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Thread: Residential property rebound by 2010?

  1. #11
    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by garthu View Post
    Am i reading that right? You are only doing a third of the business you were doing 2 years ago...
    The number is based on the approval numbers given in the article, but yep, there's been a big drop-off in that segment of our business. From my side the only way to shift the numbers is market share; I can't make more sales happen - although I did do a round of talks at the beginning of the year to "my agencies" to try to do just that. (Actually, looking at how we've gone so far this year, that might have worked )

    If it wasn't for the fact that I knew a correction had to happen sooner or later and had been building other market segments, I would have been in big trouble right now. And in saying I was kinda expecting it, I don't think anyone expected it to be as severe as it has been.

    I've had to really get my hands in and run a tight ship through this.

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    garthu (18-Apr-09)

  3. #12
    Gold Member garthu's Avatar
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    Well huge credit for predicting and prepping for it. I thought i did as well, but as you say, didn't expect it to be as bad as it was! I amazed how it has effected your business as well - actually distraught!

    Dont think anyone prepared for this - In October last year, there was a grand total of 6 sales (final sales) in sectional title between Vorna Valley, Halfway gardens, Noordwyk (which is most of Midrand res area). In a market of approx 30 agencies (probably not that high anymore), kinda makes market share REALLY important. As you say, cant make more sales... but market share...
    Garth

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    Site Caretaker Dave A's Avatar
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    A bit of a bun fight here as to what is really happening with property prices. But this was my take-away bite:
    Residential property auctions grew in both value and number over the past year. Alliance Group has sold residential property worth more than R7 billion, largely distressed house sales, since last July.

    Next month it would sell 750 properties compared with 40 last August. It expected to reach 1 000 sales a month by July and saw this continuing until the end of the year, Levitt said.
    That's a lot more auctions!

  5. #14
    Gold Member garthu's Avatar
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    Now if i had really been prepared, I would have gone into auctions of property Fact is we discussed with H/O, but discussion.... not enough .

    Thats a frightening number and i tend to agree with the auctioneers side simply as in general, and most areas, are just completing sales due to the price. If a property is listed well below current average market price, it will sell quickly. Demand is there, no doubt, far more than we believe. Property via agents is still overpriced though and often either its what the seller wants or its the agent trying to do his best to get the best price (or just lying to get the mandate).

    If advertised prices dropped by another 20%, market would flourish, simple supply demand balance come back into its own again. No one has the courage to say it though?? Not sure. The auctioneer is selling 750 per month versus, my one - do the maths, pretty simple as who's right. (Incidentally most of the auctioned properties in Midrand i have seen have sold 50-60% below a "fair" market value)
    Garth

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    Dave A (24-Apr-09)

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by garthu View Post
    Property via agents is still overpriced though and often either its what the seller wants or its the agent trying to do his best to get the best price (or just lying to get the mandate).

    If advertised prices dropped by another 20%, market would flourish, simple supply demand balance come back into its own again.
    That's exactly what I've been saying in my talk. What we are seeing is the result of trying to fight against the rules of supply and demand.

    The spin angle is that property has held its price well despite the general downturn, which shows what a great investment property is!

    The underlying reality is that there is huge resistance to lowering prices from the seller who is essentially over-committed with their bond. And that makes up the bulk of stock on the market at the moment.

    The answer is for property professionals to accept that extremely low volumes means overpriced stock (which I think they have for some time already) and get really good at price counselling sellers. Because that is where the blockage is - or at least was until the finance raising problem came along.

    But a pricing adjustment would probably help with the finance raising problem too.
    Last edited by Dave A; 25-Apr-09 at 11:49 AM.

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    Gold Member garthu's Avatar
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    Spot on!!
    Garth

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    Gold Member garthu's Avatar
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    It is beginning to be clear, says Tony Clarke, MD of the Rawson Properties Group, that a main reason why mortgage bonds are now so difficult to obtain is that certain banks are now simply refusing to accept bond applications from originators.
    *
    Clarke said that he was recently told by a bank executive that that bank now believes the cost of applications through an originator to be too high.
    Interesting comment, one i have mentioned before somewhere. There is a lot more to the article, but this didn't come as a surprise from what i have seen in the market
    Garth

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    Do you know what percentages of homeloans granted were (say 1.5 yrs ago) originated through MO vs in-house? And is fo, does this drop-off equate to similar percentages?

    I'm just trying (out of interest) to determine whether the originator is the reason behind this (or at least, most of the reason) or if it's something else.

  11. #19
    Gold Member garthu's Avatar
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    Off the top of my head (so dont quote here please!!) i think 70% of approved loans were via MO, we would get around 70-80% overall approval in general.

    Problem is at the moment these figures cant really be quoted as some MO only take deals they know will work and therefore get 70-80% whilst some take everything they do get and send through so around 25%.

    What the banks are passing on there side on direct applications i have no idea at the moment but what i have seen is guys who have gone direct have been pretty successful, thats something we used to frown upon (we lose control over the transaction for various legal reasons), right now it could become frowning if they not prepared to go direct

    2 of the banks have made it pretty clear, without stating it (legal reason there i know of) that they will deal directly with the client, one of them will only look at current clients and not others.

    Doesn't really give indication, but the signs are there
    Garth

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  12. #20
    Site Caretaker Dave A's Avatar
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    House prices are continuing to decline, due to a sizeable oversupply that has built up in the residential market, FNB said on Monday.

    Its latest house price index continued to decline in May to -11,3% year-on-year, it said in a statement.

    This represented a deterioration on the revised -9,2% rate of year-on-year decline recorded for April.

    It was also the sixth consecutive month of year-on-year decline in the house price index, FNB said.

    On a month-on-month basis, the rate of deflation was minus three percent in May.

    The deflation was a result of oversupply, with selling due to financial pressure being a key driver of supply, FNB added.
    full story from M&G here
    It's the first time I've felt these pricing trend figures are showing anything close to the pain that is actually being experienced in this market.

    If you read the article, predictions are of worse property price figures to come. Why do they lag the actual trend like this?

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