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It’s this time of year again. Jingle Bells, lights, family, friends and finally the end of year party.
The playing of Jingle Bells in the shops is highly over-rated and then unfortunately ABBA was swept along and many people associate their music with the silly season.
I say unfortunately because we went to the local friendly video store and got Mama Mia (ABBA music). What a delightful movie to watch. Fun, great actors and a happy ending. Just the kind of movie for this time of year.
The year was a tough one in many ways. The South African property market back tracked and we’ll have to wait for 2010 for an upturn. The world was spending money. Money that they had to borrow from banks - all ready to dish out the money.
But this kind of growth never lasts and natural forces always correct the situation. Painful for many. Now we should have 10 years of caution but it will again escalate to record heights and our brokers will again tell us, "this is the time to invest".
Yesterday I read a very interesting article by Kokkie Kooyman on long term investment strategies:
An investment of $1000 in July 2007 in AIG is only worth $28 in December 2008. But Berkshire Hathaway (Warren Buffett) retained most of its value and a similar investment of $1000 is still worth $976.
Warren Buffett’s salary of $100 000 did not change in many decades, while the same can not be said of AIG’s Hank Greenberg millions "received".
At the end of the day the investor can choose where to invest and then take responsibility for their choice.
I am sure you are asking: "Why do you write about Jingle Bells, Abba and Warren Buffett when there’s only 17 days left of the year?"
Let me try and explain:
I think that Jingle Bells is designed to trick me into spending money on junk. And we have had enough of that.
Although ABBA was lured into this Jingle Bells trap. Let’s forgive them. You can choose to be happy and watch Mama Mia.
The end of year is always a time to reflect and, for me, Warren Buffett is the ultimate example of what’s possible even when the world seems to be crumbling.
May you have a great Warren Buffet investment future and a happy Mama Mia festive season. Thank you for reading these emails during 2008.
Regards
Johan and Elmarie Horak
SimonsTownRealty: Sell, Buy A Simon’s Town Property? Phone Today 021-7864028 or 082 870 2004 How Do You Care For Your Second Home When You Are From Out Of Town? Ask The Local Eye To Take Care.
In general the Simon’s Town house prices have been stable except for a few that have reduced significantly.
This
home for sale in (sold in the week) Simon’s Town reduced from R4.5 to a current R2.75 million.
Apparently another nice house in Simon’s Town reduced from R7.5 million to R3.2 million.
According to the Absa House price index:
House prices have held out surprisingly well thus far despite the depressing market conditions which resulted in sales dipping by 30% to 50%.
However, it now seems as if price declines are in the offing for homeowners. According to the latest version of Absa’s house price index virtually no price growth occurred in November and prices were lower in November than during the previous month.
Jacques du Toit, property economist at Absa, predicts that homeowners will probably experience price reductions in the next few months. Absa’s house price index is based on the average price of all the property transactions that it financed during a specific month.
Only houses with price tags of less than R2,9m are considered for the index due to the ability of one or two transactions with exceptionally high prices to bedevil the average.
Four other indices have also been created, of which some are using other accounting methods, and this has stirred great confusion in the housing market. Months ago already, Standard Bank’s index, which uses the middle price, has recorded reductions of up to 10% and this index is 3,1% higher in November than a year ago. The reason for this is that several bigger transactions have pushed the index up.
Absa’s index has indicated no fluctuations during this period and showed lower growth each month than in the previous month.
Absa’s index reported on Friday that the average house price was only 0,3% higher in November than during the same month last year – and this price is now R963k.
However, the average house price for November was 0,1% lower than in October, which indicates that drops in the index will now be the norm. The average price of a house of between 80sq m and 140sq m that is worth R670,300 was 0,3% lower in November than a year ago.
The price of a mid-sized home (140sq m to 220sq m) was 1,3% higher than a year ago at R965k and that of a house larger than 220sq m 0,4% lower than last year at R1,38m.
Although the national average price is still higher than a year ago, it doesn’t mean that prices in some regions haven’t been dipping. According to Absa’s quarterly overview the average price was lower in four provinces during the third quarter.
In a city such as Pretoria prices were already 6,1% lower and in Bloemfontein this figure was 7,6%.
The reason for average house prices remaining fairly constant amidst sharp declines in sales is because few people in South Africa, when compared to other countries like the US, have had to sell their properties out of necessity. Sellers can therefore hold onto their properties if they’re not satisfied with the price. But as high interest rates start taking their toll, more people have to dispose of their properties.
The irony is that the weaker market conditions aren’t necessarily the result of a dearth of buyer’s interest.
The leading property groups are all reporting that there’s been a surge in the amount of visitors at showdays and property website visitors since the middle of 2008.
The problem, however, is that prospective buyers struggle to get financing. One of the largest mortgage initiators, ooba, reported that banks rejected 51,8% of all first-time buyers last month because they didn’t meet the more stringent affordability requirements of the National Credit Act (NCA).
Besides the fact that this percentage is rising, banks are also requiring a bigger deposit. The average deposit that buyers paid last month was 31,5% higher than in October.
There are many cases where the sellers quickly finds a buyer, and at a decent price, but the deal is then scuppered due to financing issues.
Even if the buyer obtains financing, there is often a clause which forces him to first sell his property, and the process is then scuttled when the person doesn’t find a seller that is able to obtain finance.
The housing market can breathe a sigh of relief because the SA Reserve Bank decided to lower interest rates this week.
It is unlikely that this reduction will be an immediate stimulus for the market, but it could help to relieve the pressure on existing homeowners. – David van Rooyen, SakeRapport
I believe: Although the Absa index is not exactly applicable to type of properties for sale in Simon’s Town it has very valid lessons for Simon’s Town home owners.
Have Fun
Johan Horak
SimonsTownRealty: Sell, Buy A Simon’s Town Property? Phone Today 021-7864028 or 082 870 2004 How Do You Care For Your Second Home When You Are From Out Of Town? Ask The Local Eye To Take Care.
In general the Simon’s Town house prices have been stable except for a few that have reduced significantly. ![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=2cb7fe44-4cd3-463f-a1fc-6afdc6141fed)
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