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Simon’s Town Property In Bubble Territory

Sep 20th, 2007 by Johan


Is Simon’s Town property in bubble territory? According to the following article by Heather D’Alton iAfrica Personal Finance Editor the property bubble is not on the cards listening to FNB property strategist John Loos:

“Torture the stats long enough and they will confess” — that’s the word from FNB property strategist John Loos to anyone who uses stats to show South African property is in bubble territory.


Loos was speaking at the Rode conference on property in SA, held near Stellenbosch this week, and he had considerably more good news than bad news when it comes to property prices.

Property price inflation may ease off in the short term, but by next year prices will continue their upward trend, as SA suffers a rise in building costs and increasing urban land scarcity. In fact, he said: “We are becoming a land scarce country” — not a feature you’d usually associate with SA.

Economic growth in SA will also remain strong — which in turn will drive both residential and commercial property returns — while the interest-rate peak is near.

But here’s the rub: property prices are becoming more unaffordable for a large chunk of SA’s middle class, which means they’re going to have to settle for a house that’s a lot smaller than they may be used to.

As for that bubble? Loos is skeptical, saying SA property prices remain cheap historically, and also when compared to overseas prices. For more on this story, see here.

And what about buy-to-let? If interest rates are starting to take their toll, does that mean you should hang onto your buy-to-let investment for now… or sell as soon as possible? Here’s more…

I cannot but not agree with Loos and Heather D’Alton that the property bubble is not but a short term correction (an opportunity to purchase property in Simon’s Town) and Simon’s Town property will recover.

Johan Horak

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