on their ability to obtain credit. Which ties in well with Goldilocks' Inside Job. Central Bankers on Wall Street knew what was going on, they knew the recession was on it's way, and according to that documentary they practically planned it. They made the financial situation in the US so complicated only they knew what was happening, and people trusted them. Worse though they trusted the US government who supported it and has since surrounded itself with many people involved in instigating the sub-prime crisis. The banks play with peoples *wants* to such a point that it becomes normal to pay 80% of your salary towards debt, making you a slave to your debt and to the bank. That's where SA is. If banks start with their 100% or 110% bonds BTL will be back in full swing. Property values will rise again and people will become more and more indebted right until the next down-swing. The baby boomers at least come out the other end with a shitty pension and a house. Generation X will come out with nothing but a beaten old X5, and we will have to wait and see where Generation Y goes, provided they don't shoot each other first.
I look fwd to the boomers rotting in old age homes, drooling with their nappies full of day old poop while their brains turn to sponge.
Why honour a generation that fucked up the entire planet and shredded their children's futures so that they could be comfortable? Let them die cold and alone surrounded by their possessions.
Jim and anon,
I see these interest rate hike predictions here and elsewhere. Let’s think this through even though its late and one shouldnt be thinking about such things at this time of night.
Where is the inflation? Food, electricity and fuel. How are interest rate hikes going to combat these price increases? Will interest rate hikes here stop revolts in the ME and the bombing of Libya? Will interest rate hikes force Eskom to drop electricity prices? No.
Someone explain to me the flow of how rising food or fuel prices cause house prices to go up or credit to expand? Transport costs for bricks and cement? Food for the truck driver? I often see this angle; sort of a one size fits all inflation. No, the rising fuel, electricity and food costs will just depress economic activity even more with less money available for other goods and services.
So with people having less to spend because more is flowing to necessities would the SARB raise interest rates? With people struggling in debt and economic activity depressed what would that do? Consider our banks which are not in good shape besides the MOPE you hear on teevee; reference the article posted above and connect a few dots for one. Consider them with their residential mortgage stuffed balance sheets.
This is not demand pull inflation concurrent with credit expansion and asset price inflation, this is cost push inflation concurrent with deleveraging and asset price deflation. Interest rates will stay the same or even drop to spur economic activity to pay these increased prices.
@ Goldilocks - You are correct, the nature of the inflation is not consumer spending, but rather global factors. However at the same time you seem to give the goverment a lot of credit. Gill might have a brain, but remember Tito? He raised the repo regardless of where the inflation was coming from. The biggest mistake we can make is to assume that the banks are incompetent. While in the US there was fierce competition amongst the banks resulting in them taking on more risk, in SA we have the big 4 price fixing the market and sitting very pretty at the moment. Capitec might change that until Riaan moves onto the A-List and they will join the club. Besides Capitec doesn't do home loans anyway. So you have the CEO's of big 4 probaby tee-ing off at Fancourt as I speak, discussing their next combined move.
@Anon,
I have even less credit for the government than the SARB, banks even less than that :)
Monetary policy at the SARB changed with the IMF running the show there. They dispensed with controlling money supply and now use inflation targeting. Interest rates is the number one tool.
Tito was raising rates in the face of massive M3 growth, M3 is nowhere near the 20 to 25% growth it was in the noughties. This is what the interest rates target; money supply and credit/debt expansion. This was demand pull inflation, now its the opposite.
This isnt a defence of the SARB, just giving people something to think things through instead of listening to these so called economists who are paid to be wrong 99% of the time. The only reason these people make money is because they are part of the herd, they are not the smart money/strong hands on the bubble graph.
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