The following excerpts from FNB’s Agent Survey are copied for information. These trends do little for estate agents’ and originators’ motivation but they do allow us to reflect on what’s going on and our reaction to it.

Carry On Up the Khyber [Khyber] was the kind of comedy I grew up on. The Carry On movies were a laugh a minute if you appreciated slap-stick British humour – the Americans were still chasing each other on horses with John Wayne and Roy Rogers when they stumbled upon the “Sitcom” as they now call it colloquially. To us who know, comedy was invented in Britain! Khyber is about a British regiment, the 3rd Foot and Mouth Regiment, under the command of Sir Ruff-Diamond. Also known as The Devils in Skirts, they were reputed to not wear underpants under their kilts. Alas, Private Widdle is caught out by none other than the warlord of the Burpa tribe, Bungdit Din, the Khasi [Big Chief] of Khalabar [the imaginary province of India through which the Khyber River flows] and he, Bungdit Din, decides to cause an insurrection against the British by revealing the weakness of the underpants-less Devils. Needless to say, the invasion occurs and the Brits win, even winning back the underpants-based pride.

What a farce for a laugh and typical of the Carry On movies’ nonsense.

Enter FNB’s Agent Surveys with sincere thanks to John Loos, FNB’s renowned Property Strategist.

FNB ESTATE AGENT SURVEY– Investment Property Market.

“In the 3rd Quarter 2017 FNB Estate Agent Survey, the secondary home demand percentage was mildly lower than in the prior quarter, representing the second successive quarter of decline. In addition, there was a quarterly decline in the estimated percentage of investment (buy-to-let) home buying, a mild increase in the offloading of investment properties, and the pricing power of sellers of these homes appears reduced.


Perhaps it is to be expected that, in these tougher economic times, secondary home buying overall would be placed “on the backburner” by many, given its non-essential nature, and that the levels of such home buying would be mediocre at best.

Indeed, this continues to be the case.

Secondary home buying doesn’t appear to have “fallen through the floor”, but the FNB Estate Agent Survey does point to recent quarters’ estimates showing some decline in such buying as a percentage of total home buying.

According to the FNB Estate Agent Survey, secondary residential property buying reached a multi-year high of 14.47% of total home buying peak in the 1st quarter of 2017, the highest estimated percentage since the end of 2009. Since then, this estimate has declined mildly to 12.48% by the 3rd quarter of 2017. These levels remain far below the pre-2008 boom-time levels, which exceeded 20% at times.”


“In September 2017, the FNB House Price Index showed a further mild acceleration in year-on-year growth compared with revised August growth. However, a better momentum indicator is the month-on-month seasonally adjusted growth calculation, and this points to renewed slowing, suggesting that with the customary lag the year-on-year price growth rate is also probably set to resume a slowing trend in the near term, constrained by an economy battling to achieve any meaningful growth.”


The FNB House Price Index for September 2017 rose by 4.1% year-on-year. This is a mild acceleration from the revised 3.8% for August.

In real terms, when adjusting for CPI (Consumer Price Index) inflation, the house price correction gradually continued, with the real rate of house price change remaining in negative territory to the tune of a -0.9% year-on-year decline in August (September CPI data not yet available). This is a diminished real house price deflation rate, however, from -1.1% year-on-year in July and from a low of -4.8% reached in December 2016.

This diminished real price decline in August was due to the acceleration in the year-on-year house price inflation rate of that month from 3.4% in July to 3.8%. However, a slight rise in CPI inflation from 4.6% year-on-year in July to 4.8% in August partly offset the effect of the house price growth acceleration.

The average price of homes transacted in September was R1,102,394.” [an interesting number…]


“In short, both foreigners’ buying of domestic residential property as well as South African expat buying of local

properties, are perceived to have moved gradually weaker, the former since late-2016 and the latter since back in 2015.

We believe this weakening to be reflective of a dampened investor sentiment towards South Africa in general, which in turn is the result of the country’s multi-year economic stagnation, uncertainty regarding future economic policy, and widely publicized negative news such as the recent sovereign rating downgrades to “junk status”, with further rating downgrades mooted as a possibility.”

Well, from the giggle of the Kyyber to the depression of the research. But, and this is the point and the question of this blog, is it all as crazy as it looks?

Firstly, investment property is under pressure. On the one hand, rentals must be rising as fewer and fewer people are able to buy homes. Between the lack of confidence, their jobs, their probable @inflation increases before tax, and with interest rates only just beginning to turn, I can imagine the rental increase. However, in most areas, yields have been pedestrian, costs of services have been rising, and capital accretion has been minimal. The scissor-grip occurs slowly but surely and unless you bought at a very good price, you will want to exit the investment market and focus on your own bond for a while.

Secondly, jumping to the foreigners, they’re a no-brainer. The heady days of almost R24 to the British Pound are over. In fact, anyone who bought a few years ago may even have seen their capital decline. Couple the reality of a stronger Rand with politics and no wonder the foreigners are investing in Costa Rica and Southern France, etc.

Thirdly, the house price index is declining, but it was expected to do so even if we hit 1.2% GDP growth, and would have declined further given the latest inflation rate of 5.1% against an expectation of 4.9%. At -1% [my approximation], that is good against some of the early-2017 forecasts.

This last point leads to some closing comments; a reality check if you like and hopefully, uplifting to our readers.

I often allude to the South African economy being able to absorb shocks; even the shock of State Capture. If Pravin Gordhan is correct, hundreds of billions of Rands have been syphoned out of government and parastatals by the thieves of corruption. You could say this has gone back into the economy, especially the luxury goods market, but the distraction from service delivery, wasteful expenditure and sheer criminality are on a scale that we have never seen before. This economy has somehow withstood this evil miraculously; none the least, the property market.

Add to this financial trauma, the political crisis we endure and the close-to-dictatorial presidency, and you have a recipe for disaster. And yet, even if you agree with the tone of this language, we have a slight decline in house price growth, a reduction in foreigners’ and expats’ purchasing and investors declining – all pretty much in line with expectations. Be honest, it could all be worse, much worse. I have spoken about a “new normal” and heaven knows, I have no desire that it be, but, given some of the recessions we have gone through in the past, we can out-live this one.

Please don’t misunderstand me. I am not making light of a sorry situation nor am I trying to energise the Weary. What I’m saying is that you and I have known worse and we are doing business, perhaps as much as 25% down, but still doing business. Buyers are buying and Sellers are selling pretty close to asking price and if you consider the economy, that’s almost amazing.

The real issues for me are big-hits and/or the complete distraction from critical needs. Big-hits include a South African downgrade to full junk status and the wrong choice at the ANC Elective conference. The downgrade is on a knife edge and Moodys holds the knife. The choice at the elective conference is too close to call and the ANC holds the choice. Either and particularly both, could be economically strangling. Truth is, you and I can only put in an honest day’s work, deal our inter-personal relationships with dignity and respect and then pray for sanity to prevail. As for me, I believe we will be surprised and that, positively.

So, let’s Carry On Up the Khyber! On the one hand, you have to pinch yourself that through it all, certain people have not yet appeared in court. Immoral, corrupt, populists of the worst kind with not a hint of the Poor in their conscience. And how about the email evidence that has literally caught them in their underpants. Wouldn’t it be comical if it wasn’t so serious? But, let me say this, there will come a time when the kilts are lifted and the bravado melts away. The farce that is now our politics must surely give way to some sense – of values and direction for our beautiful, tortured country. Khyber was a funny comedy, a parody of all things Indian and British. Somehow, in the midst of our own “Indian” chaos, we find the resilience to carry on, and the ability to laugh at ourselves. We South Africans look up and look forward finding the sunlight and our way in it.

Homeloan Junction is in the midst of this turmoil with you. We survived Sub-Prime and have thrived in recent years beyond our size. Like you, we are not enjoying the current uncertainty and the opportunity cost of our corrupt politicians, but we are determined to thrive as much as possible. Consider us a partner, a trusted partner, in your journey and lean on us where you require some help. We run an honest business with hardworking people and we expect to reap the good that we sow.

Yours in Property.



Here’s something interesting that was in one of my Google articles.

[By the way, please forgive me for the variety of indices I use in this blog to make points. I do not have a research house behind me so please condone that I use different ratios and indices to offer a conclusion.]

We hear a lot about Trump and the people and things he is upsetting. He really does seem like a bull in the china [should that be China?] shop but, on the other hand, what he does is critical to the world. America, for all her woes, is the bedrock of the Western world and the Dollar still the pre-eminent currency on the globe.

Juxtaposed to this, is Warren Buffet. In every Press release, he is seemingly infallible in choosing winning industries and their winning shares. From Bitcoin to Gillette razors, he always seems to have a view and his views are revered. And, he’s been very confident in the American economy believing that, despite occasional setbacks, the economy will grow and richly expand. Of course, this view finds reflection in the New York Stock Exchange which at 22283 right now [26 September 2017: 14:53 CAT] and is trading in the highest range in history. Much has been said about the meteoric rise of the NYSE and Trump, whilst he gives it jitters from time to time, so far at least, has not stopped the cork-popping good times.

Before I make the point of this blog by referring to the attached graph, I remember sitting in our Ballito flat in 2008 watching the market go through 10000. It was obviously crashing before my eyes. From 14000 points in October 2007, the Dow Jones Industrial average index dropped to around 6600 by March 2009 – a collapse of unprecedented proportions but for the Great Depression. As a proxy for the NYSE, one can understand how this current market is very exciting for investors.

The question is, will it last? Have a look at the attached graph for a moment……..


Tracking from January 1871, the S&P500 rose from 80 points to 260 30 years later and then plunged back to 80 points in 1916 when, after the First World War probably, it collapsed, only to rise to  500 points before the Great Depression of 1931. Per the black line on the graph, it had risen to 2048 before 2006 when it re-corrected to 1020. If the graph continued, it would show the index at 2502 at 10h00 this morning [26 September 2017]. The straight black dotted line shows the rate of growth over the 135 years and it’s impressive.

Have a look at the red line. It records the P/E ratio which is simply the Earnings per Share [EPS] divided by the Share Price. So a share of R43 with an EPS of R1.95 would result in a P/E ratio of 22.05. Essentially, this is telling us that at the current ratio, it would take 22 years to earn the price of the share. Now looking at the graph, the P/E ratio rose spectacularly before the Great 1929-1931 Crash ie from 4 in 1916 to 34 in 1929 – that’s 850% in 13 years. You can see, after its ups and downs, the P/E ratio rose to just under 30 after 2006, probably 2010 when the world was beginning to sense some relief after the Sub-Prime crisis. As at this morning, the P/E ratio is 24.89 against an average of 15.67 and a minimum of 5.31 in December 1917 and a maximum of 123.7 (!) in May 2009. So, the P/E ratio is now trading at 58% above its long-term average.

Finally, the dotted line that skips from pullback to pullback is our focus of attention. It took 45 years for the Great Depression to occur and then about every 30 years for a deep adjustment to occur. The question for the experts now is simply when will the next one occur as, if you look at the volatility of the S&P, it was really jumpy when the Trump ticket was campaigning but in the last few months it has stabilized a little. The jury is really out on whether we will see a correction soon or whether Mr. Buffet is correct.

All this detail to what end? The American market is a huge dipstick to the state of American Corporates and its economy. After the Financial Crisis and at the opening edge of interest rate and FED balance sheet adjustments, it seems Big Business is confident of good growth. There are more compelling articles written about a slowing of P/E expectations but against sustainable growth than what seems to be the pure downside case. In essence, we hope that the growth in Corporate profits will continue albeit at a slower rate of increase.

In my previous blog I suggested that, for various reasons, the current state of the SA property market is a new normal. Please be sure, that’s not because I like it, and it could be Much better, but, because it could be much worse. Just looking at the most recent ooba Origination Overview, volumes of Granted bonds are down but not drastically at -1.3% yoy.

As they say in the Classics: Hou Moed!

Yours in Property.


This has been a hard month for blogs.

“No news is good news” the saying goes. This really is a time of no news. I’m beginning to think that this is the New Normal. On the one hand, it’s not that bad and many of us are surviving on what’s on the table; certainly not shooting the lights out but “in there”. On the other, we are developing two horrible tolerances:

– We believe this is how life is and become accustomed to the state of affairs.

– We accept that politics will determine our fortunes and allow the chronology of elections and the antics of the ANC to determine what we do.

Please never feel when I write like this, that I’m “preaching at you”. That is not my style. I too have the tendency to relate the future to the ANC Elective Conference and then to the 2019 Elections. And frankly, we are in the cross-winds at the moment and being buffeted by spectacular news from every side. Some is highly negative [depending on which side you are on!] and some of it, sensationally criminal [depending on which side you are on!]. A tough environment indeed, in which to ply our trade.

In this context, I often have sympathy for John Loos of FNB. In his latest Mortgage Barometer, he discusses the SARB 2nd Quarter Bulletin for Mortgage Lending. Remember, this is one of the largest assets that the SARB measures and it is a huge part of the Banks’ balance sheets.

In Q12017, there was an uptick in the rate of growth of new mortgage loans lending [Residential, Commercial and Agricultural]. For those of us who know the industry, that was the December “over-run”. In Q22017, that growth sank to a year-on-year rate of change measuring -2.18% decline, compared to a briefly positive rate of +6.49% in the 1st quarter. John continues to tell us why – household and business sector confidence at sustained low levels.

So what’s new? Well, CapeTown is beginning to show signs of slowing, off astronomically high price growth rates. But I have just finished a Skype call with a friend in Sydney which creates some perspective. He tells me that the young people cannot afford a house in the city limits any longer. A 2-bed/bathroom flat sells for Aus$1.2m, about R12m in the suburbs. The same unit in Kenilworth in Cape Town sells for R3.5m – that’s roughly a quarter of the Aussie price. For interest rates, Aus is 5% vs our 9.5%. However, one of the reasons for their high prices, is that the Chinese are buying developments wholesale and then, once complete, selling them to incoming compatriots for Aus$100000 more per unit. Quick money and almost insatiable demand, to the exclusion of the real people of Australia. Globalisation and capitalism at its best or worst [again, depending on which side you’re on!]

In a nutshell, if you allow articles, the Free [thank God] Press and Google to determine the upside of your day, you may be doomed to negativity. The times are tough in our beautiful, tortured country but forces are afoot across the world, that are causing turbulence for many businesses and industries.

HLJ is at the forefront of everything mortgage. Again recently honoured for excellent performance, the business is thriving on all that is available in the market. We understand success in the tough times and have enjoyed it in the bad. But for you, our associate, consultant, business partner and client, we assure you of being there and treating your requirements with the utmost respect and professionalism. Simply put, we read the Press and work harder to thrive.

Yours in Property.