Thursday, 18 November 2010

Interest Rates DROP again...

Well good news for those of you that own property in South Africa.
Interest rate cuts have been issued again, with the government and reserve bank trying to decrease the stregnth of the RAND against the DOLLAR.

Rate cut 0.5% = Current Interest Rate = 9%.


Monday, 8 November 2010

Property Forecast Hangover already started

So my property forecast is simply that it will be 2015 before the World property markets returns to where it was at the peak of the boom in 2007 early 2008. What a hangover!!!

Looking at all the property folks analysis of the US, UK, UAE, Eurozone and Africa markets, well results are fairly sound but when it comes to the hot prediction of the exciting crazy days and world property boom, 2015 may be overly optimistic.

So, even if we are correct and prices recover to their 2007 levels by 2015, there is no guarantee that all the factors, the hype, the buzz and all the sexy property ingredients that led to the amazing level of overseas property transactions in the run up to 2008 will have returned.

So what were the key drivers of the boom:  And will we get rid of the hangover

1. Releasing money from your property, driven by domestic property boom s

2. A liberal mortgage and home loans market and cheap credit - 108% Loan to value...scary

3. Strong currencies relative to currencies in seller destinations i.e Pound versus Rand

4. Fear of loss. Prices were going up so fast, buyers felt that doing nothing was losing them money which further re-inforced the cycle.   Remember the buying of whole floors in apartment blocks in Dubai. Cash was also King, But credit was certainly the Queen.

So the big question is: Will any of these conditions have returned by 2015? Any domestic property boom is unlikely given the upcoming spending cuts, tax rises and inflationary pressures which are bound to push up interest rates in the medium term, strengthen or weaken currencies, US pumping money into the economy, this huge dearth of empty properties, even on the west coast of Namibia - time will tell.

Credit should be easier to come by as the banks balance sheets improve and we see banks scrambling to cut costs at all cost, even to the detriment of their allies the mortgage originators (Look at ABSA) but new regulations from the FSA in UK, The FED in the STATES,  SARB Exchange regulations plus more, look certain to restrict loan-to-value rates and clamp down on these weird toxic home loans (Be careful of the 6% loan in SA) mortgages which will probably negate any improvements in the banking system.

Unfortunately, I believe the banks don't have the balls or the willingness to kick start this side of the business...... they are after all people like you and I who also want to live a normal life...ha!!

The best hope for the worlds property market is a collapse in the value of the euro, exchange control removal in South Africa, the FED to stop pumping newly printed money into an economy that must take a bath, firing of all these bankers and instead of bonus's they should get jail terms but by itself this is unlikely to be sufficient to persuade the worlds masses to start buying anywhere again in the kind of volumes we saw in 2007.

So whats the good news - surely its not all doom and gloom- even Julius has a decent side to him for heavens sake!!!

The good news is that the long-term attractiveness of property is rising due to soaring inflation, man's need for ownership, properties in possession making it feel like a good deal.

Transaction volumes may not return to 2007 levels for a generation but there is an increasing market for scarce property and also toxic for some, but cheap for others properties.

Income streams and big cash owners are still there and the other markets are very scary, try the stock market if you dare..

It is good news for agents and developers promoting almost perfect developments but over the next ten years the world market will be no place to offload huge resorts in slightly out of the way locations.  Look at the death of Golf resorts etc

Lower income spenders are buying cheaper property products and once in the market they will move upwards.

Africa and Brazil are hotter than before as far as business is, China is feeling the pinch and 2011 is just around the corner.

And the best news its almost Christmas.

Thursday, 4 November 2010

To All Homeowners out there - Take Heart

After climbing a great hill, one only finds that there are many more hills to climb!"

These are words from Madiba, former President Nelson Mandela.

I find these words so true when I look at the property market over the few years. Although there are globally tentative signs for recovery it is still a path full of hills.

As home owners we can just continue our climb.

be strong, be very strong life is good eeeeeiiiiish!

Tuesday, 2 November 2010

ABSA - wherefore art thou goest!!!!

So, it is quite interesting, first they offer only 85% home loans, then they decline left right and centre for new applications including half their own clients, now: Absa informs all the mortgage home loan origination companies, that, with effect from 1st December 2010, all originators will only be allowed to originate home loans to Absa that have a loan to value (“LTV”) of 40% or less.

That equates to about 2 clients out of 200,000.

we all know that most new home loans businesshas a loan to value amount (LTV) of between 75% and 100%, this announcement will have a huge impact on the options available to the homebuyers for the future and of course it will effect the originators and the estate agencies that they originate for.

I am sure that Standard Bank, Nedbank and FNB cannot wait as now they will certainly get the cream of the crop clients from now onwards.

So who dies in the melee, you would ask.  Well for one, we heard clearly that Bond Choice will cease to operate as an independent originator and its processing and servicing capacity (rebranded as “Findex”) will be used as part of an Absa “direct to real estate” strategy, in conjunction with Absa’s internal sales force.

So the news vine says that Absa will not accept any home loan business post 1 December 2010, for LTV’s in excess of 40%, from any originators or aggregators other than from estate agencies that sign a direct contract with Absa and that are willing to have the homebuyer’s application processed by “Findex”.

Once again, we see the true colours of a very powerful bank as they step forward to control the market.  I wonder how much they paid Nedbank for their share of Bondchoice ooops Findex!!

Watch the switching of homeloans go bezerk as people freak out about the control that ABSA puts on them.

So because they are not making the profits they should, defaults are at a high, PIP's are just too much, well why not get rid of the force that does all your screening, work and provides you with the best cleint base - hell lets get rid of them and own the balance.

The freedom of choice by using your financial consultant is being whipped away and now you have no choice but to use a prescribed force...I think someone has made a big mistake here!

Lets see...eeeeeish!

Monday, 1 November 2010


VERY Interesting - after such a long layoff on loans TAMWEEL takes a step in the right direction and being an Islamic home finance provider in the UAE, specifically DUBAI, announcing the relaunch of its core activities, after a very long layoff, this is indeed great stuff.

Following the recent announcement on a significant increase in the equity stake in the company by Dubai Islamic Bank, Tamweel is now well positioned to support the country's real estate sector once again.

Beginning of the month of the scorpion, precisely on November 1, 2010, Tamweel will offer up to 80% financing of the current value of ready residential properties in Dubai and Abu Dhabi. Finance is available for salaried and self-employed residents only who meet the required eligibility criteria. So still nothing for non-residents, but a step in the right direction.

"Tamweel is back in business," said Varun Sood, Chief Executive Officer, Home Finance Division. "While the past two years have been extremely challenging for the company - during a period of unprecedented turmoil in the global real estate and financial services sectors - we have persevered. All of us at Tamweel are grateful for the support of our stakeholders over that period.

"With a renewed focus on prudence and conservatism, we are focused on booking a high-quality portfolio of select customers and properties," he said. "Today, our mission is to contribute to the stability and growth of the UAE real estate market, and to ensure that individuals can avail of the same high standard of products and services that made Tamweel a benchmark for the home finance industry."

so great news from Sheik MO and the boys who facilitated the return of Tamweel to the market....... heita!!!!