AN ARUM AND OTHER THINGS

AN ARUM AND OTHER THINGS

Welcome to Spring! Can already feel a change in the mood although, I must admit, Spring Day was a glorious snow and washout in our parts. No wonder the Cape has dams over 90% full and our own little version in the Valley is at 80% – the highest it has been since we arrived in 2014. It’s been a real Cape Winter and we’ve loved it. BUT, the whales = the tourists = little or none ☹

The picture of this blog is of an Arum lily in our garden. The Cape has millions of Arums this time of the year. This one was an import with the cycad under which it grows. Sometimes it’s so shady under there that it gets leaves but doesn’t manage a flower; just like the one on the other side of the cycad which, by my recollection, has never flowered. But normally out comes the Arum round about Spring Day and it flowers for almost two weeks before beginning to wilt. As with the flower, eventually, the entire plant wilts and disappears into the mulchy earth from whence it came; somehow gathering enough energy to repeat the process every year.

THE MORAL OF THE ARUM STORY: Admiring it in the last week or so from my veranda, it struck me that there are things to learn from this story. For instance, if it chooses, there is a time when it flowers… every year it makes that decision. Stuck in its shady mulch, it always gets leaves but if and when it flowers it pushes that bloom right out of the shade. Has lockdown been your shady mulch – kinda wet, muddy and miserable? Have you decided to go back to work grudgingly and just show enough presence to get by the day – maybe a little fearful to stick your head out, fearing infection, waiting to see what happens; “the worst is yet to come” you secretly think to yourself?

Or, have you stuck your head out with that beautiful face that is uniquely yours – enjoying the height, the sunlight and feeling of growth and the sense of success as the market has surprised you with its busy[i]ness? Imagine if you were still stuck in the shade of your own fears and troubles post-lockdown and you introverted to the point that you could not enjoy the property upswing that is so prevalent at this time? What would you have missed out on! Life’s experience brings learning and learning brings maturity and maturity brings the care and compassion to lift and encourage others. You see, when I look at that Arum lily, it speaks to me of latency coming alive. Determination exists in its DNA, comes alive, grows, and does not stop growing until its head is above the gloom and in the sunlight of every opportunity in its surroundings. What about you, and me?

As you know by now, I’m a bit of a sceptic when it comes to “the new normal”. I keep hearing that this pandemic and its lockdown will “change the way we live forever”. Having lived through sub-Prime, we came out and returned to one of the best economic periods in human history for all the debt that underpins it. I think that will happen again especially as a vaccine arrives and we have the conviction to get it. But, that said, I think there have been a few lessons that we have learned and may in fact, internalise. Here’s my thoughts:

Materialism:

We can live with less. We don’t have to go out for coffee every day. Jacobs, black or with milk [especially Woolies full-cream, long-life milk [that tastes like Ideal Milk], with or without sweeteners, sugar or honey, is really nice and even though the company didn’t change for about 8 weeks, it was a really nice coffee “outing” on the veranda. We can own less. One of our two flashy cars stayed clean for two months at least. Our day tripper went to Checkers and the vet and the licensing department and it did that for 3 months on one tank. And we were okay… no withdrawal symptoms. We can wear less. Our cupboards with 16 pairs of shoes, 8 suits, 12 jeans and 250 tops were never opened. We wore, washed, stored, and wore 4 sets of clothing for almost 3 months. Did we ever think all that was possible, clattering around in our four 2X2’s [our bed, bathroom, kitchen and lounge] that we could actually live and live well? I think covid has got many of us thinking and may bring some lasting change.

Technology:

I haven’t flown to Joburg or travelled to Cape Town for 5 months. But I’ve had at least 20 meetings of one kind or another in between watching movies and reading books. All my emails are up to date and I’ve kept in touch with friends and family nationally and in England, Portugal and Australia on a consistent basis. I have been party to multi-million Rand transactions, covid-related contingencies, BBBEE transactions and fiduciary matters. I have facetimed my family and watched my grandson double his age in months. ALL OF IT by means of technology. Netflix, Takealot, Wi-Fi, multiple App’s, Zoom – all enablers of a new way of business and interaction. The point is, did I miss people? Of course! But, did I need to meet with people to live commercially? No! And no doubt, there are real exceptions like an associate who said it’s really hard to drive the acquisitions of new clients for his business over the phone. But for many of us, for many things, we have proven we can radically reduce our carbon footprint and come out on the other side alive and well thanks to technology.

Politics:

Those who know me well, know that the state of our country is of great concern to me. However, in view of JP Landman’s last editorial, the best thing I heard signed off by our President a month-or-so ago was the authority for the interim “evidence” of the Zondo Commission to be used to initiate cases against alleged perpetrators of corruption. No waiting for two years, then another to consolidate the testimonies, and then the legal process; prosecutors can immediately commence. Excellent news needed to criminalise corruption good and proper. Allied to this, I will never understand why it took covid corruption to seemingly galvanise our President to “hang his and his party’s heads in shame” and commence with prosecuting covidpreneurs. Why didn’t State Capture, the parallel state as Pravin Gordhan termed it, dynamite the same response into action? I don’t know and won’t share my speculation, but what I do know is that PPE cashflow thieves and the international [IMF?] aggravation towards their theft from the Poor, somehow galvanised him into action. Thank Goodness! Since then the NEC has met and been managed, we hope, to allow the process to jail perpetrators. I don’t understand everything, but I sure hope I’m right that corruption has been dealt a death knell, no matter how slow the blow.

Economics:

We now have our toes over the edge of the fiscal cliff. At 51%, that’s more than HALF[!] collapse of GDP in Q22020, we have junked and entered an economic depression, in 2020. Listening to a Senior Risk Analyst the other day, he spoke of the international fears of SA “going bust” if “radical reforms” are not implemented immediately, and the Debt Trap not being an “if but a “how deep” because, amongst other things, “in 2 years, government’s spending on interest will be 30% of budget.” To the point above, have the President and the ANC finally had enough of a wake-up call to bring us back from the abyss? Point is, without covid, we may have continually drifted into this mess merrily explaining it away; but with covid, we have been jolted by one million volts [obviously not delivered by Eskom ☺] of angst to do something about the crisis. We have to hope that what I’m tabling is true; this is no longer a game or conjecture but rather mission-critical for our beautiful, tortured country.

Covid has brought about change there is no doubt. From the very personal to the possible shift in the world’s balance of power, it has halted us in our tracks, and for many and varied reasons forced us to reassess our lives and futures. Against these backdrops, the Property news has been varied but enlightening.

From FNB’s Property Barometer of August 2020 titled, Buying activity resurging, supporting prices, the following extract:

Annual house price growth rebounded to 1.4% y/y in July, down from an upwardly revised 0.7% in June and 0.6% in May. We note, however, that April and May’s house price indices are based on significantly lower volumes of mortgage transactions, which affected the stability of our price index. Nevertheless, volumes have since normalised and the index stabilised.

The bounce back in prices reflects the unexpectedly rapid recovery in market activity since the easing of lockdown restrictions. Our initial expectations were for the pandemic to have a more chilling and lingering impact on activity, with pent-up demand filtering through only later this year. In contrast, the volume of new mortgage applications has rebounded beyond the pre-lockdown levels, and across the price spectrum.

We’re all wide-eyed with amazement!!

Of course, there is often a tale of two banks and in this regard, Standard Bank’s Property Research dated 7 August 2020, and titled, House Prices Still Plummeting, reports:

As pandemic conditions keep taking a toll

  • Growth in our inhouse Standard Bank House Price Index (HPI) was just 2.6% y/y in July, after 4.0% y/y in June. Residential property prices are expected to keep moderating, likely averaging 2.1% y/y this year (from 4.0% in 2019) as the pandemic puts pressure on employment and income. The cumulative 300bps interest rate cuts by the SARB since January and downtrading by property market participants, that under normal circumstances would have purchased large and/or luxury residential properties, should provide some support to small- and medium-sized residential property prices.

    First-time buyers in good credit standing with healthy balance sheets and confident about employment prospects will likely support entry-level and small-sized residential property price growth. Still, we’d foresee a contraction of 3.7% y/y in residential property prices next year, with the forecast risks high and the trajectory depending on the evolution of the pandemic and the pace of GDP and employment growth.

  • In July, mortgage applications increased across both freehold residential properties and sectional title properties, to the highest level since March 2019 but YTD applications were still 31% less than the same time last year. Applications approved were significantly lower in April during Level 5 lockdown but have since modestly improved as lockdown restrictions were eased, even surpassing pre-pandemic levels in both June and July. Applications were still concentrated amongst entry-level and small properties but the largest m/m increase in number of applications was recorded in small- and medium-sized properties.

Some of this is not easily understood but Standard Bank forecasts a drop in house prices next year and records the increase in mortgage applications because of lowered interest rates. We’ll take the latter good news and make hay while the sun shines.

In closing, we have traipsed around in this blog. But for good purpose, I hope you’ll see…

Momentum has a TV ad that asks a powerful question:

If you could start the year again, what would you do differently?

You can’t start the year again but you and I can start again today. Like the Arum seemingly caught up in its mulch, every year it grows leaves and some years it flowers. The flower always pushes out like its pride and joy. You and I have all the resources at our disposal, and we have decisions to make. Whether you just push on or really decide to push up, is in your hands.

Yours in Property.

 

 

Jack Trevena

Jack Trevena

With over 30 years of experience in the banking and home loan industry, my hope it is share what I have learnt over the years with my blogging community, inspire conversation around the subject and in the process discover unique insights into this ever changing environment.
Jack Trevena

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