Housing Bubble in South Africa thoughts and ideas

[Dave A]

When it comes to SA's price vs average income, I've got no idea what the concern is. For good measure, I've included a few other suspects for comparison in this one.

[cyppok]

I wonder what income they used for deducing that chart Dave. Interesting kinda I don't believe it simply from global gdp per capita stats but very interesting.

desA yes I read Mish a lot I also like Karl Denninger of Market Ticker.

The reason housing matters is that banks in some degree are seeing the amount of cash flow that passes through them due to housing turnover slowing, mining slowing, and tourism slowing may in the end create a somewhat of a liquidity problem. Payments and velocity of money that they take a piece off matter to them very very much. Hiding unproductive assets takes effort and cash flow from elsewhere to pretend the outflow doesn't exist, the less you have of the former the more induced you are to let go of the later.

Property likes stability of regimes ergo tax and property rights. Both of those are shifting in SA, the headline of property values at ~R5 trillion (5/8.25 = $600 billion) seems to provide impetus for giving the gov't a larger share. The other aspect of property is income yields that is seriously not going to happen in my view. Do they yield anything rental wise? ergo like if you buy a house for 2-3 million rand does it give you a rental yield of 5-6% at least? or no. Even at that yield it would make more sense buying gov't bonds. For commercial property yields this is far more important of-course and many of them provided they are strategic enough and have high enough demand may be good ideas. On the whole though I figure both commercial and residential are pretty weak.

[samanthaflax02]

Seems to be good! Nice and wonderful information.