Purchase price: R1 180 000. 100% bond: R15 975/month
Our favourite Simon's Town McMansion has had another asking price drop. Back in August it went from R3 600 000 to R3 500 000 (a massive 2.7% price drop!) and has now been dropped to R3 200 000. That's about a 8% asking price drop. I guess these folks have never heard of chasing the market down. 
Desperation is starting to set in it seems. Here's a 3 bed house in Simon's Town for sale for R1 985 000 and if you buy it you get a free 2000 Land Rover Freelander. Now the car may be free but the insurance and maintenance (and petrol) aren't...w~~_20.JPG)
South Africa's saving rate has dropped from 2.7 percent in 2001 to a negative rating of -0.5 percent in the second quarter of this year, the SA Saving Institute said on Tuesday.
Big bank Absa (JSE:ASA) has warned that the property pain is set to continue into next year and said the housing market has cooled off "to levels not seen in many years".
Its October House Price Index, released on Thursday, still shows nominal year-on-year house growth (1,2%), but at its lowest level since January 1993.
With inflation at just over 13%, a little lower than 13,7% year-on-year in September, in real terms house prices in South Africa are falling. The figure for September is -10,1%, said Absa.
Looking at the price trends, said senior property analyst Jacques du Toit, "nominal year-on-year house price growth is at risk of moving into negative territory in the near future".
As you know I've been monitoring Remax's inventory for some time now, and the following Parklands McMansions are celebrating their first birthday on the site - for sale since 5 November 2007 (at least - some of them may have been on the market from before I started monitoring).
The lucky 1st birthday losers are as follows (ref number):
300129425 - reduced price from R2.2 million to R1.97 million in July, but it hasn't helped
300124769 - reduced from R1.99 million to R1.59 million in July.
300053213 - no reduction, no action.
300145659 - no reduction, no action.
300126745 - no reduction, no action.
300057755 - this beaut actually raised his price from R1.78 million to R1.85 million in February - yeah, that's really going to help it sell.
300132504 - no reduction, no action.
300147733 - no reduction, no action.
300134038 - no reduction, no action.
And finally, this one - 300114217 - who raised from R749,000 to R760,000 in May - roughly what you'd have to pay me to live in this deeply depressing little piece of sandblown hell.
The swanky Atlantic Seaboard, which until recently appeared to be reasonably immune to the overall housing slump, is now also being hit by negative sentiment.
New data from Seeff Properties' Atlantic Seaboard office show that sales of sectional title apartments in Fresnaye, Sea Point and Bantry Bay have halved from January to October 2008 (y-o-y).
Seeff sales specialist Adrian Mauerberger says in 2007 around six apartments were sold every month in this area in the price range R2m plus. Atlantic Seaboard apartment sales are now down to an average three per month.
More worrying is the large number of units coming on to the market. According to Mauerberger's statistics, some 117 sectional title apartments are currently for sale on the Atlantic Seaboard. He says given that only three units are selling every month it would take 40 months (or more than three years) to sell all of this stock. "That's assuming that not one further listing comes on to the market.'
Parklands
Parklands - 3 bedroom/2.5 bathroom townhouse(only 12 months old) - sheriff auction price R583000 - Sold in 2007 for R879 000 by developer
Parklands - 3 bedroom / 2.5 bathroom townhouse - sheriff auction price: R379 000 - exact same sized property in same complex selling through Remax for R749 000
Parklands - 3 bedroom/ 2 bathroom townhouse - sheriff auction price : R480 000 - Open market value: about R650 000 (currently being rented out for R4600)
Parklands - 3 bedrooms/2 bathroom townhouse Sheriff auction price: R515 000 - Open market value: about R699 000 (currently being rented out for R4800 hence its high price)
Parklands - 3 bedroom / 2 bathroom freestanding house (no garage): R490 000 - Open market value: about R650-699 000 (currently being rented out for R5000 per month)
Parklands - Plot - sheriff auction price: R350 000 - outstanding bond: R590 000 odd
Table View
Heron Cove complex - 2 bedroom / 1 bathroom - sheriff auction price: R252000 - Open market value: about R399 - 429 000
Heron Cove complex - 3 bedroom / 1 bathroom - sheriff auction price: R355000 - open market value: about R449 - R499 000 - Oustanding bond value -R550 000 (achieving a monthly rental of R3500 per month)
Bloubergstrand
2 bedroom/ 1 bathroom apartment - sheriff auction price: R424 000 - open market value: R650 000
2 bedoom/ 2 .5 bathroom 127 square meter luxury apartment on Blouberg beachfront - Outstanding bond: R1.9 million (registered in 2005)- sold by sheriff for R1.450 million
Parow / Loevenstein
2 bedroom/ 1 bathroom duplex apartment with great view - Highest bid: R381 000 - Nedbank wanted much more as bond was over R550 000 so no sale.
3 bedoom/ 2 bathroom/double garage/pool - recently renovated house in pristine condition with seperate 1 bedroom granny flat on 900 sq/m plot - Sheriif auction price R866 000 - Outstanding bond: R1.5 million - open market value- R1.3 million
Goodwood
2 bedroom / 1 bathroom apartment (1 years old) - sheriif auction price: R330 000 - open market value: R499-550 000
Sybrand Park
4 bedroom/3 bathroom 250 sq meter house on 850 square meter plot with pool, garage for 4 cars, offstreet parking for 6 cars / had a granny flat that was easily 80 square meters in size- sheriff auction price: R790 000 - outstanding bond value: R1.6 million (registered in 2004) - Open market price: R1.5 million odd
Cape town CBD
Batchelor apartment (40 square meters) - sheriff auction price: R371 000 - similar sized apartments in building selling for R599 - R620 000 - Bond with FNB registered in 2005 was R600 000.
Zonnebloem
3 bedroom/2 bathroom corner unit duplex in Cantebury Square with garage and big garden - sheriff auction top bid: R895000 - no sale as Standard Bank wanted more - Bond value: R1.9 million - exactly same sized property selling for R1.499 million.
South Peninsula
Coniston Park / Retreat- 3 bedroom/ 2 .5 bathroom freestanding brick face home with double garage - Sheriff auction price: R315 000 - Open market value: R550-599 000 - achieving a monthly rental of R4500
Costa Da Gama (opposite Marina Da Gama) - 3 bedroom/2 bathroom freestanding home with garage (about 2 years old) - Sheriff auction price: R270 000 Open market value: R499 000 - R529 000
St James - 2 bedroom/2 bathroom 80 odd square meter sea facing apartment in the St James Terraces - Sheriff auction price: R 1 million - unit directly underneath selling for R1.499 million but has a small garden
Maitland - the exception!
3 bedroom/2 bathroom freestanding trashed house with a garage that was occupied by 30 or so Congolese or Nigerians - somehow this property was sold for R450 000 when the oustanding bond was R280 000. There were two shady characters bidding hell for leather so they probably knew something everybody else didnt.
What I mean by open market value is the current value at this point in time and taking the current depressed market conditions into account.
Its quite apparent that the market has tanked judging by the prices being achieved at the sheriff's auction. It must be said that there are numerous bidders at these auctions and the bank's representative does get involved if the bids are too low.
Another interesting observation is that the banks, with the exception of Nedbank, are willing to accept the fact that the final bid is only 50-60% of the oustanding bond value. It seems the banks know that prices are going down and they are selling cheap to cut their losses. That and banks dont want to be landlords of distressed properties.
In the third quarter of this year 70 000 homeowners were more than two months behind with their bond instalments - 21.5% more than in the first quarter.
At the same time, 25 000 homeowners were more than four months behind and in danger of losing their houses. This figure shot up from 18 000 in the first quarter.
These shocking figures have become evident from the Alliance Group's latest research for the third quarter.
CE Rael Levitt says that indications are that the numbers will climb. "The residential market is slipping backwards and, if the macroeconomic climate weakens further, more and more homeowners will experience serious mortgage stress."
He says that stressed sales being handled by the group are growing 20% month by month.
Here's possibly the worst 'investment' I've ever seen advertised in Blouberg. A 2 bed/2 bath apartment on sale for R1 250 000,a 'winner all the way' and 'IDEAL FOR INVESTORS', but which rents for... wait for it... R3 500/month. To put that in perspective the payments on a 100% bond is R16 923/month which means it would be 4.8 times cheaper to rent the place than buy it. The difference between the bond and the rental is R13 423/month alone, and if you were diligent and saved that money you'd be sitting with over R160 000 in your bank account at the end of the year. 
raffle of apartment R 1500
Fully Renovated Stylish Apartment for Sale.- R 1500 - Yes thats right - one thousand five rand only - and I pay for ALL the transfer/duty/lawyer costs in total into your name !
Just came back from a few days in Hermanus. I'm not lying when I tell you that virtually every 2nd house is for sale.
What a surprise! The worst investment in Hout Bay that we last saw in May is still on the market. To remind you all it's a 3 bed townhouse on the market for R6 million which is tenanted for 5 years (that's not a typo... it really is 5 as in f-i-v-e years) at R28 500 a month. Which means that with a 100% bond over the five year period of the lease you will end up losing R3 163 920. Even if interest rates had to magically drop to 10% for the next 5 years you'd still end up losing R1 764 060 and you'd only need a deposit of R3 000 000 to break even on cash flow.
Strand is a suburb with some of the worst rental yields in Cape Town, probably not helped by the 45 minutes it takes to drive there, and that's when there's no traffic. So it's not suprising with the stagnating market to see investors beginning to exit ASAP.11 Investment Properties in security complex for sale in Cape Town, Strand, South Africa.
1. 2 bedroom units
2. Signed leases with tenants in occupation
3. One years capital growth
4. All are managed by rental agents
I've been attending quite a few repo residential auctions and thought i'd send you some figures:
San Marina (Marina Da Gama) - 3 Bedroom / 2 bathroom house
Agent selling price: R749 000
Sold at auction: R425 000
San Marina (Marina Da Gama) - 2 Bedroom / 1 bathroom house
Agent selling price: R599 000
Sold at auction: R415 000
Costa Da Gama - 2 bedroom/ 1 Bathroom house
Agent selling price : R529 000
Sold at auction: R340 000
Pinelands - 2 bedroom flat (92 m/sq)
Agent selling price: R799 000
Sold at auction: R514 000
Rondebosch East 2 Bedroom flat (18 months old)
Agent selling price: R585 000
Sold at auction: R300 000
Table View 3 bedroom/ 2 bathroom house
Agent selling price: R795 000
Sold at auction: R 438 000
Durbanville 4 Bedroom / 2 Bathroom
Agent selling price: R2.25 million
Sold at auction: R1.05 million
Pinelands - 8 bedrooms/ 4 bathrooms (400 m/sq house on 900 m/sq plot in pristine condition) sold for R1.4 million - conservative value by Sheriff was R2.7 million ( a little optimistic but never the less)
Agent selling price is the price the property was going for before the house got repo'd. The auction price is the price knocked down by the Sheriff.
Here's a 2 bed/2 bath apartment for sale in Royal Ascot(Milnerton) on sale for R1 195 000 with a current rental of R5 500/month fixed for the next year. With a 100% bond the monthly payments are R16 178/month leaving you with a shortfall of over R10 000/month. Here's the payment and yield graph.
Mortgage defaults surge
An increasing number of homeowners are defaulting on home loan repayments, with an estimated 70 000 South Africans currently in mortgage arrears, latest figures from the Alliance Group shows.
Alliance Group CEO Rael Levitt says their research shows that the number of homeowners who have defaulted on monthly mortgage repayments by up to two months have increased tenfold in the 12 months to end-September 2008.
Here's a house for sale in Muizenberg;Join the mad rush to view this bargain property! The owner has decided this is too much of a steal.
Instead of increasing the price all at once, however, it will be going up steadily every week until a sale is achieved! Don't miss this opportunity to get in on the ground.
I raised the issue that the Absa house price index was late. As you can see they were just delaying the bad news. 9.6% decrease in real terms of large segment housing. Check out the link
Trevor Manuel and 10 Cabinet ministers quitFinance Minister Trevor Manuel is among 11 Cabinet ministers and three deputy ministers who have resigned.
Their letters of resignation had been received by President Thabo Mbeki "which, regretfully, he has had to accept", the presidency said in a statement on Tuesday.
They included Deputy President Phumzile Mlambo-Ngcuka, who earlier in the day announced her resignation from the position, to which she was appointed after ANC president Jacob Zuma was released from his responsibilities as deputy president in 2005. One of the reasons she gave was to allow a new president the opportunity to choose their own deputy.
The other resignations were of the Ministers of: Defence, Mosiuoa Lekota; Minister in the Presidency Essop Pahad; Intelligence, Ronnie Kasrils; Correctional Services Ngconde Balfour; Public Enterprises, Alec Erwin; Science and Technology, Mosibudi Mangena; Public Works, Thoko Didiza; Provincial and Local Government, Sydney Mufamadi; and Public Service and Administration Geraldine Fraser-Moleketi.
The consumer price index excluding interest rates on mortgage bonds (CPIX) should accelerate in year-on-year terms to 13,3% in August from 13% in July, RMB financial markets research said on Monday.
RMB forecast a month-on-month increase of 0,5% in August CPIX.
"The upward pressure on the index will probably come from higher processed food prices and residual increases in electricity tariffs and housing costs," RMB said.
This loft is on the market for a cool R3 400 000. It attains a gross rental of R15 000, minus rates/levies of R2 000 to give you a net rental income of R13 000/month. With a 100% bond the difference between the monthly bond payment of R46 031 and the rental income is R33 031/month more than twice the rental attained every month! 
Credit Act takes toll on 18 000 estate agents
As the interest rate hikes bite, the number of potential home buyers has halved and houses are spending double the time on the market than previously, spelling hard times for estate agents.
At least 18 000 of them have lost their jobs in the last year as they struggled to sell over-priced homes in a climate in which consumers can't afford to spend.
Estate Agency Affairs Board (EAAB) chief executive Nomonde Mapetla said the economic slow-down has resulted in the number of estate agents registered with them dropping from about 78 000 last year to 60 000.
WITH more than half of employed South Africans now estimated to have impaired credit records due to late or nonpayment of debt, debt counselling company Consumer Assist said recently SA needed a further 2500 debt counsellors to cope with a looming consumer crisis.
That prompted a response from one notoriously gloomy (and so far correct) blogger on the Cape residential property market.
Writing under the pseudonym of CT Bubble, he suggested that there would soon be plenty of unemployed estate agents out there.
These newly jobless agents could not only find new careers as counsellors but also help fix some of the trouble they caused in the first place when they encouraged people to buy what they couldn’t afford.
Ouch.
Aaaah the De Waterkant, the land of shitty rental returns. Why rent a 3 bedroomed house for R20 000/month when you can rent a 3 bedroomed house for R9 500/month. Now while the first ad might be for a furnished home and that ads to the rental there's no way it can account for 110% difference in rental returns.
FirstRand reports bad debts at R4,7bn
FirstRand Ltd, South Africa's second-biggest banking group by assets, reported a 13 percent fall in full-year normalised headline earnings on Tuesday, and said credit market conditions remained challenging.
The firm, the last of the country's four big banks to report full-year results, said normalised headline earnings for the year to end June were 8.8 billion rand.
FirstRand said it had been hit by slower asset growth and higher bad debts at its retail units. Bad debts at its retail unit were at 4.7 billion rand versus 2.6 billion rand in the previous corresponding period.
Here's a house in Plattekloof on sale for R3 395 000 with a rental income of R18 000 (despite the ad saying it's newly built and looks empty). That means with a 100% bond the difference between the monthly bond payment of R45 964/month and the rent is R27 964/month. If you're fully geared you'll be losing over R335 000 every year! Here's the payment and yield graph:
The decline in the number of first-time home buyers has made the rental option more attractive, but people looking for homes to let are limited by affordability, say estate agents.
The FNB Residential Rental Barometer for the second quarter of 2008, released yesterday, showed a decline in activity from a rating of 8.4 to 7.6 . Agents who were polled for the national index said only 59 percent of rental properties on their books were snapped up in less than a month, compared with the 75 percent take-up recorded in the first quarter of the year — a 16 percent decline in activity.
The main reasons given for slowed activity was a 7.43 rating of landlords asking high rentals, and a 6.73 rating for the letting market being a tenants market.
Here's a 2 bedroomed flat in Diep River on sale for R925 000 with a current rental of R4 800. "GREAT OPPORTUNITY FOR INVESTORS!" shouts the ad. That means with a 100% bond you'll be losing R7 723 every month, which is about 1.6 times the gross rental income. Here's the payment and yield graph:
"We haven't seen this since late 1970s," he says.
Sunter points out that one of his friends who wants to retire in the UK is trying to sell his home for four-million pounds, but the best offer he has received is just 1.6-million — 40 percent of the asking price.
"It has even spread to South Africa — you can't sell a house here," said Sunter.
"Things are getting very tough," he said.
"We had minor recessions in 1998 and 2001 — but nothing like we are seeing now," he said.
This house in Bergvliet on the market for R1 850 000 is described as an "INVESTORS DREAM" and is tenanted at R8 500 a month. Buying this on a 100% bond means that the monthly bond payments will be R25 046 a month and the difference between that and the rent is R16 546, nearly twice the rental itself. Here's the payment and yield graph:
Bachelor flat on Long Street. Superb position. Keen tenants paying R3000 per month - it is a lower than average rental because we told them we were going to be selling. Selling at way under value. Our bond is R450000.00. Remax gave a written valuation saying we should be marketing the flat at R530000.00. Reasonable offers will be considered.
After a four-year boom during which prices soared, the property market is in crisis, with consumers facing a desperate struggle to get finance to buy or build homes.
Almost 40 percent of would-be borrowers have had their home-loan applications rejected by the four biggest banks since the beginning of the year as the credit crunch, sparked by stringent lending laws, rising inflation and higher interest rates, bites ever harder. Rejection rates have reached record highs.
...
With inflation reaching 13 percent last month, consumers are under pressure - they have racked up more than R1 trillion in household debt, up from R378,5-billion in 2002. They are now being forced to cut back on spending because of higher interest rates and the rising cost of living.
"However, the 2010 soccer World Cup could offset the current negative view of South Africa as an investment destination and this could drive momentum in the residential property market," he said.
There has been a 38% year-on-year decrease in the amount of national property sales transactions (across all property price brackets) between January - July 2008, compared to the same period 2007.
Total properties valued under R499 000 sold this year is 36% less than in 2007. Overall, the amount of sales transactions has decreased year-on-year by 42% for properties priced between R500 000 - R749 000; 39% for properties in the R750 000 - R999 999 price bracket, and 33% for properties with a R1 million to R1, 499 999 value.
In the higher price brackets, the largest decrease is recorded in the R1,5 - 2,5m price bracket: total properties sold so far this year is almost 50% less, compared to properties sold in this value bracket in 2007.
The Protea North Wharf is another one of those hotels where the hotel owners get their upfront costs subsidised by "investors" who buy rooms (or rather some vaguely defined 'right' to the rooms income) and then get a share of the profits. Now the market for re-selling these 'rooms' is pretty much non-existent so I'm not so certain this 'room' at the Protea North Wharf on the market for R2 200 000 will sell for anything close to that. The ad claims the "average rental" is 10 000 a month which means with a 100% bond the deifference between the monthly bond payment (R29 785) and the rent is 1.9 times the rental itself (R19 785). Let's look at the payment and yield graphs:
'S Africans act like Americans'Finance Minister Trevor Manuel said on Tuesday evening that South Africans were not adequately saving for tomorrow and preferred instead to consume in a US-like manner.
He said households were highly indebted and consuming in a manner that mimicked patterns in the US.
"They live on debt and are highly leveraged. It is not a basis of stability," said Manuel.
"If they are borrowing for consumption then there is something wrong in the equation," he emphasized.
Manuel said inflation targeting was a necessary policy as inflation hit the poor and those relying on a fixed salary the hardest and thus price stability was needed.
Experts told The Times that the economic “perfect storm” — high inflation, including food and fuel, and the resultant interest rate hikes — have driven six million South Africans to the brink.
Rajeen Devpruth, manager of statistics and research at the National Credit Regulator, said that by the end of last year, 6.3 million South Africans had “impaired credit records”, which means their payments were more than three months in arrears or judgment had been obtained against them for outstanding payments.
That’s half of the 13 306 000 South Africans currently employed, according to the latest Labour Force Survey in September 2007.
Our favourite Simons Town McMansion foreclosure has had a price drop! Instead of R3 600 000, the've slashed the price to R3 500 000! That's 2.7% off! It's a bargain now!
Remgro chairperson Johann Rupert told shareholders at the group's AGM in Stellenbosch on Thursday that the downturn globally - triggered by the sub-prime crisis - could be a prolonged affair.
Rupert, who warned of the financial crisis early last year, said the downturn - or recession - could last between five to 10 years as banks and major financial services companies cleaned up their operations.
"It's been a bit like getting overweight from eating, drinking and smoking too much, and then been told you have to run a marathon. For some it would take three years just to walk a marathon. So now you have frantic attempts by investment banks to get assets off their balance sheet."
"The best we can hope for - and it won't be quick - is that the system won't collapse in the process."
Reader PJ writes in:I drive past Ballinrobe, a new development being built on High Level Rd in Sea Point every day. The site was empty for at least a year before they started building and in the past year they have been building all they seem to have put in is some foundation pillars. I have yet to see more than 4 workers on the site at any one time. The past two weeks all I saw was two workers who didn't seem to be doing much.
The original completion date was supposed to be June 2008 but they've pushed it back to June 2009, although at the rate they are going June 2010 seems more realistic. The sign on the site claims it's 70% sold, 100% I would guess are speculators. This place must've gone on sale in 2006 at the height of the boom and is going to be completed right in the middle of the property bust. If anything with the lack of workers and progress it looks to me like they're trying to draw out construction so it's completed when (they hope) the property market recovers.
South Africa needs 2 500 more debt counsellors to cope with its growing consumer crisis, debt counselling company Consumer Assist said on Wednesday.
The company's chief executive officer Andre Snyman in a statement said: "The counsellors were needed "to cope with the needs of more than six million indebted consumers, who are losing homes at the rate of 2 000 a month and 6 000 cars a month",
Took a walk down Sea Point Main Rd and saw that two agencies have recently closed (International Realtors, Wendy Machanik Properties) and one moved to a smaller office (Lew Geffen Sotheby's).
Here's an ad from April for a one bedroomed apartment in Vredehoek:Charming one bedroom apartment in secure, small, upmarket and sought-after block. Private garden with views of city and Lion's Head. Secure off-street parking
Beautiful sunny one bedroom flat with private garden. Small, secure and upmarket building, Vredehoek. Undercover, secure parking. Views of the city and Lion's Head.
Kleynhans said it was possible some customers might lose their deposits on houses if they did not get the bond.
But, he said, the loss of a R30 000 or R50 000 deposit might "in the grand scheme of things" be better for the applicant than a much bigger loss if the client could not service the bond.
It was possible that if the customer was later forced to sell the property he could find himself with a shortfall of R200 000.
STANDARD Bank posted a 7% rise in first-half normalised headline earnings per share (EPS) to 481,8 cents today, but said rising bad debts meant it could not give full-year guidance.
Thembi Motaung, a manager at a South African legal firm, faced a painful choice when she started to fall behind in meeting hefty loan repayments on both her home and car.
"I had been defaulting on both my mortgage and car repayments for three months, so I had to choose which one to let go," said the 36-year-old mother of two who lives near Pretoria.
"I've been using public transport all my life so I found it easier to do without the car."
Having had to let go of her much-cherished Audi A4, Motaung joined a growing number of South Africa's so-called "black diamonds" who had fallen foul of the credit crunch and faced the heartache of repossession.
While a rise in interest rates, inflation and food and fuel prices have hit all sectors of South African society, research shows that the biggest sufferers have been members of the emerging black middle class.
Middle-income households who rent are beginning to show economic stress, Andrew Schaefer, managing director of national property managers Trafalgar, said on Thursday.
"Our offices throughout SA report that vacancies in flats renting at R4 000 to R7 000 per month are rising, a typical occurrence in the late downward phase of the economic cycle," he said.
Ooba (formerly MortgageSA before deciding to listen to some idiot consultant and change their name to something which makes no sense) have released the 'Oobarometer' which tracks house prices and (suprise!) it confirms the market is tanking.THE fact that residential property prices are on the decline was given further confirmation yesterday with the launch of Ooba’s own house price index.
This showed prices had fallen 1,4% since June.
Ooba, SA’s largest bond orginator, which has a market share of 25%, said its index, called the Oobarometer, showed the average price of a property acquired last month was R782385, down 1,9% from July last year, when the average price was R798300.
Here's a 2 bedroomed apartment in Stellenbosch on sale for R850 000 with a current gross rental of R4 000/month. Let's have a look at part of the ad:Located in the Stellenbosch Golden triagle with 5 year growth of 23%-28%. The monthly rental income of R4000 will cover 40% of your bond repayment or be a usefull passive income for the cash buyer.
South Africa was better off with using inflation targeting as an instrument of monetary policy, the governor of the SA Reserve Bank (SARB) said on Tuesday.
"Let's stick to it for now," he told a gathering of Wits students.
He said while there were those who argued that alternative instruments could be used to fight inflation, these instruments - such as forcing banks to increase their reserves - weren't useful.
Mboweni said that lately, there had been calls to abandon inflation targeting.
"But that's because rates are high - when rates were low, no one called for inflation targeting to be shelved."
Barclays is forecast to reveal a 35% drop in profits to £2.6 billion as bad debts around the world, particularly in South Africa, combine with further losses from its exposure to the credit markets.
Property deals are set to crumble, leaving developers, estate agents and conveyancers scramble to cover costs, as one of the biggest banks withdraws approved mortgage offers "on a large scale".
It's not just service providers who will be knocked financially: buyers and sellers with deals from other banks could find themselves high-and-dry where FNB pulls the plug on a key buyer in the chain.
FNB, one of the big four and part of the FirstRand group (JSE:FSR) listed on the JSE, confirmed to Realestateweb.co.za today that will withdraw home loan approvals "on a large scale".
Here's a two bed apartment in Blouberg on the market for R1 590 000 (for "Investors" only the ad says, good way to exclude 95% of the property purchasing public out there) and renting out for R8 000 a month with a 10% escalation to R8 800 set to kick in in April 2009. Levies are R1 500 a month which means that the net rental income will be R7 300 a month. With a 100% bond the difference between the monthly bond payment of R21 526/month and the rental income is R14 226, nearly twice the rental itself. Here's the payment and yield graph:
The residential property market is unlikely to escape its quagmire soon despite interest rates being near or at their peak in the monetary policy tightening cycle.
Sizwe Nxedlana, a Standard Bank property economist, said residential property prices were unlikely to recover in the near term due to the precarious state of household finances.
Nxedlana said the residential property market was driven by interest rates, inflation, employment growth and consumer sentiment. These drivers suggested the market would stay weak over the next year.
This 2 bed apartment in Diep River (" 
