The Western Cape is in the throes of the worst drought in its history. Cape Town is about to be the first city in the world to face Day Zero. That is, the day that taps are turned off other than for strategic sites; that too, as long as water remains in the dams.

Volumes have been written about the drought but here is our take for your interest. Truth is we don’t know what will happen but some healthy insight and speculation will do no harm.

Day Zero was 11 April. This was moved to 11 May. Now, it is estimated at mid-June. The timing is interesting as nobody really knows what the impact of siltation will be in the dams. At what point will the water become muddy and at what point will the density of that mud make it impossible to pump or to purify the water to a drinkable state? Little is known about this doomsday scenario so the setting of Day Zero must be somewhat theoretical and I presume a safety margin has been incorporated in the Date. At Day Zero, all taps are turned off with the exception of key sites – hospitals, homes for the disabled and, informal settlements. The latter is very interesting as many claim the Poor have been gathering water from taps all along and it is just the Rich who will feel the pain. For those on boreholes, we trust the boreholes will not run dry. On the other hand, Cape Town foreshore hotels are pumping salt water from their foundations which are built below sea level. Now, this water is being run through in-house desalination plants to supply the hotel with pure water.

Of course, Capetonians are running for cover. A family member has installed a 5000 litre tank and has filled it with drinking water. Others have moved into Hermanus, for example, and begun to harvest water. Some interesting facts:

  •  Last weekend, looking for 5 litre bottles of water at the Spar for my son, firstly, there were none by Sunday and the manager informed me that of an order for 500 bottles, only 8 arrived. The reason is that the supplier “is servicing Cape Town first”.
  •  Rentable homes have dried up [excuse the pun] as Capetonians have rented homes to have available on the weekends for showering, washing etc and to live in permanently, if required. [Anecdote or true, the mind boggles.]
  • The Hermanus municipality has requested vigilance of your garden tap as people are filling water tanks with your garden hose and selling it in Cape Town and surrounds.
  • The Hermanus dam is just over 50% full and we have been informed that at 40%, penalties will begin to be imposed. Not too cool!


Who supplies water? To be honest, I thought the municipality supplied but they only purify and deliver from dams which are owned by central government. Key to this understanding is that Provincial government is practically only able to apply for a state of emergency and then, if they want the Defence Force involved, a national state of emergency needs to be proclaimed. Only the President can do that. In all of this bureaucracy, the use of power predominates. If the province is on the president’s side, you get action. If not, you risk abuse. There is a sense in the Western Cape that the latter applies right now. Hopefully, CR will be a better go-to man than the most recent resignee. We shall see. Point is every city in the country needs to be assessed given the recent experience and all the global warming warnings. Beaufort West ran dry and only some new boreholes saved it. Just because a town is small that does not mean it can be ignored; water security is a constitutional right as opposed to electricity which is obviously considered a luxury in terms of the Constitution. So Cape Town needs water truck aplenty immediately and the Army to keep guard and the peace at 200 water-collection points. When we’re through this mess, we need more dams or better still, water desalination plants. The aquifers are just too deep and the risk of salination of the aquifers just too high to continue to rely on deep-level boreholes. Government will need to find money for desalination plants but the PPP’s proposed by the likes of PSG seem to hold powerful promise; let’s hope sanity and competence prevail soonest. Talking to a friend in Sydney, he tells me that a “corrupt Labour government” put in a desalination plant there many years ago and now it’s a white elephant. Boy, could Cape Town do with one spare plant right now!


The political fallout has been most notable. As the Day drew near, the knives have gone out. Cape Town municipality has not covered itself in glory by any means and too-little-too-late has become the order of the day. Of course, money was a problem from the get-go but even if it was available, little was done until panic set in. Now the blame-game predominates and fingers are pointing outwards. Listening to CapeTalk for a day is enough to realise the knives are out. Mmusi has written a great article Arise, Cape Town, Arise but it truly feels like oration in the face of a possible power shift. Between Patricia de Lille and the ANC, we could see serious fallout politically.


Against this backdrop, the people of Cape Town are very interesting. There have been outstanding examples of community in the face of calamity. The school Smart Meter water saving initiative has saved millions of litres of water. Initially sponsored by Shoprite, 100’s of businesses have come alongside to fit Smart Meters at more schools across the province. A lady I heard has installed a catchment tank from her roof and then sponsored two poorer homes to do the same. How’s that for community!? However, there is something else I hear beginning to rise in Cape Town and that is Stoicism. A stoic person can endure hardship or pain without showing their feelings or complaining. That spirit, so prevalent amongst the veterans of the Wars, is beginning to rise in Cape Town. “We better get on with it” has replaced “What the hell is going on?” And you can feel its influence. Want a pedi or hair wash, take your own water. No more showering at the Virgin just get into your bucket at home as part of your 50 litres and pour the grey water on your plants you care about. To that point, businesses are deciding now to close down and let their staff work from home and be able to collect water supplies daily from the water-points – pre-planned and communicated; not last-minute panic. The farmers of Grabouw have released 10bn litres of water from their dams to Cape Town. Voluntarily and simply because they have been blessed with good watered crops so, through the danger-point of crop failure, they are taking the risk of releasing possibly next year’s water to a community that needs it now. Stoic actions displayed by people who share their compassion and grit; stoical people. I believe that that spirit will carry Cape Town through this catastrophe. Don’t under-estimate the stakes or the potential for rebellion, but somehow people are beginning to see Others as they face their own fears. I believe in that “stuff” even if my readers may have a different view. In crisis, leadership arises and people do extraordinary things. And remember, if dams normally enjoy, say, a 50% top-up to overflow by the end of a Winter, getting a 50% top-up off zero, is very different. In other words, if dams have a normal top-up this Winter, it could still occur that Cape Town runs out of water again in the Summer of 2019. Scary indeed!


As a consequence, property values will be affected. But to what extent nobody knows. So far the slowdown has just been the inevitable drain of a struggling economy and few articles I have read have evidenced the paucity of water as a reason. To that point, tourism has perceptibly been hampered and will be so until water supplies return to normal. My sense is that catastrophe will result in property price declines. Just logically this will occur. However, anything less, coupled with an improving economy on the back of recent political events, will not cripple property values. Put another way, a return to good rains this Winter will make the current slowdown a blip and a good desalination plant PPP will even raise prices slowly. Semigration will continue as few employees would walk away from a promotion to Cape Town if water is at a manageable stage.


Then, for those of us who have faith, we trust the recent rains and the political events spell a turning point in the state of affairs of our beautiful, tortured country.


Hope you enjoyed the read as much as I have enjoyed aggregating some of my thoughts about this current state of affairs. I trust that all the Doomsday scenarios will be spared and that water sustainability across the country will be part of the Marshall [Ramaphosa]Plan to get South Africans working again. Who knows so let’s just keep watching this space? As for Homeloan Junction, we understand stoicism. Anyone who came out of Sub-Prime really does.


Yours in Property.


I loved reading John Loos’ Property Barometer – 2017. John, together with Jacques du Toit of ABSA , is one of the most experienced property market commentators in South Africa. His Barometers are both scientific and appealing. Bad news when revealed, but also good when the tide turns. I am always also struck by “what could have been” if not for a few negative factors. Our president, now for years, has featured in the “what could have been” column and none the least, last year. When we think how we came out the blocks in 2016 expecting 1.2%+ growth and how, despite the technical aberration of 2% in the 3rd quarter of 2017, we only have managed 0.7%, it is good to read John quite up-ish on the scientific numbers for House Price Growth.

Let’s quote FNB and then make some early-2018 points:

“2017 saw the FNB House Price Index growing by 3.7%, a slowing on 2016, and the 3rd consecutive year of slowing annual average price growth. We had expected a slower house price growth rate in 2017, with the country’s economic growth performance having stagnated for some years.

However, monthly house price growth has been accelerating recently.



2017 turned out to be the 3rd consecutive year of national average house price growth slowdown. From a multi-year high of 7%, reached in 2014, the FNB House Price Index’s average annual growth slowed each year, to 4.8% in 2016 and then further to 3.7% in 2017.

Based on 11 months’ worth of CPI inflation data, this translates into an estimated decline of -2.4% in real terms (adjusting house price growth for consumer price inflation).

However, from a low of 1.5% year-on-year house price growth in December 2016, the rate gradually rose to reach 6.1% in December 2017, further up from a revised 5.5% rate for November 2017.

In real terms, house price deflation that had occurred earlier in the year gradually dissipated, and by November we saw a slightly positive year-on-year real house price growth rate of 0.8%, house price growth moderately exceeding CPI (December CPI data is not yet available).”

Under the circumstances, this is truly good news! Could it be better? Of course, but given the state of the economy, we could have seen:


  1. A deeper dive of the real HPI with Inflation higher and Interest Rates higher, thus depressing markets into falling residential prices.
  2. Negative sentiment prevailing in the minds of Consumers with depressing Consumer Confidence.
  3. Even more destructive politics approaching the Elective Conference.
  4. A Full Junk Status with Moody’s making its final move.
  5. Drought in the Western Cape crippling the pearler of a run on property prices in the province.
  6. The practical collapse of the Eskom cashflows.


“Bleak”, would not have been the word to describe the economic landscape. You can only imagine.


Instead, we have:

  1. A 6%+ increase in House Prices in December 2017.
  2. Cyril Ramaphosa as the president-in-waiting.
  3. The Eskom board rejuvenated with Jabo Mabuza and Mark Lamberti [the two I really know, but I’m sure there is still much serious competence] in concert at senior level firing sham re-appointments of Koko and the like.
  4. Good news coming out of Joburg’s business community despite one of their own, being Steinhoff, toxifying the air.
  5. Mike Brown and the likes inviting the ANC President to re-engage Business as Pravin had envisaged the rescue before the Junk status nightmare.
  6. Clean-ups under way in Joburg and Pretoria as fast as possible.
  7. Our SARB and the FIC free of state capture and our Treasury pulled back from the brink. You just have to listen to smooth Gigaba to realize that and, when last did you hear about Nuclear?
  8. Late but not least, some action being taken by the NPA and AFU against the Guptas.
  9. A continued stay of execution from Moodys as regards their Negative Watch for a full downgrade.

Truth be told, if the Cape Town City Council had been one year ahead of itself with the drought measures, there would be much cause for celebration.

Not the best performance of our country but certainly it could have been worse. As I said in my first blog for 2018, I am convinced that CR’s leadership will shine through and that we will see rapid change taking place in critical areas starting [with an excellent start] with Eskom.

It remains for us to be focussed and positive, using every scrap of good news to motivate our actions and be successful.

In closing on the Title’s question, is there a possible detachment between rising house prices, which generally indicate a lively market, and consumer confidence? It seems counter-intuitive to me as over the years. consumer confidence has been the main driver but there is a thing developing called “-fatigue”. Corruption-fatigue, Bad News-fatigue, Politics-fatigue, Negativity-fatigue etc. People just gatvol of everything being down-and-out and needing to just get on and live their lives somewhat normally. If you’re moving from Bloemfontein to Joburg you could sell your house and “rent for a while until things improve”. However, could it be that people are saying “this is as good as it gets so let’s just get on with life”, or, “now is a good time to buy”. Either way, unless December’s number is just a statistical aberration, there seems to be an inexplicably good rise in prices which even has John Loos excited. If I’m right, agents and originators score. If I’m wrong, I’ll apologize. But, for sure, we will have a better year than last year – that I’d bet on.

Yours in Property 2018.


This blog is a bit late for the New Year but Happy New Year in any case.

I don’t feel too bad because I’m sure most of you reading this went to work last Monday but only got to work today 🙂

Two stories from my town to introduce some points on leadership……

We have some trees above the houses in front of ours – old, tall Fir trees. When the wind blows from any direction towards the North, they make a rushing sound. Whispering Pines no doubt got its name from trees like these. They don’t bend too much but they “russhh” and have a beautiful effect on our environment.

So too, sitting on the sea-cliff paths, you can see the white horses in the distance on the sea but not feel the wind. But only a fool would think that that wind is going to stay out at sea. Sure enough, sooner or later, in it comes and it can blow for 48 hours. These last few days even bringing us some precious rains but always cooling the hot humidity of the coast.

Leadership does not stand still. It has an effect that you can sense and finally feel as it begins to change and even revolutionize the environment. Therefore some points in no particular order:

  1. On the way to Harvard in 2000 I read a book about leadership and its premise was simply that you don’t need leadership when everything is going well. It’s always good but maintenance of a status quo can be managed by managers and somewhat motivated people. When you need leadership is when the chips are down and the organization broken. The great examples are Winston Churchill who, once he had ignited Britain to fight and win the war, found himself spent in the next election. He turned a horrible time in Britain’s and the world’s history into the rebuilding of Europe. So too, many great CEO stories come off a low base as they reconfigure the company and take it to hitherto unknown heights.

Cyril Ramaphosa [CR] has the opportunity to be our Leader. Beautiful, tortured South Africa is on its knees financially and morally with more to come as the drought in the Western Cape bites with Gauteng having used their “Get Out of Jail” card last year. Broken sewerage, broken communities, broken trust, broken indebtedness, broken values, broken cities, broken corporates, broken labour relations – Broken, yet eminently fixable. Don’t believe me? Watch Eskom. Jabu Mabuza, with “unimpeachable integrity” and loads of successful corporate leadership under his belt, will make a difference. He has to; Eskom could go down in the next month.

Leadership is essential in crisis and rises to great heights in storms.

  1. Success breeds success. Leadership breeds success as well. The reason is that success, other than a one-off fluke, is the progressive realization of the positive efforts of a group of people. You see, you can channel energy but you cannot create it. If leadership was a science you and I could learn it and formulae and templates would do the trick to point a group of people in the right direction and then get them to perform – apply the formula and everybody will “do the maths”. But leadership is a social skill. Why can the technically competent not lead? Why is your best sales person often not your best sales manager? Leadership.

CR is a leader. In doing so, he plies a trade of negotiation and direction. Is he ever going to do this alone – Never! So he’s going to have to envision and motivate 10’s of thousands of people and then stop their tendency to corrupt in order to fix the municipalities, for instance. Can he do it? I don’t know but I’d bet on him as being the best of the ANC to pull it off by galvanizing resources and raising the bar of performance individually and in large groups of influential persons.

  1. Allied to point 2 is the definition of Leaders. Definitional to anything on leadership that you Google, are followers. You cannot be a leader-of-one. Self-leadership is cute and necessary but battles to be impactful. Leaders have followers that define their leadership. Followers are the foot soldiers of leaders. Those who are leaders in their own right have the duty to share the vision downwards and outwards and to coordinate its activity cross-leadership with their peers. This cross-leadership avoids silos and makes sure the left hand knows what the right hand is doing. But at some level, the need to Do becomes stronger than the need to Lead. Motivation then comes to the fore and it simply has to be given direction so as to be effective. Wonder at the mighty Blaauwkrans River bridge and you’ll know what I mean.

Followers are willing to sacrifice something to follow. Even if it is just their daylight hours that they spend working, that sacrifice we all call Work makes organizations great. An ex-CEO of Nedbank always used to say: “If you can’t lead or you can’t follow, get out of the way.” He’s right. Especially in SA Inc right now.

  1. Leadership brings prosperity. Of course, it can bring gloom as well ala Hitler and JZ but the kind we’re talking about brings wealth to the people. Social Justice looks to the upliftment of the Poor and the sense of Gain, if not Equality, between the Have’s and the Have Nots. The reason may not be entirely philanthropic but just common sense. I often say that people don’t burn what they own so ownership and belonging, in their broader context, is really stabilizing and therefore creates the environment in which people can succeed.

So the point is that if a leader is winner-takes-all and self-enriching [heaven knows we’ve seen sick examples of them in Southern Africa recently in politics and corporates], he gains and everybody else loses. Instability fails All and investment dries up as business people prefer to conserve rather than to grow. The same goes for your business as for our country.

  1. I hear some nonsense about the thought that Zuma should have won the Elective Conference so that the ANC would lose in 2019. If that were the answer to prayer that the Good Lord gave us, I would need to accept it, but why would anyone want to have another year and a half of tragic leadership for the brinkmanship of losing an election? And then you end up with an EFF/ANC coalition or something more deleterious. I’m not being political but just asking why would we want Eskom and the Rand to go to the wall [like TOTAL COLLAPSE] to have the chance to change the government. Of course, I can imagine the answer of my naysayers – “Take the pain now”; “No pain, no gain” – but what about the disastrous economic scorched earth impoverishment and social instability while the greedy get richer at the cost of our People?

Surely a reasonable man would wish Jabu Mabuza success and that Eskom keeps the lights on and enables the smelters to begin to beneficiate iron ore into steel at great electrical cost because we can do it cheaper than the Japanese? Com’on!

  1. Leaders trade in Hope. Lift the eyes of your people and you will be amazed how soon they can sense the excitement, understand the new standards and “the way we do things around here” and get on with the task at hand. I’ve said is before on this platform, you reinstate Pravin, bring Thuli in as Minister of Justice, appoint Russel Laubscher to Public Works etc and you will be shocked at how undervalued the Rand is to the Dollar. About 60 years ago Singapore – the Mighty Tiger – was practically a well-placed fishing village. National Will is an unassailable commodity and we have resources in this country to make the eyes water. No train should derail in any Metro – Ever!
  2. A final one-liner. What is written above applies to yourself, your home, your business, your province and your country. But it’s up to you and I to activate it.

I hear really good news coming from business leaders in Gauteng. Many stand by to advise government and invest in economic plans. The wind is in the trees and the white horses dancing.

I’m not a supporter of CR. My eyes are placed far above him and my hope centers way broader than his politics but I have had a little to do with leadership. When it’s bad, it’s really bad and things grind to a halt. But when it’s good, it’s really good and harnesses the immense talents even of the common man and women to the Greater Good.

Am I an old idealist? Have your view but in the meantime, let’s get on with what we can do to make a positive impact on our world.

Yours in 2018 Property.


Well, it’s happened!!

Just sitting here listening to the de-brief of what took place has caused me to rise and write this blog immediately.

I am still to write a synopsis of the property market in 2017. Those who have been reading me during the year know that I will be positive. Not in the sense that that is the stance I take as a rule but rather, that the end of the year is better than expected after our president turned the Treasury on its head for the second time in as many years. In doing so, he ignored any common sense that may have prevailed locally and internationally. His view was his view, no consultation, no permission just Guptanomics applied brutally. In doing so it feels as though he cooked his goose and has paid the price. In his own words in his scathing last speech, he is a soldier and he will march on. Man, has he left a legacy of unity at the cost of principles, and best of all, free education for all [well, 90%], which we cannot afford! Guess who is going to pay for it? – the wealthy and the Poor.

But this Elective conference which I must say has delivered the candidate I prayed for, has delivered a mixed-up unity like none other. There are people in senior Secretarial positions whose own province could not stay out of court for branch and PEC electoral distortions. Other people who have played the game of politics for politics itself – the amassing of votes in a democratic society but who probably have no one in mind but themselves. Self-centred individuals who triumph on the backs of well-intended people.

KZN could implode. What that means I do not know but I’m sure unless the leaders of the ANC pull together, that province could well continue with their low-intensity civil war. My sense is that whilst the Eastern Cape is bereft of competency and leadership, KZN is bereft of values as well. Without values, killing your tender competitor is sanctioned and if that means revenge killing, so be it. Heaven help the leaders there as they take unity to the ground and make it happen in the hearts of the people. I cannot help but think Jacob Zuma has set alight the province where he scored his greatest victory, namely, to quell the warring IFP/ANC factions in the 90″s.

The one thing I have seen all my life is that people follow leaders. Watching Colin Maine, the ANCYL leader, it was amazing to listen to him change his tune and welcome the unity that the appointment of Cyril Ramaphosa brings. What rubbish! He hated and slated the man in favour of his beloveds – jz and ndz. But how fast the change occurred as he saw his salary and his prestige swiftly flowing out the door. Will he survive the next election? I don’t know but I must say, I have seen the same shift of position happen often in Corporates. Human systems adapt to leadership. Leadership can lift the games of their followers. Or, leadership can sink their followers to the lowest common denominator. Jacob Zuma has done just that and in case you thought he’s going away, remember, he is still president of our beautiful tortured country.

So a couple of points for the property market:

  1. The Rand strengthened prior to the conference on the buzz that Cyril Ramaphosa would win. Now it has crashed through barriers last seen 2 years ago, especially to the British Pound.
  2. This strengthening movement is probably over-stated and we will need to see if it continues and then sustains. It will literally take the first few words of the new President of the ANC to shift it one way or the other. Even as President of the leading political party in the country, his stance will determine the short-term value of the Rand. If he favours the country overtly and the ANC secondly ie in private discussions, he will win us kudos.
  3. We have a downgrade from Moodys in the wings. I think Cyril Ramaphosa has just won us a reprieve.
  4. The downside, for those who wanted to win the 2019 elections, is probably that the ANC will consolidate and even win back metros they have lost. Joburg, prepare yourself for change. It will take a huge amount of scepticism and a massive amount of compromise with the zuma faction, to foresee the ANC losing in Gauteng again.
  5. Speculation aside, the win by Cyril Ramaphosa is good for property:

– The 1% growth that we lost out on this year will materialize as 2% next year.

– The drain of the SOE’s on the economy will begin [very slowly, however] to recuperate.

– It will be very interesting to see if anyone goes to jail, but I think there will be some sacrificed lambs who will do time to satisfy the populace.

– When the economy rises, jobs will be prioritized and COSATU will be manifested in all their glory in the new-birth of the tripartite alliance. That happy band of vote-winners will be in unison again. Tonight’s manufactured unity will be realized and expounded to the Press.

In summary, property will benefit and rates will decline as long as the Rand holds onto its new-found value. Slowly but surely, property will rise in price. Don’t write off that Gauteng, on the back of positive politics in a winning streak and with the fresh feel of abundant water, don’t be surprised that prices rise well above the average of the last three years. “Prepare to meet thy boom”, was how the late de Kock, the Reserve Bank Governor, expressed it.

What a Christmas present for South Africans of every walk of life! Jobs will be at the centre of a conference that Cyril Ramaphosa pulls together with Business and Economists and Others. Prepare for a Grande Plan that mobilizes for jobs – probably the most precious thing besides water in our economy at the moment.

More to come but in the meantime,

Yours in Property


In our previous blog we explored the notion of Distraction and its associates, “Procrastination” and “Important”. In this blog we’ll discuss an old term, Opportunity Cost.

On BBC, there is a programme, The Chase. It is a quiz show with a panel of normal people who pit themselves against a brilliant expert in general knowledge. At a point in time when the panel has come up against the expert, one person on the panel is chosen to pit themselves against him or her but with a twist. Let’s say the panel has scored UKP8000. The chance is then given for the panel to win, say UKP60000 or, if the expert progressively answers correctly, the panel loses, say, UKP2000. So, if they lose, they get UKP6000 but, if they win, they walk away with UKP68000. Of course, the panel can choose if they risk UKP 2000 or they try to win the additional UKP60000. This is an example of Opportunity Cost – if you play it safe and then beat the expert, your opportunity cost is UKP60000. Just to put that in our terms, that’s a whopping, R1000000! But, if you lose, UKP2000 is taken off your current winnings.

Opportunity costs exist in almost every decision to a greater or a lesser degree.

Opportunity Cost occurs as a result of having alternatives in a set of decisions. If, by doing one thing you prevent yourself from doing another, you may have just caused yourself a cost of opportunity. We do it all the time, negotiating our way through life’s complex paths. Risk-taking always implies opportunity cost. As in The Chase, you walk into one thing and leave another. Of course, it may be possible to do both or to undertake a hybrid of the two but, it is always the chance of upside or the downside that drives our decisions.

Here are some examples:

– You choose to marry Jane and not Sarah. Time tells if you made the right decision, remembering that your opportunity cost, might be measured in opinion only.

–  You chose to remain in a Corporate and retire on a pension rather than set out on your own and create wealth. Here, if you succeed in business, you score but if you fail, your opportunity cost would be the pension you could have had.

– You decide to have children. The cost is measured in Rands of education and care. The alternative may have been loneliness and the absence of familial care in old age.

And so it goes. The thing you left behind as you made the call to proceed in a particular direction, is the opportunity cost of the decision. Sometimes it is great and sometimes what you chose could prove much better than the action from which you walked away. Time tells in real life. In business decisions, the decision-taking is a lot more mathematical and models of forecasts, discounted cash flows and the likes are used to aid the decision. But even the richest of companies makes decisions to leave one thing and do another, always probably based on a reduction of expense or an increase in profit.

Where does this leave us when it comes to Distraction? Well, distraction either causes the wrong or a delayed decision or, distraction may cause a particular route to be followed when it was obvious to the focussed observer that the other should have been chosen. In such a case, the opportunity cost of delay or an incorrect decision could be significant. One area where I am feeling huge opportunity cost at the moment is in our SA politics. The current leadership is not putting us back 8 years being the two terms of the president, but rather a decade and more. Pravin Gordhan speaks about 10 years to recover from a full junk status and if that occurs before Christmas, that means 8 years of Zuma and another 10 years of recovery. In all of that, we all get poorer and the Poor become completely destitute. If we embellish on that with some of the social unrest scenarios, the ruin is unimaginable. I have recently read Jacques Paauw’s book and in the course of it, I stepped back and began to think of the reading that I have been forced to do to stay abreast of the scenarios in our beautiful, tortured country and the negativity contained in these books. I thought about the effort that it has taken to investigate and expose the “bad” and the amount of Distraction that it has caused a nation. Imagine if the only books selling at the moment were studies and success stories of green energy, water purification initiatives, farming methods, advanced financial planning and wealth creation, inexpensive building technologies, self-driving cars for public transport, etc, etc. – just imagine!

You see, the Distraction that corruption has brought has induced an immeasurable Opportunity Cost for our nation and her Peoples. Thus the travesty for me of the current leadership crisis is not even what we have lost, but what cost we have foregone with the amazing opportunity that democracy and the former leadership engendered for us. We live in hope that something occurs in the next year or two that completely changes the trajectory we’re currently plotting. In this regard, Zimbabwe has just got interesting and we wish a better outcome for her Peoples.

But back to us and what we can individually control. The cost of Distraction is immeasurable even in our own lives and circumstances. We need to be mercenary when considering what we spend our energy on. Time is of the essence when we choose, by design or default, to focus on the Unimportant in our lives. By pursuing a senseless decision or strategy, we waste the actual time expended but we also may bring about setbacks that last much longer. In your business, the relationship with your children, your marriage, Distraction and its associate, Opportunity Cost, lurk to waste your efforts and impede your success. Take control. As we’ve made the point before if you don’t, somebody else will. You don’t need to get paranoid about every decision but just take one or two “big rocks” and begin to practice Focus as opposed to Distraction, and estimate the Opportunity Cost of your alternate decisions. Great strategies are as much made up of what you do not do, as they are of what you do.

Homeloan Junction is practiced in these issues and no doubt has examples of where Opportunity Cost went against them over time. We learn from our mistakes and sometimes learn best from them, unfortunately. Point is a discussion with those who have been before you can always help when you are making decisions with uncertain outcomes. Strength to your arm as you manage the choppy waters with which we are faced. Hopefully, as we’ve discussed before, you will continue to enjoy the current level of activity of the market as it certainly feels like Property has held its own in difficult times.


Yours in Property.


A blog for the honest readers amongst us 🙂

Who doesn’t know this word? It is the cousin of Procrastination and the bedfellow of Important. In fact, anything in life, personal or business, which takes more time to perfect than a morning cup of instant coffee, can go from Important to Distraction in seconds. If you still don’t believe me, sit to down to pray and “focus your thoughts” as you begin to worry about the “Sunday roast” – no wonder that ministers have a hard time of it!

Important often takes it out of you. You need to place it front of mind and concentrate on it over a period of time. Whatever’s important probably has a combination of thinking and executing, over time with a sense of discipline and consistency. Stephen Covey, in First Things First, uses the matrix we’ve discussed before, around the issues of Urgent vs Important. For most of us these days, Urgent [Urgent/Urgent in the matrix] things are emails and WhatsApp; the frenetic activity first thing in the morning to clear the stuff before work so that I can, well….work. But that is work, we say! Juxtapose that against building the character of a child or teaching a teenager to become a man – the Important/Important block [at the top of the matrix], and we are talking the real stuff of life rather than the froth on top of our next beer. Are we distracted as much doing emails – No? But a teenager –  different story!?

Enter Procrastination. I find most of us talk about time-wasting rather than the wasters of time. Procrastination is normally the big English word we all know. Putting things off, from mowing the lawn to fixing the lamp to writing the email that is not pleasant, to sorting out conflict etc, etc, is well-covered ground if you’re human and involved in relationships. Oh, how we sidestep the issues and just “wait for something to happen.” What are you doing about it? Nah, I’m just waiting for something to happen. Well, sometimes your patience and stillness pays off, but normally, two weeks later, that shrill voice says, “When are you going to fix the lamp?” And, so it often should, to awaken us from our wasting of time! Procrastination is well-known in business and a major reason why businesses become complacent. There is nothing like a cashflow crisis to shake everybody from their business-as-usual slumber and to get them going and understanding that things need to be done. I have used the analogy before of a 4X4 entering mud. You go in with a measure of confidence and eventually you find yourself sinking deeper and deeper until you’re just wheel-spinning. Such is the complacency of low to zero growth as we’re currently experiencing – you just don’t feel it for a while and then when you wake up and stop procrastinating, you realise there is serious work to be done to keep the business moving forward. Hopefully, it is not too late. A great leadership trait has always been to shake-up the business in the good times by reminding people that salaries are not guaranteed and getting them is a combination of hard work, application and customer service; the rules never change in business. Frankly, things never change in families either and we often need to feel hurt in order to change and even, progress.

So, we’re adept at procrastination but what are those time-wasters, those distractions, that steal the capability of any determined person to accomplish what is Important? Rather than give you a list, let me cover one thing that is common to us All. That one thing is invisible but real to each of us – our thoughts. It is hard to believe that thoughts can hold such sway over us – completely intangible but very powerful. They can make you smile and make you sweat. They make a man a boy and a boy, a man. They are the bedrock of bravery and the sinking sand of weakness. They are unique to you and I – each thought in its own time and place – and yet, so much of our human experience is driven by common ground no matter who you are and what your standing in life. Thoughts take place in the pre-frontal cortex [PFC] of the brain, just behind your forehead bone, where the stage of life plays out your day. Sitting here looking out the glass doors at a windless Spring day, yes, even now, my thoughts are racing. What to write next, what to prepare for tomorrow’s boards, remembering the farmers’ protests across the country [hopefully totally peaceful and effective], wondering what time my wife will return from her Soup Kitchen and her tea with a friend – thoughts pulsate in and through my PFC. Some take root, some dance like butterflies and move on; none have stopped me to waste time..yet. What about you as you read this and nod your head? What is wasting your time as it seats itself beyond the PCF. Some are physical [so go to the bathroom], some are mental [so check your bank account balance to see your monthly commission] while others are emotional [apologise for that harsh word with your child] and some may even be spiritual [a sense of fear of the unknown in this beautiful, tortured country of ours]. Whatever thought takes root in your mind just beyond the PCF can be or become the time-waster, a Distraction. So what is just beyond the PCF? Without the big names, it is the seat of your emotions and experiences. You see [and experience], when a thought takes root in the PCF, our stage of mental activity, if we allow it to rest there we will quickly make the connection with our emotions and/or experiences. Simple example: you see a red rose and before you even bend down, you smell the scent of the rose in your imagination. In fact, you may even smell again to check if there is no scent “like last time”. Take something less trivial: you have a fight with your spouse in the morning and the whole day, you break away from what you’re needing to do, to replay the fight and the response, in your mind. Emotions running wild or previous experiences reinforcing a current thought, play havoc with your ability to focus. And focus is what’s needed even for quick, yet important, things. No wonder the Book of Joy by Desmond Tutu and The Dalai Lama, reminds us that joy in any sense of the word, begins with Perspective. If you want a distraction, have a negative perspective on an activity. I often think Attitude [the positive one] is half the battle won. You see, a long time before you make another cup of coffee, get up to check the weather, sit back and think about something off the point, you’re thinking. No wonder the Good book admonishes us to, “take our thoughts captive.” Nothing like thoughts wastes our time – thoughts are the genesis of Distraction.

Once again, for some of you, this is old hat. But for some, a jerk of conscience may just be the medicine you need to re-focus and get on with the Important things you need to deal with. Homeloan Junction is made up of people just like you. We need to take Distraction to heart just like the people who read our blogs. If this reminder has helped you do that, goodie. If not or if not required, well done and be radically successful in what you want and need to do.

Yours in Property.


Just for a break, let’s look at and consider one of the oldest learning forms known to Man. I believe it has enormous relevance in a modern day, South Africa.

Let’s check out the trusted Wikipedia for the definition and then unpack it for our and others’ benefit.

Mentorship,, [the art and skill of Mentoring…my words], is a relationship in which a more experienced or more knowledgeable person helps to guide a less experienced or less knowledgeable person. The mentor may be older or younger than the person being mentored, but he or she must have a certain area of expertise. It is a learning and development partnership between someone with vast experience and someone who wants to learn.

You cannot deny that South Africa is loaded with older people who have vast knowledge. Knowledge, often founded upon theoretical qualifications but also, for many years, bolstered by vast levels of experience, both bad [learning by mistakes] but mostly, good [learning success by becoming successful]. And the fields of expertise are enormous – Water, Marriage, Business of Every Kind, Politics Both National and Corporate, Artisanships, Construction of Every Kind, Consultancies [None the Least our own Property Industry[, Finance, Insurance; for Every Resource – Fuel, Water, Sewerage and, in Every Organisation, NPO or Not. Deep and wide lakes of skill and experience stored behind a dam wall of what – laziness, nonchalance, don’t-care-less? What’s your reason not to find a Mentee [as they’re commonly known] and begin to impart your skill?

In the good book, there is sage instruction to us around this very issue, Titus 2:2-3:

The aged women likewise, that they be in [good] behaviour …….be teachers of good things……That they may teach the young women……..

You see, mentoring, even at the more obvious level of motherhood, does not always come naturally to us. We have to be reminded that we have the experience and because we have been blessed with that, the duty, to teach and mentor others. I almost want to say, it is our Civil duty to mentor someone about something.

This argument lends itself to the need to understand how people learn. One of the most well-known researchers in this field is Kolbe, as described in his Experiential Learning Model. According to Kolbe, learning is not just an active, self-directed process but also a process where knowledge is created through the transformation of experience. In essence, his model is:

Concrete experience – learning by Feel or Touch;

Active experimentation – learning by Practice;

Reflective observation – learning by Observing, and;

Abstract conceptualizing – learning by Thinking.

My quick sense is that I use all of these methods to learn something but Kolbe is, as many quadrant models do, referring to a dominant means of learning. Most of us who went to school have had “talk and chalk” learning drummed into us and then we cemented that learning by homework, which equals practice. But what about the bricklayer? Would she be in a classroom or in the field, so to say? Point is, if you are to mentor, the question you can ask is simply, How do you prefer learning a subject or skill – listening or practice or just by watching me at work? The answer informs your mentoring style.

Two things before we conclude with the benefits of mentoring. One is Role-modelling. Watching someone chair a meeting or negotiate a deal is huge learning. The trick is to have the person or persons upon whom you intend to role-model decided upon and in your sight. It’s really difficult to role-model someone you cannot see. On the other hand, TV gives you a good observation platform – take public speaking and President Obama; excellent material for a mentee to learn the art of public speaking. We learn to role-model as a child and watching our parents and siblings has a huge place in our childhood development. How much more, as we grow into Corporates and our own businesses. And remember, learning from the positive and the negative is quite possible if you have the right attitude. You can learn how to putt and how not to putt just by watching the British Open.

Allied to role-modelling is Visualization. It’s told that Gary Player would play the Masters in his imagination while flying to America. Face it, you can go to the beach, love your wife, speak to an audience or write an exam right now just by closing your eyes and focussing, or visualizing if you prefer, on the event. Imagination rules the world, said Albert Einstein. And, how did he not know that, when he posited the famous E = MC2 equation before it was fully proven. Teach your mentee to visualize and you have taught a gift of a lifetime.

Mentoring is not for me, you might think. Well, here are some of the benefits:


  1. Mentoring is good for business. Call it what you like – feedback, discipline, training or development – mentoring grows your people. You cannot delegate a task to a person not capable of it – mentoring would have prevented that and saved you hours at the office especially on those days where “I should have done it myself in the first place.” Mentoring establishes rapport, that secret ingredient of relationships. You’ll know it as trust or emotional reserve or just “liking my boss”, but it is the stuff that gets people to work when you’re not watching and to care when you’re not there. We relate to people we know and we consider people we see and who see us in the psychological sense. Sharing is indeed, Caring, and nothing beats mentoring, as an element of your leadership style to let people feel and be part of a growing team.


  1. Mentoring is good for our country. Heaven knows we have a need for skills transfer and for people to do well enough in their endevours to be able to employ other people and continue the virtuous cycle of employment and growth. We often hear the lament that there are no longer any role-models in the townships. If all you woke up to every morning was your Naope-smoking sibling or an abusive, unemployed father, where would you be today? Talk about emulation, you would hardly help yourself but to do what they do and wreck your life in the process of wrecking many others. You and I can sit in our cosy lounges watching TV hoping that Gigaba will sort out social equality in his Medium-Term Budget speech on Wednesday but beware; inequality is becoming the buzzword of the Globe. Mentoring, like the starfish story, may be the best you and I can do to make a difference in a few lives, but it’s worth it. I love the advert on TV where the Indian man has planted 1400 acres of forest in the past 38 years to prevent soil erosion by just planting a few trees one at a time. An amazing story, best understood in the result. None the less, a couple of people testifying that your mentoring made a difference in their lives, is a gift to this beautiful, tortured country.


  1. Mentoring is good for you. If you have any sense of Purpose, those you mentor may go onto great things knowing you touched their lives along the way. Not a big deal, but loaded with meaning. Starting with your children and moving outwards, people grown under your wing can give you a huge sense of meaning and purpose as the years unfold. Be kind to yourself, consciously go out of your way to mentor someone and watch them grow – it will bless your soul.


In Homeloan Junction, role-models and mentors are aplenty; people who have been there and done that. Grab them and turn them into your role-model or mentor to help you grow and mature as you feel the need to. Willingness abounds so taking the step to go from “I respect you” to “will you please mentor me” is sometimes just a matter of asking. Be or find a mentor today and begin to visualize your success and let your imagination draw you into new worlds and ways that you desire. You deserve it! Yes You!


Yours in Property.

The Medium Term Budget Process

The medium-term budget speech on Wednesday was the first by our new aspiring-to-be-president Finance Minister. I could not help but wonder if, between the position he has been given and the nuclear rush [so it seems], he has not been given a poison chalice by his incumbent president.

The Medium-term Budget Process…..

I remember the time when Trevor Manuel became the Finance Minister and we played rugby against the All Blacks. Like so many of our lovely people in Cape Town still today, he shouted for the HAKA Warriors. Suddenly, to all of our surprise, the Rand dropped. After all, how could Investors trust an unpatriotic Finance Minister with the nation’s Treasury? What a lesson for Trevor and an eye-opener for South Africa. Even given the wind that was at his back, he still became one of the most revered Finance Ministers we have ever had.

You see, it’s what a person in this position says AND DOES that makes the difference to those pesky investors and Rating Agencies. To quote Pravin Gordhan, he was presenting to Investors with US$5tn to invest when he was recalled by the president. You see, you can’t just sweet talk these guys and girls into giving you their monies, in fact, it’s mostly not theirs and they’re just asked to invest for pension funds, investment houses and the likes for a good and secure return. So they’re interested in the facts and not the fancies. Frankly, no matter how good your suit looks.

With that as background, Malusi Gigaba gave us and them nothing. On the positive side, he was brutally honest and told us that our debt is projected to rise to R3.04tn by 2021 and that would exceed 60% of our GDP. If we were building houses and hospitals we would still have a shot at understanding forgiveness but unfortunately, we’re not too sure whether we will rescue the SOE’s with it or pay commissions to India. By the way, KPMG could have learnt a thing or two from SAP on monies paid to or allowed to be paid to, the Indian connection. Informing the US authorities lifts the ante beyond the NPA and to where law enforcers actually enforce the law; so watch this space. He then proceeded to inform the watching world that he is going to sell Telkom shares in order to fund SAA’s 82nd [my exaggeration!] turnaround strategy. So what we intend to do is sell the non-essential [read: incorruptible] government investments to fund the ongoing rent-seeking from the SOE’s. Perhaps the thinking is, while the going is tough, the ruff keep going. With all this hard talk, no wonder he forgot to mention the nuclear deal. At least, Rostrom would be building the power station so it would not take as long as Medupe and Kusela but with a price tag of US$100bn and whatever in Rands by then, we could almost double our sovereign debt and still have some change from our childrens’ future GDP.

Of course, you would think I am only being sarcastic in writing like this but as we all know from a free Press, this is the thinking. And, it’s possible, though not probable, given a great Legal institution that protects the Constitution.

What we also know is that the budget presentation could have been put on Facebook to save money. The two paragraphs would have read something like this:

“Ladies and Gentlemen, we have a problem. Our growth is low and our debt is high. The situation is dire and we have two years to solve it before we need those equally-pesky IMF loans with conditions like, You Can’t Steal Anymore!

However, we have a plan, the first that we intend to implement effectively. We will:

  1. Monitor and fire people who spend taxpayers’ money on themselves or on wasteful, corrupt expenditure.
  2. Cut government expenditure by 10% in year 1 and 5% for 3 years thereafter.
  3. Appoint honest, capable directors and executives to the boards of the SOE’s so as to be able to consider privatising all SOE’s to knowledgeable shareholders with a proven track record in the respective industries.
  4. We will insist that business spend their R1tn cash reserves in South Africa because they, and their shareholders, trust us to deliver on our promises.
  5. We will have our last cabinet reshuffle for a while. As the Mother of All Reshuffles, we will fire ministers who are incompetent and risk the health and wealth of our People, including the indigent and retarded.

I have seen a few times in my life where people have done something in a department which they then re-inherited in a mess. But we have never seen the likes of Gigaba inheriting these rotten finances mainly from SOE’s where he appointed the directors whilst he was Minister of Public Works. Talk about sowing and reaping!

There is much to be worried about. The slide of the Rand is the first sign of that. We need to stay positive because we are positive by nature and believe.

Yours in Property.


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.