Heading for a downturn?

[IanF]

The sheeple are starting to squeal

Optimism rules - will have to be the new motto.

Marq I love that word "sheeple" the image that comes to mind is woolly lemmings.
I agree optimism rules

[Dave A]

It looks like repossessions are on the up.

Auction warehouses are full of glittering 4x4s and expensive sedans, driving the message home to the previous owners the high price to be paid for over-indebtedness.

Yes, South Africans love debt and hate saving.

Household debt reached a record high of 77.4 percent of disposable income in the third quarter of last year, up from 49.8 percent in the fourth quarter of 2002.

Total consumer debt was at R839 billion, although most of this consisted of bonds and vehicle finance, said Gabriel Davel, the chief executive of the National Credit Regulator (NCR).

He said consumer debt had increased by 134 percent over the four years to 2007.

Car repossessions have risen by up to 20 percent year on year. But losing your 4x4 is nothing compared with the crunch when your home is repossessed. Remax has predicted that up to 17 percent of South Africans could lose their homes this year.
full story from Business Report here

[Chatmaster]

I am currently doing a business plan for a friend who heads a large investment company. They buy property before it is repossessed. I was shocked when I saw the data on SAPTG. There is allot of people in serious trouble with judgements left right and centre and it seems to be increasing. Well my friend is smiling, they get property at way below market value...

[Dave A]

New vehicle sales still drifting lower.

Car makers Volkswagen and Nissan will halt production at their assembly plants for several days because of the slump in new vehicles sales, while another motor manufacturer did not rule out similar action.

Bill Stephens, a Volkswagen South Africa spokesperson, confirmed last week that the company would shut production at its plant in Uitenhage for eight days between last Thursday and May 2.

Stephens said employees would be required to take five days' annual leave and to be on unpaid leave for three more days during this period.

The decision was an attempt to adjust the company's production schedule to subdued demand, following a 16 percent decline in new vehicle sales this year.

He added that Volkswagen's export business remained strong and was unaffected by the shutdown.
full story from Business Report here

At least new vehicle exports are still steady.

[Dave A]

Herschel Jawitz, CEO of Jawitz Properties, said the market would find a "fairly significant fall off" in the number of registered estate agents this year.

"It could be as much as a 15 percent to 20 percent fall off, which translates into around 10 000-15 000 fewer estate agents," said Jawitz.

He said there were about 80 000 estate agents registered with the Estate Agency Affairs Board.

He said the challenge for estate agents at the moment was less a matter of property prices and much more the volume of home sales, which had also declined by as much as 20 percent year-on-year.
full story from IOL here

I suspect in some market segments, the unit volume fall-off has been significantly higher than 20%.

Surely the latest rate increase is going to bring in more forced buyers and press prices lower? The "upside" of that scenario is that unit volume might pick up, though.

[Marq]

From what I can gather in speaking to various agents and readings - the unit volume has not dropped that much. There is an obvious drop at the high end of the market - but the bottom to middle range is going strong as demand has just lowered its sights a bit and people have become a bit more realistic in terms of their salaries and income levels. I think the sales themselves are becoming tougher which is where the usual disinterested estate agent starts to baulk and sees life in fast lane as not for them.

The level of agents in the country a few years back, if memory serves me, was round about 65,000. This big drop off we are looking at now is a common phenomenon as soon as things get a bit tight. The bored housewives and instant money idea people drop off pretty quickly if they can't cut a deal within the first few months and its also the once a year thing as the registrations come in and they can get a handle on how many agents are out there. I think if one has access to the boards numbers, we will find this to be the trend every year. The ranks swell during the year as people look for something to do and then fade at the end of the year as they do not renew.

So while there is probably a correlation between drop in agents to depressed house market as intimated by these property 'experts', I doubt it is anywhere on the same level as indicated in the reports.

I think I saw more agents boards out this past weekend than I have for a while so assume there is more stock than usual which of course could also prove that there is an excess of agents boards as a result of all those leaving and thus more room to manoeuvre in a volatile market which means a buoyant situation ripe for the sensitive buyer with ready cash on hand.

Oh sorry......The last sentence is as a result of listening to too many economists out there telling us about matters of finance and housing.

[Vincent]

To put a light touch to such an emotive subject.

My economist has suggested the following trends for the next twelve months.

• Petrol will rise to R12 -R15/ litre,
• food cost will rise by another 20% on the things he buys and
• interest rates will reach 16-18%.

Very scary stuff if I have to believe him. I have this conversation with him every couple of days when I need to fill up my car with petrol.
I wonder if he knows something that we all don't know.

And this was my 200th post

[Dave A]

And this was my 200th post

Way to go, Vincent
And so many quality posts too.

[Dave A]

First National Bank's (FNB) residential property barometer has dropped to the lowest level recorded for any quarter since its inception in 2003, the South African Broadcasting Corporation reported on Monday.

The bank said the barometer, which measures commercial activity in South Africa's major urban centres, dropped to 4,96 -- on a scale of one to 10 -- in the first quarter of 2008, from 5,09 in the previous quarter.

Up to 83% of people selling their houses had to accept a much lower offer than their asking price.

The bank said the average time a house remained on the market had risen to 12 weeks and four days from 11 weeks and two days in the previous quarter.

The barometer picked up a substantial rise in the number of people selling their properties in order to emigrate, compared with the previous quarter.

"This is especially so on the higher-income end of the market. While it is too early to say how far the latest emigration surge will go, this does pose a greater risk to the higher-priced end of the housing market," the bank noted.
full story from M&G here

[duncan drennan]

"This is especially so on the higher-income end of the market. While it is too early to say how far the latest emigration surge will go, this does pose a greater risk to the higher-priced end of the housing market," the bank noted.
full story from M&G here

I wonder how many of those are being snapped up by foreign investors....the irony.