Sharemax appears to be spiralling to its doom. Multiple stories today report that they are late on dividend payments to investors and may not be able to pay dividends in the forseeable future.
Cash has run out. The overvalued, over-geared properties cannot support the income stream that was demanded from them.
No surprises here then.
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Lightstone have a trick up their sleeves. Their raison d’être is collecting, analysing, understanding and packaging data for themselves and others to use to understand past, current and future property valuations.
Their housing price index is more robust (and more independent) than those of the banks based off their own data and target markets. Rather than consider only the average price of houses sold in that particular month (which is a function of house price growth / decline but also how the type, condition, size and location of the houses sold that month differ from the prior month and year) they consider repeat sales where the same property has been bought and sold more than once.
This data is combined or “chain-linked” to provide a continuous measure of house price inflation over time.
House Price Inflation 2010 source: lightstone.co.za
The result of all of this data, best-in-class methodology and analysis? When Lightstone says “opportunities abound in local market” I actually listen. Since their business model is to sell information, I’m more likely to trust what they say.
The South African Reserve Bank today lowered the REPO rate by a further 50 basis points, down to the level last seen in 2005 and the lowest the REPO and BA Rate have been in nearly 3 decades. Surveys leading up to the announcement and analysis of market interest rates suggests that the expectation was for rates to be held constant. Was this a purely populist decision, or does Tito Mboweni see more economic trouble ahead that other, more optimistic South Africans believe?
To date, the South African economy has been relatively less affected by the global financial crisis. Unemployment in Spain is up to 18% – within spitting distance of our own extravagant unemployment rates. Several large economies have been making eyes at 10% annual declines in GDP – often used as an informal definition of a depression (compared with a recession typically defined as two consecutive quarters of decline in real GDP). Property prices have been declining between 5% and 10% (depending on who you ask) and even after allowing for our higher inflation and thus greater real decreases, we compare very favourable to the drops of 20% to 50% in some parts of some countries. (more…)
photo credit: johnnyalive
A reader has some news, potentially about Rudie Visagie and another Rudco-style plan. Neither I nor the reader are sure about the details yet, but the story sounds all-too-familar.
I read your article on the web when i googled Rudy Visagie.
How very interesting to note all concerns people are having about “RUDCO”.
So i guess the guy is using a different company name.
I just wanted to share with you what is happening in the area in live.There is a company by the name of Grande Properties, owned/directed by RUDY VISAGIE. He is also offering low-cost middle class houses in Kimberley, Northern Cape. Houses range from 2-3 bedroom, fixed interest rate on 8%, 10,000k deposit for securing your plot. For a 3 bedroom you will be paying bond instalment of 2,000k fixed for 20 years at that interest rate, for a 3 bedroom at a price of 450,000k, 3,000k fixed for 20 years.
Concerns are many and most are the same as of the people in your articles, like: (more…)
Our memories are too short. It was only a few short months ago that Alan Greenspan’s legacy was being torn apart by critics of his eagerness to prop up bubbles through monetary easing. The critics said that his actions limited short term damage from the bursting of bubbles and economic difficulties only to generate the most severe crisis since the Great Depression.
Injecting liquidity, increasing the money supply, encouraging credit extension contributed to poor allocation of economic resources, a housing market bubble and a desperate search for yield through gearing and risk-taking. Many South Africa commentators were vocal in support of this view too.
But now we have forgotten. A seasonally adjusted and annualised decline in South African GDP of 1.8% has everyone begging for an emergency cut in interest rates. Early cuts before the next scheduled MPC meeting and 200 basis point cuts are suggested and encouraged. “We must save the economy, jobs are being lost!”
Bank-affiliated economic units have been particularly loud. (more…)
Skyrocketing home prices were ignored by the retired masses. With limited income and huge equity stored in their primary houses, thousands of retired home-ownders in the US and UK dipped into the equity in their houses.
Banks facilitated this through the creation of home equity release products or “reverse mortgages”. The bank lends money to the home-owner against the property as security. However, since the income of the “borrower” is limited, no interest payments are required. Instead, on death, the house is sold and the proceeds go first to repay the accumulated loan to the bank. The emotional trauma of having to sell one’s home is limited, no interest payments are required and the bank has another channel to route excess liquidity.
Bad selling practices and high effective interest rates gave these products a bad name. Sometimes the correct move, if difficult, is to downsize rather than rapidly erode the equity in a house. This tempered sales of the home equity release products that might otherwise have caused more headaches for banks given the current, twinned crises of credit and property. (more…)
It is entirely possible that I was too optimistic. For once. What I said was:
Our house prices will decline further but (political meltdown excepted) I’d bet serious money that we won’t see these declines in 2009 or 2010.
I was talking about the 12.4% decline in US house prices in 2008 and the areas with declines greater than 50%. Now I still don’t expect this as a most likely scenario, but a little more evidence is showing that the possibility exists.
According to Realestate web story:
According to a Business Day story:
Ok, so these are just a few anecdotal stories and perspectives from a couple of market players. However, it is clear that not all is well in the property market.
CNN has a story on house price declines being at their highest in 30 years. Turns out the headline is misleading in two ways. Firstly it proclaims house prices at a 30-year low, which is fortunately not quite the reality. However, the largest decline in 30 years is still pretty shocking. The second item is that the 12.4% decline in US house prices in 2008 is the worst since they have been systematically recorded.
Home prices fell 12.4% during 2008, the largest yearly decline since the National Association of Realtors began keeping comprehensive records in 1979.
As always, averages are a useful measure of overall market movements, but hide some truly enormous declines in individual areas: (more…)
