NEWS TRAVELS FAST

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The beautiful seaside town of Hermanus has not been spared the ravages of land invasions. The accusation is that people have waited for houses for 20 years and are now completely impatient. Having the unrest close to you is nerve-racking and our hearts went out to the peaceful residents who live in Zwelishle. As is so often the case, they bear the brunt of the ire of the crowd and get beaten and even to death [3 cases as we understand] for simply going to work. The local churches have set up Safe Shelters and we are feeding and caring mainly for those who feel completely unsafe going back home. The Housing MEC flew in yesterday to meet with the protesters and things seem quieter [27/3/2018]. Let’s hope that sanity prevails and that justice is served both for criminals who have looted and assaulted, but also for genuine cases of long-delayed housing delivery. Our Municipality has assured us that we are one of the most progressive house-building local governments so we must take them at their word at this stage. What I can say is that in the last three years many homes have been built and many are under construction, but obviously, not enough for the Eastern Cape and foreign people who have semigrated into the Cape in general. The irony of irony is always the burning of buildings – the satellite police station which could have provided protection and investigation and the other, the….wait for it…..the Housing Department. The latter holds the lists of Awaiting Houses people. So let’s hope there’s back-up in this crucial area.

All of this speaks to the Land issue with its component parts:

– Vacant land;

– Services;

– Service delivery of existing housing, and;

– Housing construction and delivery to the properly prioritized people.

To the latter pair, does anyone know if the government has completed the delivery of title deeds to the so-called “matchbox” houses in Soweto? If not, that’s a scandal of immense proportions as long-time residents of those houses could have formed a symbolic body of homeowners able to benefit from the wealth creation of their properties.

God knows, the Land issue is now worldwide. Detaches delivered to the Australian government do not help and the lack of comprehensive, understandable, compelling communication to every global stakeholder is vital. You don’t redistribute land even with compensation, never mind without, by passing a resolution at the ANC Elective Conference and then go quiet on all of our major trading and investment partners. Little wonder that the Australians, who are building a nation of highly skilled and vetted immigrants, have taken the gap of practically inviting our farmers to apply for visas. Sensationalism aside, we have some of the finest agricultural skills and expertise in the world and most certainly in a water-scarce country, which Australia also happens to be. Until we realize in Home Affairs that Skill is a globally competitive commodity, we will not replenish the hundreds of thousands of people who have left for other lands. It is not about race or ethnicity – if you stand on a Vancouver street corner, you will be shocked at the number of Asian folks who have immigrated there. Where did they come from? Hong Kong certainly, and in the face of the uncertainty of the British handover to China. Skills walk and Money talks.

Shew! That was a headful to get on paper. So why do it? Well, the price of property will be linked to the long-term affordability of our population. While everyone will not be rich, everyone can own an home appropriate to their affordability. As is obvious, the home is first of all shelter, second of all family security and sense of being, but thirdly, a source of wealth creation. We can remind ourselves that for most people, their pension and their home are their ability to retire – one or the other missing and the prospects will look bleak. We will never progress our nation until it catches the dream of the likes of Joe Slovo who set the goal to build 1000000 houses by 2000 and succeeded, even posthumously, to beat that goal. The American Dream of home ownership was not motherhood and apple pie, it was about the mighty American Dollar and the profit that could be made. In turn, it worked for all who succeeded to realise “the dream”.

Developers reading this, we salute you. You are building the national housing stock and that is meritorious. Keep it up!

The news did indeed travel fast. From Cape Town, the Vaal, Joburg, and Sydney message after message to find out how we are. So far we are good but every hour a new threat arises from people intent on destruction, another spear of fear penetrates the hearts of the people of this town and its surrounds. Let’s hope the violence dissipates and with things back to normal, houses get delivered as soon as possible.

But, there is other much better news. The Moody’s decision to retain our rating bordered on a miracle. To have held the downgrade off was a gift to South Africa. Remember that their decision would have plunged us into full junk status and to the point that the Citi World Bond Index would not have been included in offshore Bond mandates. In simple terms, $10bn of SA Bonds would have been sold off in no time. They prevented that ignominy and financial destruction just by holding the rating. But then to give us the filip of lifting the negative watch to Stable was amazing! It sets the scene for a few things that should excite us:

 

  • It gives the new Administration and its decrepit SOE’s a financial space to move on critical initiatives. The cost of funds should not rise and we need every Rand we can spend on turnarounds right now.
  • It gives the SARB the space to manoeuvre interest rates and I for one, am backing a decrease in Bank Rate come the next MPC. Allied to this as we have noted, the strengthened Rand also gives the SARB much-needed headroom for a rate reduction.
  • It may spur the other Rating Agencies to review their stance on South Africa.
  • Finally, it’s just some good news amidst the gloom that has succeeded Ramaphoria.

 

All of the above said, am I negative? No!

We live in a vibrant country that is grasping the nettle of social inequality. We will make some mistakes in our rollout and even frustrate many with the pace of change. But ultimately, we must survive and even thrive in order for our People to enjoy a developing economy. I can understand people who are cynical about this approach but we have chosen to live positively and faithfully in our beautiful, tortured country. For some there is not an option but to live here but for others, it is a choice. Either way, as in all of life’s challenges, you can be positive or negative. The decision is yours and the way you react to a stimulus will always be your responsibility. I choose to live positively and remind myself of that whenever I need to “hear my own prayers”.

HLJ agrees and we invite you to do the same. It’s not fairyland stuff, just a simple choice to be happily effective in what we CAN DO.

Yours in Property.

HOME OWNERSHIP

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In this blog, we cover an issue upon which I am biased. I admit that upfront so that no illusions are created.

The issue is full title standalone housing versus sectional title homes.

The recent FNB Property Barometer gives some insight into this phenomenon and we quote as follows:

“The Sectional Title Housing Market Segment continues to outperform the Full Title Segment, although the latter segment has seen its average house price growth accelerate somewhat.

The FNB Sectional Title House Price Index has remained at a faster growth rate than Full Title of late. The Sectional Title House Price Index rose by 5.18% year-on-year in the 4th quarter of 2017, having accelerated from 4.96% in the 1st quarter of the year. 

The Full Title House Price Index, by comparison, showed a slower 3.95% year-on-year growth rate in the 4th quarter of 2017. However, its growth had accelerated a little more over the year than the Sectional Title Index, from a lowly 3.18% year-on-year in the 1st quarter of 2017.

Our panel of FNB valuers also perceived the Sectional Title market to be stronger than the Full Title market in the 4th quarter of 2017.”

Let’s just analyse this trend. What does sectional title represent generally? Secure estates with smaller homes on smaller stands and community living.

On the negative side, if you don’t like people, you’re too close to the neighbours. In addition, you become liable for the community rather than your own costs. So, as per our units in a Cape provincial town, you become liable to paint the whole complex when that is needed or the sewer repair even though your own toilet is working. Of course, you don’t really feel this as a good Body Corporate will make provision for such an eventuality. In my Mom’s case, the roof is still asbestos sheeting and this needs to be replaced at great cost and with sensitivity of those living below. The financial provision is building for this to happen and even the downstairs units are contributing to the replacement. Painting is another generic cost and gardens are contained in the operational budget. In essence, everyone contributes to the common good of the complex.

So why stay there and endure all these common costs? I would put to you that the major reason is the simple human phenomenon that there is safety in numbers. Older folk feel comfortable that having a friendly neighbour provides then with a point of first call should there ever be an emergency. But for the younger folk, having neighbours, especially good ones, just creates a sense of community that you can get nowhere else. The kids grow up together, the lifts to school are easier, and the sense of security and camaraderie is expanded as people live closer together.

So, it is not unusual that sectional title properties are more sought after than standalone houses. To be honest, I’m not sure this is a purely South African phenomenon. It may well occur elsewhere. Here are some of the reasons why:

  1. Community is a modern trend. We give away some privacy in order to live in community. I have a friend with a 3000m2 stand, who has planted fully grown trees so as to avoid neighbours. But he would be the first to admit that he is unusual. Firstly, affording such a property is the realm of the wealthy and secondly, not everybody needs such reclusivity. For many, the proximity of neighbours is sacrificed for the benefits of communal living.
  2. Expenses are shared in a sectional title complex. Painting, municipal costs, security, building insurance, and Body Corporate costs eg a burst geyser, are all co-borne. In other words, when we paint, I pay just that portion of my cost that pertains to my square meterage. So I don’t need to pay for my whole property but just for that portion that I “use”. That’s neat! The same goes for security. When you drive in Inanda in Joburg and you see those guard quarters at the entrance to the property, you’re looking at R20-30000pm for 24 hours guarding. In your complex, you get that but for a fraction of the cost.
  3. The case for security goes without saying. Firstly, you have it with everyone else but you also pay less and feel safer in a complex where there is movement around you. Nothing is fool proof as my friend’s daughter who was followed right into her complex will tell you, but there is a semblance of more security in a townhouse complex than on the open road.
  4. Sectional titles can be cheaper to buy and give a better return long-term than stand-alone houses. The reason upon entry is standardization. A 50 home complex has 500 common windows, 1000 similar doors etc so prices can be negotiated by the developer that pale into insignificance compared with your non-standard, fancy windows and doors in your architecturally designed home. This what you buy – similar design, cost-effective material and building costs and often, benefits like transfer duty included in plot-and -plan sales. Really, a great value proposition.
  5. Finally, a benefit worth mentioning in an ageing population [that’s you, by the way :-)], is that old age facilities accompany communal living. Where we live, Alzheimer’s centres, Frail Care and proximity [if not on-complex] to such facilities, is crucial to the buying decision and the value proposition of community living. High demand exists in these areas as global populations age beyond their time.

There are a few property types in the communal category that bear unbelievable common-sense. My uncle taught me that properties along a ridge, with a view, and properties along a shoreline, close to the sea, are scarce. Another is the golf course and eco-estates that have sprung up. The golf course estates of course now bear the water issue. Golf courses drink water so practically no more will ever be built except at the great expense of grey water reticulation which makes the stands expensive to service. Eco-estates will continue to spring up in many different forms as urbanites attempt to escape the pressures of city living. It is therefore fair to say that these estates carry a scarcity value that bodes well for good investment returns.

Compare these benefits with a stand-alone house. In this case, your security is your responsibility, your neighbours are “next door” rather than close by and every cost of the property is your own exclusively. You may be paying excessively for privacy.

Thus, sectional title complexes have carried value over the years and have proliferated as a form of property ownership.

Property ownership remains a definite source of wealth in South Africa. The fact that you own property, never mind the advanced financial engineering of gearing properties, remains a major source of wealth creation for most young people.

In this regard, Homeloan Junction is positioned to help you acquire property. Our advice, access to the free services of the banks, and our ability to negotiate credit terms that suit your pocket, mean that we remain a leading originator in the country. We have offices countrywide and can refer you to them with any need you may have. Contact us on www.homeloanjunction.co.za for a free consultation and pain-free mortgage finance.

 

Yours in Property.

BUDGET 2018

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My humble opinion? The Budget was a good one.

Flowery finmin Gigaba and his new President have inherited a mess from his predecessor. Whichever way you cut it, the Budget needed to make the best of a bad situation. We cannot but wonder how the estimated R700bn [per Pravin Gordhan’s estimate, I read] corruption and wasted expenditure could have helped at a time like this. I wrote a while ago about Opportunity Cost and the cost of the Zuma era. Added to the number, triple the cost as my guesstimate. Say, 600 people right at the top of the corruption food-chain, 500000 people waiting for direction and wondering what the hell is happening and R1trillion in corporate investment-in-waiting with all its employment potential, and you have a sense of what anything that looks like state capture or parallel-government means. It bears repeating that if ever you wondered if South Africa has a strong economy, look at the beating it has taken and that it has not utterly collapsed is a miracle. But, if I take Eskom as an example, if ever we were taken to the brink, to the edge of the abyss for the economy, then the last 10 years have taken us there.

Little wonder that Zwelinzima Vavi as a trade unionist looks into the numbers and says the Poor have been made to pay for the sins of the past. Simply put, the increase of VAT was unnecessary. We could have dropped taxes if our economy had been able to rise with the tide of favourable World growth that has occurred over the past 3-4 years. But instead, we find ourselves in a bailout of epic proportions and fighting the winds of downgrades. What a waste! And, tragically, what a long way back – Pravin said 10 years off full junk status so I hope that we are spared by Moodys and that Pravin exaggerated a little. No wonder CR takes Trevor Manuel for runs in the morning – “How did you do it back then, Trevor?” must be the question between pants for breath. But another point I have made is that I believe we can turn this around quickly in economic terms, given the goodwill that exists towards this great nation of ours. With boards like Eskom’s, the National Development Plan spoken about, implemented and measured, SASSA and its like taken off the agenda by sound execution, the appointment of a credible, competent Cabinet, good service delivery to our People, the renovation of municipal essential services, the courage to cut government expenditure and programmes that open 100000 small businesses, we would not recognise ourselves in 5 years’ time. Negativity will never get us there; Optimism will – begin to Believe, my reader!

So the technicality of the Budget in broad brush strokes after you’ve read so much already:

  • 1% VAT increase equals R30bn
  • Estate Duty rise to 20% equals a few Rbn
  • Sin Taxes and some excise duties etc equal a few Rbn
  • And, Fuel increases equal a few Rbn.

The first and the last directly, tragically affect the Poor.

 

In exchange for our money, we get:

  • Expensive petrol
  • More, but not enough, money for education
  • Free tertiary education for students whose parents earn less than R350000 per annum which equates to 75% of the student body
  • More security
  • Money for drought relief in disaster areas
  • A reduction in the Deficit over 3 years.

 

We don’t get SOE bailouts, nor competence in municipalities, nor reduced government costs nor spare change for corruption. The margin of error is very tight and no stone can be left unturned if we are to make this year count as a springboard for sustainable economic growth. The 1.4% is good but I must say, I believe we will see closer to 1.8-1.9% this year. Despicably, one of the best things we could hope for is early successful prosecutions of corrupt individuals who have stolen Rbn’s from us. The role of civil society and the courts would receive much-earned accolades when successful convictions occur. In the meantime, we don’t need to put our fingers down our throats to be sickened by the fugitives of justice and those allegedly guilty stare out from certain seats of parliament. I’m reminded of a comment Jack Welsh made when questioned about retrenchments he undertook in turnarounds. Known as Neutron Jack because he took out people and seemingly just left the buildings, he said “he should have cut deeper the first time.” This would have avoided much more pain. Horrible thought, but he experienced that if a company was suffering from bloatedness, doing retrenchments “deeply” avoided protracted uncertainty and pain as more was often required down the line. Extremely harsh, but Mr President, he may have a point for you to take.

 

All of the above said, the property and finance market should improve noticeably over the next two years. We’ve become accustomed to shocks just as we say that but hopefully, we have seen the last of those, at least, those we can control. At Homeloan Junction, we have put our heads down in the past few years and enjoyed the success that Focus brings. We intend to do more of the same and to do more of it with those of you on Team. They say all the boats rise when the tide comes in. Naturally true, but we’re not boats, we’re people and we can rise disproportionately given our individual effort and consistent application. We stand by to assist in that process, to be there in the tough and clinking glasses when the success comes. Don’t allow anything to hold you back from the success you deserve; You’re Worth It!

 

Yours in Property.

DROUGHT

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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.

DETACHED?

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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 FNB HOUSE PRICE INDEX PERFORMANCE

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.

LEADERSHIP’S EFFECT

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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.