In Part 1 we spoke about interest rates which are so topical at this point in time, across the globe.

Japan became the first major economy to adopt a Zero, [and even negative in January 2016], interest rate policy in 1999 as the Bank of Japan sought to stop a slide into deflation by making money available at virtually no cost. The rub of this is that any Japanese bank that parks money with the Bank of Japan needs to pay them interest to do so.

And so, began my exploration of some interest-ing facts:

The following countries have the highest Savings rates in the world:

Top 10 Countries with the highest Savings Interest Rates
Ranking Country Savings Interest Rate
1 Kyrgyz Republic 9.59%
2 Gambia 8.00%
3 Mexico 6.15%
4 Brazil 5.04%
5 South Africa 4.88%
6 Uganda 3.88%
7 Bangladesh 3.80%
8 Zambia 3.13%
9 Kingdom of Eswatini 3.08%
10 Seychelles 3.03%
Source: International Monetary Fund

I suppose you knew that the Kyrgyz Republic is a landlocked country in Central Asia with China to its East ☺

What’s interesting is that South Africa has the fifth-highest Savings rate in the world. I’m a little out of date, but no wonder, together with the exchange rate, the “swallows” from Europe and Britain love coming here for summers. To be honest, in our town we can’t wait to see their rosy-cheeked faces again; our first influx of tourists for half a year.

Then, there are those countries with the highest cost of Borrowing rates in the world:

Country Last
Venezuela 38.98
Argentina 38
Zimbabwe 35
Yemen 27
Liberia 25
Suriname 25
Congo 18.5
Iran 18
Haiti 17
Sudan 15.8
Angola 15.5
Sierra Leone 15
Ghana 14.5
Uzbekistan 14
Uruguay 13.8
Malawi 13.5
Nigeria 12.5
Guinea 11.5
Tajikistan 10.75
Mozambique 10.25
Gambia 10
Nicaragua 10
South Sudan 10
Madagascar 9.5
Egypt 9.25
Ecuador 9.12
Kazakhstan 9
Mongolia 9
Sao Tome and Principe 9
Turkey 8.25
Georgia 8
Zambia 8
Belarus 7.75
Ethiopia 7
Kenya 7
Maldives 7
Myanmar 7
Pakistan 7
Uganda 7
Bhutan 6.86
Tunisia 6.75
Azerbaijan 6.5
Burundi 6
Ukraine 6
Brunei 5.5
Guyana 5
Kyrgyzstan 5
Mauritania 5
Nepal 5
Tanzania 5
Bangladesh 4.75
Lebanon 4.53
Mexico 4.5
Rwanda 4.5
Sri Lanka 4.5
Vietnam 4.5
Armenia 4.25
Botswana 4.25
Russia 4.25
El Salvador 4.18
Bahamas 4
Benin 4
Burkina Faso 4
Guinea Bissau 4
India 4
Indonesia 4
Iraq 4
Ivory Coast 4
Mali 4
Niger 4
Senegal 4
Togo 4
China 3.85
Algeria 3.75
Honduras 3.75
Namibia 3.75
Swaziland 3.75
Lesotho 3.5
South Africa 3.5
Trinidad and Tobago 3.5
Bolivia 3.34
Cameroon 3.25
Central African Republic 3.25
Chad 3.25
Equatorial Guinea 3.25
Gabon 3.25
Republic of the Congo 3.25
Bosnia and Herzegovina 3.05
Dominican Republic 3
Laos 3
Libya 3
Papua New Guinea 3
Seychelles 3
Moldova 2.75
Croatia 2.5
Jordan 2.5
Qatar 2.5
Comoros 2.45
Belize 2.3
Cuba 2.25
Philippines 2.25
Barbados 2
Brazil 2
Colombia 2
Mauritius 1.85
Guatemala 1.75
Malaysia 1.75
Cambodia 1.5
Kuwait 1.5
Macedonia 1.5
Morocco 1.5
Romania 1.5
United Arab Emirates 1.5
Serbia 1.25
Taiwan 1.13
Bahrain 1
Cape Verde 1
Iceland 1
Saudi Arabia 1
Hong Kong 0.86
Macau 0.86
Costa Rica 0.75
Paraguay 0.75
Hungary 0.6
Albania 0.5
Chile 0.5
Jamaica 0.5
Oman 0.5
South Korea 0.5
Thailand 0.5
Australia 0.25
Canada 0.25
Czech Republic 0.25
Fiji 0.25
New Caledonia 0.25
New Zealand 0.25
Peru 0.25
United States 0.25
Singapore 0.16
Israel 0.1
Poland 0.1
United Kingdom 0.1
Austria 0
Belgium 0
Bulgaria 0
Cyprus 0
Estonia 0
Euro Area 0
Finland 0
France 0
Germany 0
Greece 0
Ireland 0
Italy 0
Latvia 0
Lithuania 0
Luxembourg 0
Malta 0
Netherlands 0
Norway 0
Portugal 0
Slovakia 0
Slovenia 0
Spain 0
Sweden 0
Japan -0.1
Denmark -0.6
Switzerland -0.75

Fascinating hey? The bottom 3 have all bought into negative interest rates as a policy. Those many at zero are probably watching them in anticipation. The highest 3 are basket cases brought on by disgusting government [being the most diplomatic term I can use to describe the bankruptcy of their policies]. And South Africa finds itself somewhere in the middle, seemingly well-managed in the crisis to have reached this point. And now that you know where it is, Kyrgzstan has a borrowing rate of 5% – another reason why you should not be living there – just joking, all my Kyrgzstanese friends ☺

Our housing market has exploded post lockdown Level 2. We know that there was pent-up demand but no doubt the sharp reduction in interest rates has contributed. What really impressed me in the latest ooba statistics was the total approval rate they achieved. Off a high during covid in July 2020 of 80.29%, for the past year, they have achieved an average per month of 80.29%. absolutely brilliant and a salute to the banks as well!

Cost of ownership in homes is basically bond repayments, service costs and levies, where applicable. However, in the latest Property Insights from John Loos, FNB Property Sector Strategist, entitled, Don’t expect major “fireworks” in the Commercial Property Sector on the back of low interest rates, he tells us [by way of extract]:

This property segment [Commercial property] is less sensitive to interest rate moves than the Residential Market, and negative economic growth forces are currently the dominant influence on it.

SARB’s latest repo rate unchanged decision doesn’t alter the fact that the Bank has given very significant stimulus… [and] this appears to have breathed significant life into the residential demand side of the property market. But it appears to be a tale of 2 markets, with the Commercial property market seemingly far more subdued and not taking the low-interest rate “bait”. And more focused on the economy than on interest rates.

But there are some good reasons to expect the residential market to be noticeably stronger currently, and likely in the remaining months of 2020 at least. We say this for the following main reasons:

1. The Commercial Property market typically takes longer to respond to interest rate cuts that Residential

Firstly, following major interest rate cutting cycles in the past, the resultant growth surge in new residential mortgage lending has often been more rapid than that of new commercial mortgage lending. This points to households on average being more sensitive to interest rate moves, and typically making property buying decisions in a shorter time frame than their commercial property counterparts.

This begs the question as to why this should be?

2. Households possibly make quicker investment decisions than businesses, while also perhaps possessing a stronger “ownership culture”

Typically, I believe that on average the household decision-making process regarding whether to buy a home or not is significantly quicker than that of the average business. In the case of the latter, there are arguably more considerations regarding cash flows and alternative uses for those, and often more people to consult with. I am also of the belief that there is a stronger culture of property ownership prevalent in the Residential Market. Households often see homeownership as a creator of wealth, repaying a bond on something one owns as a better alternative to paying rent to a landlord.

3. The recent COVID-19 lockdown was a major production side economic shock, arguably hitting businesses far harder than households to date. The weak economy thus appears far more as an influence for the Commercial Property Sector than low-interest rates.

In the current economic environment, it may indeed make sense for many business owners not to rush into buying their property at the same rate that a portion of households appears to be going for the home buying option. The TPN tenant data suggests, therefore, that the business tenants have to date taken a far greater financial knock than residential tenants (largely households). In the 2nd quarter of 2020, as lockdown got underway, the percentage of residential tenants in good standing with their landlords dropped from 81.52% in the 1st quarter to 73.5%. By comparison, the percentage of commercial tenants in good standing dropped far more severely, from 77.85% to 50.36% over the same 2 quarters.

The lockdown was a production side shock, and to date appears to have done far more damage to businesses than to households. This added to the likelihood that we would not see any significant commercial property demand response to interest rate cuts this year, and indeed this appears to have turned out to be the case so far.

4. But 2020 rate cutting has made a difference to the commercial property market nevertheless… providing crucial relief for tenants and owners, possibly containing the growth in supply of property on the market.

However, we do see aggressive interest rate cuts as having an important function in the Commercial Property Market, but perhaps more on the supply side of the market.

Rather than bolstering property demand, the key role the rate cuts earlier this year has possibly been in providing relief to current property owners. However, the 2020 rate cuts probably haven’t been sufficient to prevent a significant oversupply of property in this economic environment, but we do believe the supply glut may have been headed for far higher levels had there hypothetically been no rate cuts.


In short, the 300 basis points’ worth of interest rate cuts to date in 2020 has likely provided significant support for the Commercial Property Market through providing relief to businesses. However, in this severe recession, the stimulus impact has largely gone unnoticed, overshadowed by the negative recession economic impact.

The Residential Property Market, by comparison, appears to have responded quite noticeably to interest rate cuts. To an extent, this is normal, the residential market having responded more rapidly to interest rate stimulus in prior major rate-cutting cycles too. But… the Residential Market appears to have responded far more significantly to this year’s interest rate cutting than the Commercial Property Market.

These Insights are a valuable case study for our interest rate discussion. Fundamentally, for all the power of interest rate manipulation, it cannot make everything happen for everybody. For some, it drives us to buy but for others, it serves only as a survival tool for their business. John is talking to businesses buying their properties as a rent saving and wealth creation tool, but another personal case study really drives home the point. A property investment portfolio reveals the true tragedy of Commercial property in 2020.

The decline from the initial investment cost to this month is 61% and the yield on the investment against its initial cost has declined to 4.7%. No doubt the fund manager has included the entire Property Index in their tracker fund and so this impoverished result reflects the state of Commercial property in South Africa. No wonder Growthpoint has revalued all its properties by 20%. In this sector, a drop in interest rates on the bonds would be meaningful, but as I walk past a vacant Edgars store in my local shopping mall, it really says it all. One of two anchor tenants gone bust probably owing millions to the landlord. In short, it will take more than a 3% reduction in cost of borrowing to even come close to rescuing the Commercial property valuations.

I’d like to finish on a positive note with something that really struck me when I read it. It is not directly related to interest rates but is of obvious importance for the rescuing of our towns’, in general. We know that small business has been decimated by covid’s lockdown and I believe some 28000 of them have gone out of business. This article in Businesstech by a Staff writer, Catherine Wijnberg,  on 5 September 2020 entitled, The basic economics of spending R10 in South Africa – and the importance of supporting local, is a real-good, feel-good read:

There are those who have lots, and those who have little, yet if people understood the power of a single Rand to change the future of the country, everyone might spend it very differently. In 2015, a paper on the negative impact of shopping malls on local economies used research from India, USA and South Africa to explain how the arrival of a glamorous mall sucks the money out of the local community and pulls it away, into the coffers of big business.

The counterargument in favour of malls is that small, rural and township dwellers deserve first world shopping, which provides local jobs and convenience, entertainment, and better pricing than traditional high street shops. Most township residents would certainly vote for glorious first-world shopping and low prices, at least in the first year.

By year three, however, they might notice, for example in the small town of Grabouw or Knysna perhaps, how the main street is deserted. Small businesses that had thrived there for generations are now reduced to mere shells of their former self and replaced by those selling counterfeit, imported T-shirts or cheap bling.

The money circulating locally has dwindled, small businesses have closed, many jobs have disappeared, and local wealth departed along with them. By year four or five, the shopping malls also suffer as local buying power is depressed along with the lower employment rate, resulting in an overall downturn in spending.

For those who need more convincing, it is important to look at the maths of it. In basic terms it works like this – in the days before the arrival of malls and major chain stores, Mary would spend R10 at the baker; who (assuming a 10% profit retention); would spend R9 at the butcher; who would spend R8 at the tailor; who would spend R7 at the school; who would spend R6 at the stationery store; who would spend R5 at the farmer’s market and so on. A simple illustration of how one R10 note can create wealth ten times over.

Local wealth

In today’s reality (especially in poor communities such as the Eastern Cape where up to 60% of the population live off social grants and there is very little local economic activity), Mary gets R10. She spends R7 at the local Boxer store where R2 of her money goes to local shop wages, R5 goes to national suppliers elsewhere in the country and R1 goes to shareholders at the JSE.

She also spends R3 to buy data at MTN, so all that money goes to MTN headquartered in Gauteng. None of her R10 circulates in the local economy so no one other than Mary benefits from it. Money in equals money out and there is zero local wealth creation. Mary’s R10 didn’t stay in the local community for even one day.

This is not just a South African phenomenon. This indicates that this is more than a mere economics problem, but a social and cultural one – why do some communities care for each other, by shopping local and others not? Is it because South Africans simply haven’t understood the power of that rand in their hand, or is something else at play?

Why supporting local matters

It is time to ask the question of rich and poor alike: “If I knew this R10 could change the lives of ten other families in my community simply by spending it locally in a small spaza shop, a corner café or a farmer’s market, then why am I not doing that?”

By supporting small independent businesses in our community, encouraging citizens to trade with other local businesses using local collaboration platforms, local discount cards, and pleasurable local entertainment will build stronger, supportive human communities, generate local jobs, and ensure that our money circulates so that ten families can benefit from every R10 that enters the system.

Shopping malls can also develop more viable long-term strategies such as those showcased by the V&A Waterfront in Cape Town, who have improved their lasting appeal and built a more sustainable and healthy surrounding economy by actively encouraging a diverse mixture of smaller businesses. [Clicks have also had to re-think their shelf space for smaller businesses [Writer].

Recovery and regrowth of South Africa’s economy is our responsibility; now that you know the power of your money, where are you going to spend your next rand?

I really enjoyed writing these two blogs. Some of the information is just interesting. Some are new learning. But this last article amazed me in its simple logic and powerful influence. I happen to have a 5-star country market just up my street and love to frequent it and I’ve just returned from a local butcher who makes the best boerewors in town according to… wait for it… Facebook!

But what about HLJ? We know the interest rate and its impact, we have demonstrated a keen interest in your business for 17 years and value your impact, and we have a national footprint of highly skilled consultants for impact. We value your business and want your business; we have just had another record month because of your business. And we find ourselves humbled and grateful to have survived a mean pandemic with you.

“Interest” has just taken on a whole new meaning and we Thank You.

Yours in Property


Many people are experts in property. I am not one of them. Real experts are multimillionaires with property portfolios that dazzle the eye. They have built them with seed capital, geared the investments to multiply the number of units and they have built sufficient equity in their portfolio of cash flows from their portfolio in order to withstand even pandemics.

I am not, nor have I been, at that level but I have owned buy-to-let and/or bought, built and sold enough properties to position some guidelines for investors. I will focus on residential but many of the aspects of investment transfer to commercial properties. I hope the following, in no precise order, adds some value for Homeloan Junction’s readers…



Buy-to-Let was novel as a concept in 2002 when I introduced it into Nedbank. I had been to the UK to research the investment with local lenders. The numbers were compelling and, coming off the back of low returns in retirement savings, many people were supplementing their income by buying “the house next door” for let. It was not small but rather a multi-billion UKP industry.

When you invest in property, you are tied to a fixed asset. Key to such investments are personal circumstances. You need to understand, and I believe write down for future reference, the reasons for investing this way. Where you live and want to live, what money you have for a deposit and for a rainy day, your affordability of what for most people would be a second mortgage, where you see the market for people who’d want to rent, and the time you have to manage the investment.

All of these questions plus some, need to be carefully understood and answered realistically.Bottom line to this is that you’re buying a fixed asset. Forget the notion that “if you get into trouble you’ll just sell the flat.” Property is not a unit trust or savings account; you cannot just sell it because you need to do so one morning. With the knowledge of your circumstances, you could think about approaching a bank for a bond once you have found a property.



Obviously, if you have cash, you can buy the property, find a tenant and be on your way. For the less fortunate, you need a deposit. My recommendation, against many pundits, advice, is 30%. It is good for bank approval to have some “skin in the game” or equity in the property but the main reason I see is that your bond will have a smaller payment in times of vacancy. As regards the bond, the banks like no more than 30% of your gross income payable on bonds.

They will permit a percentage of the expected rent to be included in your income but the old rule of 50% of that monthly payment is no longer simply applied. In addition to the bond, there are services and maintenance costs to add to your budget. [Talking about budgets, any businessman needs one for any investment].

These costs include:

  • Rates, Water and Refuse: I estimate that municipal costs are increasing by about 7% per annum compounded.
  • Levies: This cost, budgeted and apportioned by the Body Corporate, are rising at least 8% per year.
  • Maintenance: Maintenance responsibility is determined in your Lease agreement with the tenant, but you will have maintenance costs as the landlord.
  • Tenant Costs: The costs of entering and exiting a tenant should be considered.
  • Capital: You don’t need a global pandemic to tell you that you need some spare cash. Vacancies occur. My rule of thumb is 6 months’ rent in ready cash. You can sail much closer to the wind financially but getting bank approval for a bond on a second property is not that easy. 



Gearing is possible in property. It simply means putting in as little as possible in order to obtain a maximum return. Say you spend R1000000 on a property and you deposit R300000 and bond for R700000. Your rent per month is R10000.

In this case:

  1. Your loan-to-value ratio is 70% [R700000/R1000000].
  2. Your investment is R300000.
  3. Your return on investment is 40% [R10000x12/R300000].

Some investors see Gearing this way, but I never have been able to. Rather, I prefer the acid test calculation. If you don’t think you’ve signed up to invest R1000000, just skip a payment with the bank. You will quickly know that you owe them R700000 and, if you need to sell urgently, you risk some of your deposit as well.

So, if you agree, then the more conservative calculation for return on investment is: R10000x12/R1000000 = 12%.

In this thinking, you have also invested the R700000 but just decided to use the bank’s money to do so. But remember, whichever way you wish to see the investment, the 40% or the 12% is gross return and your costs, including vacancies, come off the return.

What I have done in these regards is requested the highest bond possible; in some cases, 100%. But I insist that it is an access bond. Then, I store the deposit and the rainy-day money in the bond for easy access if I need it. In this way, I hold a reserve and save interest equal to the bond’s interest and over time, that is a big saving.

You get tax relief on property investments. In general, costs are deductible from rental income. Some would, therefore, say my use of the access bond is conservative. But for all the years, I have had no overdraft and simply used the bond as such. Finally, a word on interest rates. Now, the rate is at historic, 40-year lows.

My old rule was to do the bond payment calculation at your rate + 2%. Right now, I would push that to +4%. The reason being that the SARB will increase rates to protect the economy against inflation and the Rand. The normal rules have been discarded within the crisis we have, but the minute we as consumers begin to buy again and inflation looms, the rates will go up. When, you may ask? My sense.. from this time next year slowly but surely.



So many rules apply to this. We have discussed the “fixedness” of the asset class. Right now, investment or primary property, prices are down 20 – 25% off 2019’s valuations. You cannot easily sell your property without a deep price discount. In fact, allied to this if you’re a Buyer, you should only deal with serious Sellers. If the price is too high in comparison to last year, walk away – you could be overpaying.

Then the Golden Rule [he who has the gold, sets the rule ] but not that one. Rather, Location, Location, Location. Where you buy the investment property depends on the kind of tenant you envisage. If normal working-class people, then proximity to schools, transport, shops etc become the driver of the decision. If, as many are doing, you’re investing for your retirement and want to let long-term while you work, make the decision of where you want to retire and buy in that location.

Two extremes of the same investment principle, but the essence is that you determine the target market of your tenants and then work back to the location of your investment property. The building itself is very important. If the sectional title, [which I see as a rule ie no standalone investment properties], then ensure the financial management of the complex is sound. The bank will ask for Body Corporate financials to confirm this but if you’re paying cash, do the investigation yourself.

Maintenance is a killer-cost so reserves, recency of painting, state of the gardens, etc need to be considered. “Needs a little TLC” is great but who is going to do it and at what cost to your return on investment?

Avoid lifts [their maintenance is very expensive] and ensure back-up power generators are in place or that the “special levy” has been collected and invested for the move to backup power. Finally, I have never found a “bargain”. You may, and I encourage you to keep your ears close to the ground. But for me, a good property in the right location at the right price is the foundation for a long-term investment.



My late friend used to say: “Trouble equals distance squared.” In other words, buy a property close enough to you to be able to respond quickly and easily. Living in Joburg with a burst geyser in Cape Town sets the scene for what he meant. However, I wish I’d invested more offshore. Nevermind the Rand depreciation, property in hard currency has provided very good returns over the last two decades.

At this stage, you are able to buy good management as well in places like Mauritius, England and Australia. This is taking care of administration, tenancy, rent collection, and maintenance. Once you’re in the position to do so, consider offshore. Some of the student rental complexes seem to offer affordable properties at a good return, for instance.



I appreciate estate agents. To begin with, they are professionally qualified to practice. They have access to sound legal advice from conveyancers when required and often know the complexes in which they sell very well. They understand property and how to buy it. Make them part of your network especially in the area in which you intend to invest. Their time is free, and a well-structured appointment will give you stacks of information as you research your investment. But you have to take personal responsibility; it’s your money!

Think carefully through your investment – how much, where, which tenants, what values, what rentals, what capital appreciation, comparative pricing, facilities, state of the body corporate, special levies etc? This information can be simply obtained but you need to ask for it. Your estate agent is not investing your money, You are. So, it’s up to you. A primary consideration, if you require the service, is rental collection and insurance – you may wish to only deal with an estate agency that facilitates this important function of your buy-to-let investment.

Investment in property is not for the gung-ho or light-hearted. Many an investor will tell you of poor or peaked returns after costs or bad tenants. If you don’t have the determination to manage your investment, rather buy a unit trust. In fact, for sad economic reasons, right now Property unit trusts are at very low prices and may have upside as the economy improves. At least there, your money is easily accessible and the properties are managed professionally for the best returns available.

HLJ provides Bond Calculators on their website Our staff can point you in the right direction probably with many an anecdote of their own property investments, though never as advice.

When it comes to your bond application specifically, our service is free to you and loaded with professionalism. Like any saving, the cost of delay is very high. So, start now, even if it’s just for the deposit on your new home.

Yours in Property.

2020/21 BUDGET

This a very short blog.

In my humble opinion, the Budget was good. For property, it means:

  1. Less transfer tax with property less than R1m zero-rated.
  2. More money in the pockets of people who may be 1st-time homebuyers. The tax entry threshold has been increased to R83000 and lower-income tax rates have been reduced.
  3. The Treasury has decided to reduce government expenditure as required by any corporate who has grown their staff to the point of unaffordability. In addition, even though recent declines have occurred in numbers of employees, the wage bill has increased by a real rate of 40% in the past 5 years [I think I’m correct about the time, but I’m definitely correct about the increase].
  4. About R260bn is being cut out of government starting this year over 3 years.
  5. Money has again been allocated to Eskom and SAA; about R160bn. Eskom is simply too big and too important to the country to fail.
  6. Fuel is going up but VAT and Private tax is not. Corporate tax may come down.
  7. “Sin” taxes are up.

Give that man a Bells! Oops, it’s about 30c more expensive ☺

So, if the banks continue to lend and, as we expect, the rates may continue to go down, property will be in the pink.

Now for the bad news…….

  1. Government has blown its budgets for years now.
  2. If Tito fails and the EFF march on Eskom today and the “declaration of war” by Cosatu succeeds to shy away from the resolve of the government and the President, our Debt: GDP ratio, which is already in eye-blinding spheres, will disappear into the stratosphere. There, we will ask the IMF for a bailout or not, but whatever, it will be ugly.
  3. Moodys will probably downgrade us and the ultimate question: Is Junk priced in? will be answered.
  4. The money paid into SAA will be wasteful expenditure ab initio. That into Eskom may just do what it has to and help keep the lights on.

It’s a brave man who calls what will happen but indulge me and let me give it a try…..

  1. I think the Finance Minister will be able to convince the Unions that less is more, and that destroying government is counter-productive for everybody.
  2. SAA business rescue will succeed with a very trimmed down airline, or a sale with half the jobs protected and, whichever, the management will be sanguine and professional going forward.
  3. Eskom will tide our way by spluttering through on three cylinders. Private power will increase rapidly and more and more, large public and private institutions will generate their own power. This will place an already battling Eskom under enormous pressure but never again will we be in this one-man-one-power position. None of the major nations I have visited have all their electricity coming from one supplier. In America, with hurricanes and snow tempests, they could not stomach them if they did not have widespread power producers; just makes sense.
  4. Government will come good with repatriations of money stolen by corrupt means, it will prevent wasteful expenditure and SCOPA will prosecute offenders, it will take the pill of salary reductions for staff continuation and it will muddle its way through ANC factions and opposition’s disgusting behaviour. Maybe I’ve just been reading too much Mcebisi Jonas, After Dawn, Hope after State Capture, but I was buoyed by the grip he has on matters economic and the Foreword by Cyril Ramaphosa. They know exactly what to do and that if they do not, the lights will not be the only thing that goes out.
  5. The President’s meeting with business and his urgency for private investment must bear fruit. Off this low base, every R1bn will count towards growth.
  6. As I write the stock markets have plunged and the Rand has followed suit. The only good news [for the wrong reason, of course] is the Fuel price. The downgrade may affect already-scared sentiment, but right now Corona has terrified the world. I thought the 58% theoretical infection of the global population was unlikely. But it’s creepy at the moment. Who knows but that Corona will dissipate and a downgrade will be lost in the noise of it and then we’ll rise up again? Truth is I have no idea but I sure do hope so. In the meantime let your nervous twitch cause you to wash your hands frequently and touch anything but your face.
  7. I think the banks will continue to lend, but the rate will need to remain so as to protect the Rand somewhat. Bond investors will continue to call for a world-beating rate differential but that certainly is already priced in. It seems the Citi World Bond Index investment may only be about $8bn so that will not affect us too much.

Motherhood and apple pie, my thinking may be. But if you panic, panic first; it’s too late to panic now. So, I would not say, Eat, Drink and be Merry, but certainly let’s understand when things are not under our control and relax in the knowledge, we have done our best.

If the virus begins to be contained and the budget has a shot at implementation, property – our main focus – will benefit and things will improve again. We will hope for that normalcy back in our lives again. In the meantime, spare a thought for China, its neighbours and Italy who all seem to be in the eye of the storm.

Yours in Property.


I had the pleasure of attending a Pam Golding function in Hermanus. In greeting Andrew, I complimented his Mother who was the Founder of Pam Golding Properties over 40 years ago. An outstanding lady and businesswoman who drove a powerful ethos into Pam Golding estates over her many years. I believe she also oversaw the transformation of Pam Golding from an elite-area agency to an agency for “the normal man”, bringing all the class and expertise to that market’s operation without detracting from the sophisticated positioning of the Pam Golding brand.

She also oversaw the transition from her own dynasty to her son as the guardian and driver of the business into the future. I’m sure she was tough on her “boy” as he too transferred from Medicine to Property to take his place in an arena he had no doubt grown up in around the dinner table. With genuine praise, he has done that very well indeed, continuing to uphold Pam Golding as one of the iconic businesses in our industry.

He had a team thereof himself, Golding’s economist and Strauss Daly, the attorneys. Here’s a synopsis of what they spoke about. A little parochial but I’ll add some comments at times.

  1. Properties are moving given that Sellers are getting realistic as regards the value of their property in the current market.
  2. Prices are down about 20% compared with one year ago. Secure estates flying in the range <R2.5m. This is attributable to the continued perceived security threat but also due to downscaling from larger properties.
  3. Stellenbosch is flying with this town being the #1 Pam Golding office in the country.
  4. The value of a house that lingers on the market declines at 1.5% per month. This was an amazing comment that I have heard but never taken too seriously. I can now understand why friends have removed their homes from the market and then put them back on.
  5. House prices slowing are slowing which we all know but seemingly at a slower rate according to the latest research. 
  6. 7% (14% in my opinion) of house sales are for the purpose of emigrating. But, according to Andrew, many sellers are not actually leaving but are rather renting and then investing in golden VISA countries eg Malta and Mauritius. Apparently, the latter country is very active indeed.
  7. Semigration has slowed to Cape Town. People are now choosing PE and Durban for similar lifestyles but with much more property value. PE is now the top growth market for house prices, whilst Cape Town has been declining rapidly
  8. Hermanus [I knew we would get a mention ] is now attracting young buyers in the <R2.5m price range. As I experienced in George many years ago, many people place their families here but then fly to work in Joburg or internationally. Hermanus is beginning to carry value in all price ranges but I can attest to the 20% reduction in asking prices. I have two examples this month of sellers of newly built or renovated homes just getting their cost price or a little less after commission.
  9. Andrew agrees with us that a primary underpin of sales these days is the willingness of banks to lend. Their growing or defending of market share is driving sales.
  10. This slide caught my imagination. Consumer Confidence = The Great Depression. That is really sobering and I’m not sure how we’re selling anything if that is empirically true.
  11. First-time homeowners are changing the structure of the market. Millennials are moving to growth points eg Claremont.  Pods, which I experienced at the new Dubai airport some time ago and read about in Japan, are being built and sold. R1m buys you 24m2!! A parking bay then sets you back a further R250000. Point is that if you have a hectic social life or choose to avoid the traffic every day, such an investment may be realistic. Rental pools exist in these apartments if you wish to “timeshare” your unit.
  12. The Retirement market is robust which is quite obvious for two reasons: We’re ageing and many people cannot consider going offshore. KZN is repositioning itself to these buyers but the Western Cape is still outperforming all other markets. 
  13. 10 of the top estates are in the Western Cape.
  14. House prices remain at an absolute premium within 500m of the sea.
  15. The Coronavirus has the potential to infect 58% of the global population.  The only good news on this point is that deaths from infection are only 1%. Small comfort
  16. Ramaphosa is not as strong as we need him to be, neither as a leader nor as a politician. We are advised to watch the upcoming ANC NGC.
  17. Asked about property values, we are all waiting with bated breath – to downgrade or not to downgrade, that is the question. However, Andrew is realistic when he says that a downgrade will have negative sentiment value if nothing else. The hope is no downgrade but if so, it will affect property values.
  18. A fascinating statistic from Japan: 30% of houses are empty as older people move out to smaller properties. 

Andrew was asked about EWC. His answers were sensible. Firstly, that he hopes the matter will be settled between the Executive and the courts in such a way that recourse to the courts is allowed so that sensitive matters can be handled properly. Secondly, that we should not expect residential property to be included; it is occupied and used-for-purpose and any attempts to do so would be sensational. Thirdly, that land redistribution is an unfortunate consequence of our past but if handled correctly by ALL, he would hope it contributes to a lasting solution and economic prosperity in our country. The question is obviously on his mind and he answered it in a very level-headed manner as any business leader should.

In closing, the presentation was a privilege to attend and a feast of information. It is quite obvious that the global property market is experiencing enormous change. A friend of mine who is emigrating to the UK has been watching the guesthouse market very closely. Many of them, up to 11-bedroom, B&B’s of about UKP500000, have been on the market for 18 months or more. It seems that kind of money is not readily available, but on the other hand, perhaps Brexit has been hurting tourists and landlords alike.

Yours in Property.


News is everywhere at the moment. When I worked, I read a lot but in a very restricted sense: Business, Banking and Academics. It was more than enough to be conversant and skilled.

Now, I read on two or three platforms and then try to piece together some coherent trend that may be of interest to you. It needs to be positive as far as possible but also informative and at least from a property perspective, assist you given that your busy days may not permit that much reading.

So let’s kick off…

Bloomberg is telling us that the JSE is set to come good this year, even outperforming other markets. That’s amazing news especially seeing that the stock market has moved sideways for the last 5 years. As a general rule, [read: balanced funds] the market has been very close to static whilst the S&P has super-performed at about 30% growth including the Nasdaq, in 2019. The latter is already up 7.26% year-to-date and February is yet a pup. Did you miss the boom in USA stocks – no pity here, join the club ☺ As regards the JSE which has been outperformed even by Cash fully taxed, I have no idea where Bloomberg is coming from. I understand that shares are looking decidedly under-valued, but I thought that that was because we’re almost in recession. I really hope they’re right and the JSE flies; nothing like the national feeling of wealth to promote that invisible gem: consumer confidence.

Then Corona. The name on every TV screen and normally limited to SciFi. Superbugs are no joke. Saturday recorded the highest number of deaths at 89, bringing the total to 811. Last I heard, about 30000 people are affected which has probably increased since then. The best advice I’ve read is forget facemasks, wash your hands frequently and don’t touch your face.

That said, cities in lockdown have the feel of Bruce Willis in Armageddon movies; quite eerie and surreal. Very frightening for those trapped and hugely inconvenient for cruise ships and aeroplanes. But beyond our creature comforts, trade is shutting down as countries prohibit cross-border travel and the movement of goods. Frankly, if Corona was in Cambodia or the likes, it would have about as much impact on global trade as an outbreak of Ebola in Mali. But China, that’s another story; a huge trading story. I thought Shares would be more rattled but not so thus far. So let’s hope they are able to contain it and treat it to insignificance for everyones’ sake.

Fresh from Sydney this morning on WhatsApp…”Looks like SA, UK and Australia all had terrific storms. We had a year’s rain over the weekend.” “Shew! Fires out? I replied, and “Yep, well doused” was the answer. That’s stunning so now the animals can begin to get cared for. One thing I think I’ve mentioned before, last year’s 18000Ha fire though Bettys Bay has stimulated a massive repair and construction project in the area to rebuild properties. I think Australia has 2000 houses destroyed so the same will happen there.

The Rand is the cheapest currency in the world. That’s according to the Big Mac Index. So, all you McDonalds burger-loving people, go home this evening with a Family Pack; according to the world-famous Index, you’re eating cheaply. But what is interesting is how Oil has declined and we’re enjoying a welcomed respite in Fuel prices despite the Rand moving from R13.80 in late-December to R15 recently. I see Iran is now mothballing some Oil fields in order to stimulate the global price of Oil so probably expect a rise in price next month.

The Bank Rate is decreasing, and I remain surprised as I said last time. But it’s good news and 0.5% starts to be meaningful in most households. On a R1m bond, that’s R400 per month less. Point for me is not the saving for clients used to paying about R8775 per month but for those who are battling to pay it’s welcome relief. The other sector positively affected are those First-time homebuyers who are considering entering the market. Right now, they’re a big part of what’s moving and encouraging them is very positive for the industry.

Eskom is load shedding… De Ruyter has his job cut out but at least he’s keen and has moved on the divisionalisation of the mammoth structure to make it more manageable.

On Wednesday I’ve been invited to The Marine, one of our 5-star hotels, to hear Dr Andrew Golding. Very exciting for the sleepy coastal town of Hermanus and we’ll get to eat free canapes with the Jones ☺. I’ve asked my neighbour, one of the most successful estate agents who invited me, to ask him to give us his opinions on EWC. Right now, that stands for: Eish We’re Contracting but it seems the President is intent on forging ahead. The very fact that he’s doing that in concert with implementing other Nasrec 2017 resolutions in order to maintain his support in the ANC, is symbolic of the potential downside.

I am sensitised to the need for redistribution of land, however, was seemingly lulled into thinking that the land would be dormant and unused and that anyone who queried the decision to get Nothing for it had recourse to the Courts. But now there is a real concern that residential property is incorporated in the definition by default and that the State may have the say. It’s speculation right now as the deadline for commentary has been extended [Have you given input to the government?] to end-February 2020 but given the trust deficit between this government and its citizens, there’s no smoke without a fire.

Sadly, as much as the incumbent President may give reassurances to us, even Mcabesi Jonas in his book, After Dawn: Hope After State Capture, states that an ANC about to lose the next election may have the need to accelerate “structural reform” for votes. That is deeply concerning in my humble opinion. “Watch this space!”, as the President was wont to say in his early days. Dr Andrew’s comments will be very interesting…he’s an outstanding person.

By the way, if you’re economically minded, you will really enjoy Mcebisi’s book. He is obviously a huge asset to the country and his Foreword by Cyril Ramaphosa is heart-warming. His opening sentence is, “In October 2015, the Gupta brothers offered me the position of minister of finance in exchange for R600 million.” Thank you for saying, “No!”

So, let’s quote the man who is still the political head of Eskom, and “join the dots.” Looking at the above, so much is happening in the world and in our country. What we have mentioned is snippets of your daily macro- and micro-environments. Yet you and I labour in the overdose of news and find our optimism often despite it. There is one thing though with which I’d like to close this blog today and it comes from January’s Standard Bank House Price Index. I love it and I close with it and a few comments:

January house prices post 5.5%
But, sustained real house price growth still some way off

  • Nominal house prices growth, per our inhouse Standard Bank House Price Index (HPI), increased to 5.5% y/y in January, from a marginally downwardly revised 4.3% (previously 4.4% y/y) in December. The January HPI grew 1.0% m/m, after growth of 0.9% m/m in December, the first time since October 2018 that nominal house price growth has recorded more than 5% y/y. In 2019, house prices growth averaged 4.0% y/y, slightly below average headline consumer inflation of 4.1% y/y.

Outlook and implications

  • This may be the start of sustained momentum. Indeed, residential mortgage advances have supported house price growth, having averaged 4.8% y/y in 2019, from 3.5% y/y in 2018. The cumulative 50 bps rate cut since July 2019 and prospects of further easing should keep supporting nominal house price growth.
  • Nevertheless, house price real growth still seems some way off given that both lenders and borrowers remain cautious amid sustained economic fundamental weakness along with highly uncertain economic conditions. Specifically, both consumer and business confidence remain depressed, with all SA consumers remaining pessimistic about future economic performance. And, the country is on the brink of being downgraded by Moody’s to non-investment grade, which will lead to SA falling out of the WGBI, and power cuts will persist for at least the next 18 months. Even the expected global growth recovery now faces new downside risks such as the as yet unknown outcome of the coronavirus outbreak.

HPI in detail

  • Sectional title property price growth rose further to 7.2% y/y in January, from 6.0% y/y in December. Sectional title property prices growth had bottomed at 0.6% y/y in April 2019 but recently surpassed growth in freehold property prices. In contrast, growth in freehold property prices slowed to 5.7% y/y in January, from 5.8% y/y in December, having peaked at 11.7% y/y in January 2019.
  • Gauteng property prices accelerated to 6.8% y/y in January, from 5.5% y/y in December; Western Cape grew 3.0% y/y from just 0.3% y/y in December. KwaZulu-Natal property prices moderated to 7.7% y/y, from 9.4% y/y in December.

So, despite the lapse into negativity on the third bullet, here is what I garner from this research:

  1. Gauteng growth in HPI is starting to move and eclipses Western Cape by more than double. I’ve been calling that for years and I’m so glad for you guys. Long may it last!
  2. Security remains paramount as the sectional title continues to fly. I think First-timers are in there as well and many prices are in the “moving” range, say, <R2.5m.
  3. 5.5% growth is a real increase of 1.2% with this quarter’s inflation forecast at 4.3%. Little in the scheme of things but I’ll take real growth in house prices any month; so would you.

But the statement that got me going was this: “This may be the start of sustained momentum.” You see, when Standard Bank says that’s a possibility, I sit up and listen. They then go on to ground that in mortgage advances growth so it’s not a wish-list, its concomitant with the readiness of the banks to lend and the affordability of clients to borrow. I say again, I love that. And again, long may it last despite the current “everywhere” headwinds.

Lift your heads. In all of the news, there are snippets of information that portend some growth. How or where, I’m not debating but that there are many positives, I’m putting it out there. Think about it.

Yours in Property.


On Tuesday I flew to Joburg for business. Boarding my usual redeye Kulula flight, I was struck by the SAA plane parked next to us. The stairs were pulled up but not engaged and the pilots’ windows were frosted by early morning dew. Obviously, that plane was going nowhere and that had been so for some time. Isn’t it sad that two unions could cause that 15000 employees received half their pay and, according to management, the other half and their 13th cheque [?] will be paid next week.

The only thing I can see as good in all of this is that the unions have again highlighted the travesty of management’s incompetence and corruption including poverty, illness-pleading Dudu Myeni and that DPE has stood firm on not funding the business. To the latter point, where the R2bn rescue-package comes from I have no idea.

Property isn’t flying either but in my bones, I feel something is happening. Property is caught up in the economic malaise but I’m really hoping we won’t need business rescue. Reading the latest research, Standard Bank lends some substance to my emotions in their Property Research on 14 November 2019:

Bottom seems in sight — but a long recovery awaits

Nominal house price growth, per our inhouse Standard Bank House Price Index (HPI), ticked up to 4.0% y/y in October, from 3.7% y/y in September. HPI growth was 0.5% m/m, after contracting 0.3% m/m over the same time. Still, house price growth has struggled to grow at rates similar to last years because of SA’s sustained weak economic fundamentals such as rising unemployment rates, labour market uncertainty, and depressed confidence.

You know, coming off a previous month’s negative house price growth, I’ll take anything on the upside. I’m also acutely aware of the previously reported record month in Origination. That flows through to every market player and is such amazing news. In Hermanus, there is something abuzz. From the “dead” and “if only someone would phone in” to “there’s something happening”.

A home was sold to Americans at a good price in the scheme of things. A local paid R6.9m for a 1-bed home on the golf estate. The town is buzzing and occupancies are projected at 80% over Season compared with 30-50% last year. It seems relative social calm and the full dams is having a positive effect. “Bottom seems in sight” is a really good headline from a major bank and it’s a damn side better than we’ve seen for a long time.

The SARB interest rate decision was excellent in my opinion. 0.25% is neither here nor there and at 3/2 in the voting, it was an exceptionally close call. Very interesting to see that FNB Commercial Property called a reduction mainly as a result of benign inflation and no particular cost pressures in the medium-term. Being wrong in these times is not unforgivable as the SARB had to choose conservatism in the light of Ratings gloom.

Last Friday’s negative watch by S&P was a case in point and reading the IMF’s urgency this week leaves no room for doubt as to content and speed of the reforms required to spur growth. We are headed for a fiscal cliff if we don’t cut debt. In my last blog I said SAA was a dry run for Eskom.

In the manner it’s turning out, I am left a little bemused. A salary increase of 5.9% with a promise of the 8% if the specially appointed consultant can find the necessary cost reductions, is half-pregnant. On the other hand, Solidarity’s serving papers for business rescue still need to be responded to by the government. I would be amazed politically if they succeed but commercially, I cannot see any other option than to shut SAA down. “Half-pregnant” is that feeling you get when increases are being given and business rescue to avoid total collapse, is imperative.

Durban, my ex-favourite city, is lifting off. I believe it’s the warm water. FNB believes semi-gration has now moved eastwards; maybe we call it “easti-gration” ☺. Cape Town has had its time but now Durban is the new playground of Gauteng. Spurred on by the easier access of the airport and the new beachfront promenade, property prices may outperform the country. FNB’s Commercial Property Insights of 20 November 2019, talk to the point and even if they’re half-right, residential property will follow commercial property as people are employed. Hold thumbs, every region could do with a lift!

And here’s a thought from ABSA to leave you a little perplexed. In their Homeowner Sentiment Index, 23 October 2019, they have this to say:

Positive sentiment regarding conditions in the South African residential property market was somewhat lower in the third quarter of 2019 compared with the second quarter, despite a cut in lending rates in late July and a rebound in economic growth in the second quarter after a contraction in the first quarter.

To be honest, I’d take anything that started off with “positive sentiment” but it’s a bit of a downer to read that it’s “lower”. I’m feeling more and more that 2019 will be a year of highs and lows. The net result of that is the old story of the half-full glass. Half-full or half-empty? Always the question, the answer of which is loaded with insight and meaning. With it comes the issue of what I can control and what is out of my hands. When I read today that Donald has signed a pro-protesters Bill into law that commits the USA to support the Hong Kong protesters, what am I to do with the fact that it has made China raving mad?

I mean let’s face it, you or I are victims or benefactors in such a global play. All we can really do is decide if it might affect us and how, and then determine to drive our businesses like an upswing is coming until we feel ourselves lifting with the tide. HLJ encourages you. We swim in the same sea and fish in the same ponds.

We have feelings of euphoria and discouragement just like you. But we remain committed to honest, hard-working success and want you to experience that as well.

Have a Kulula moment and fly!

Yours in Property


Shew, this month has been hectic! Yours as well?

We’re on the last of our three blogs on the “I” of the acronym, LIFE. So far, we have covered Live, Laugh and Love. Then Imagination and Inspiration – that was a tome as I re-read it 😊

Today, we’ll cover Investment and I promise it will be shorter. Nonetheless, I am again ready to “throw my heart into it”.

Albert Einstein dumfounds me when he says, The most powerful force in the universe is compound interest.” Every time I read it, I think he must have had unaffordable debt and he couldn’t believe the cost of not being able to pay it off on time, but, of course, that’s tripe – if he ever had debt, he knew how much money he repaid. We, at Homeloan Junction know that at 10%, a 25-year bond is 2,5 times more than the original cost. Throw in the transfer, attorneys, etc and buying houses are expensive.

Of course, this type of compounded interest we all know well. Hopefully, we also know enough to never incur credit card, and upwards in the sense of interest rate debt. My rule is simple,
what you can’t settle on your card at month end, can’t be bought. With that rule, I buy almost everything on my card and just settle the balance at month end. Negative compound interest kills and especially when no tax deduction lessens the load on our purse. The inverse is Investment. Here, compound interest works splendidly.

The other day I helped an elderly lady consolidate her investments; little bits and pieces in three financial institutions. Wow, what a surprise as I trawled through old records dating back to the late 90’s when she retired. Figures like R43000, R60000, etc, but nothing too rich. Unsophisticated investing – a unit trust, fixed deposits, money market, etc. To our surprise, the total amount was over R600000! The reason is that she has lived off her dwindling pension in real terms and never dived into even the interest of her investments. Then, every 6 months or so, she would be advised to re-invest and she did. The lot just grew and grew and the end result was unexpected. No wonder a friend of mine once asked me, What’s the best investment?” I waited and he told me, The one you stick to.” You see, the elderly lady could probably have done better in Naspers, but what she knew all well was that time and interest are directly correlated and maybe she didn’t maximise the opportunity, but she had enough. I am not an investment advisor, but here are some generic rules for Investment from personal experience.

Time is measured two ways, the length of time you save and the length of time you don’t.

You see, R500 per month over 40 years at 8% earns you R1745504. The problem of not starting 40 years ago can be expressed in three ways:

  • 30 years: R745180
  • 20 years: R294510
  • 10 years: R91473

This is the way we normally look at it and, often, we look at it relative to a fixed date, retirement, child’s education, the coffee shop we’ve always wanted to own etc.

There is another way and it’s not insurance broker-speak, just a fact of life – Cost of Delay. You see, the numbers of 40 and 30 years may kinda look alike, but the difference is R1000324. That’s a Million Rand! Compare it to the R91473 which you save in the first 10 years and the number is 11 x [1000324/91473] more than you could save. That’s the awesome power of compounded interest. It builds like a hockey stick at the end if you have not touched it.

You see, when the “fixed date” arrives and its retirement, the third problem is that you just don’t have 40 years of R500 per month to catch-up. Very sobering, I know.

In case you think you’re the only one who missed this, I took out a unit trust in 1976. It was R50 per month. As a guess, the JSE Index would have been about 500 then. Today it is 55000. Doing the sums, that’s 11.22% growth plus dividend yield of, say, 3,5% would total 14.72%. Using that “interest rate”, my little R50 per month investment would be worth about: R1900000. Makes you think, doesn’t it?!

So, the moral of the story is: Take out an investment while you’re young. Don’t delay, and then, stick to it.

You know as well as I do, that the money part of this Investment is the easy part. Life calls for an investment as well. For that thought, I turn once again to my old well-known guy, Dr Dennis Waitley, who said, It takes as much energy to live a good life as to live a bad one. So live a good one.” There’s a thought, but we also know we don’t always put the “good” together long enough to make the ultimate difference. We sometimes stumble up and then stumble down and then stumble up again.

We all seem to do it; I include myself. On the negative side, it seems we have the ability to:

  1. Try
  2. Fail
  3. Regret we failed
  4. Regret we tried
  5. Then try again
  6. Repeat the cycle.

You there as you read it? The downward spiral of defeat and “if only’s”? You know that the only failure is failure itself. Don’t judge me by my successes, judge me by the times I failed and then stood up again”, said Nelson Mandela. Read some of his books and this understanding of life permeates them. “I should have…”, “I could have…”, “I shouldn’t have…” are often on his lips but in the end, “I did, and if I failed as I or some may think, I tried again.” [My way of expressing this man’s attitude to Life]. Ultimately, despite the naysayers, Nelson Mandela succeeded beyond our expectations.

So let’s rerun a “good life”. One that you invest time, energy, and a focus on priorities into: 

  1. Try
  2. Fail
  3. Forgive yourself or ask forgiveness
  4. Learn
  5. Succeed
  6. Repeat the cycle.

You see, investment in yourself tries, parks the past, learns falling forward, and never gives up. Please hear me!

Taking from the financial lessons above:

  • Start as soon as possible. Lives also endure the cost of delay.
  • Invest regularly and as much as you can. A little study is better than none. An hour a day extra doing what you believe is important, not urgent, is 3650 hours of extra focus on your priority every 10 years, not just your “stuff”.
  • Opportunity cost is real. Redefine your focus by all means, but don’t stop doing what is right for you.
  • If you’ve wasted time, stop regretting it and get on using the time you have left.
  • Forgive yourself, you’re better than you think.
  • Celebrate successes, even if you’re alone.

I don’t want to go on to produce a tome like Inspiration, though I could. Thus, a closing thought from the Good book. Job is a well-known story – a great guy who loses everything and then recovers “twice as much as before.” At the end of chapter 42, the last verse says this: The he [Job] died an old man who had lived a long, full life. That fact stuck with me when I read it about 2 weeks ago. Long is easy – Job died at 140 years of age. Right now, scientists are telling us that the person who will live 200 years has been born. Whilst I’m thrilled that’s not me, the “full” caught my attention and has wandered through my thoughts since. What is a ‘full’ life? What things have I done, seen, been to, given attention to, consistently undertaken, left, adopted, listened to, read, spoken about, focussed on, achieved, believed, debunked, tried, striven for, loved, hated, bought, sold, eaten, experienced, achieved, learned, given birth to…that makes up a life that is “full”? I’m still teasing this out so I don’t intend to answer my question right now. However, I encourage you that if something in the question, or anything else above it, has struck you, read it again, begin to coagulate your thoughts, mind-map them and let them develop into something positive and forward-thinking.

As the business of HLJ, we are all on this journey. We have chosen to associate with each other. We have common ground, knowledge and resilience. Use what we have to make a better place from our inside out. Touch lives and encourage them upwards once again. For those on a high, imagine the possibility of being an inspiration to the rest of us and invest some time in all of us, and all of the others, you meet.

Yours in Property.


Boy, do we have an interesting market at this stage in the game.

Our gut would tell us that the property market is slowing. Recession, politics and pessimism [RPP] all seem to indicate the obvious, but in some of the recent reports received from Homeloan Junction, some great contradictions appear to be happening. Make no mistake, the general trend is downwards from both the estate agents and the economists, but let’s see what jumps out of the woodwork to encourage us.

The following extracts are used for explanation and then I will make brief comments on some of the aspects:

First of all, the ooba ORIGINATION OVERVIEW: SEPTEMBER 18 tells us that “the Bond Application Intake for September 18 was 10.8% lower MOM and 8.9% lower YOY.  Cumulative volumes for 2018/19 are 10.8% down on same period 2017/18.”

Guys, if we had “suffered” that level of reduction in Sub-Prime [2008-2012], we would have been ecstatic. Most of us were down 90% by January 2009 from the height of July 2007. 10% is surprisingly good given the level of RPP in the market right now. I bet many origination consultants with good estate agent relationships have not yet felt any marked decline in their business. Admittedly, the issue is always pipeline and when that begins to drop, watch your step.

FNB’s Property Insights report, covering the FNB Estate Agent Survey’s 3rd Quarter 2018 indicates this slowdown:

“The 3rd quarter FNB Estate Agent Survey points to a further weakening in the housing market (and perhaps economy too) in the near term. A broad declining trend in the Residential Activity Rating started in 2015 and has continued in the most recent quarterly survey.

From a multi-year low of 5.35, seasonally-adjusted, in the 2nd quarter of 2018, the Activity Rating declined further to 5.12. On a year-on-year basis, the indicator went deeper into negative rate of change territory, from -7.21% in the 2nd quarter to -9.2% in the 3rd quarter.”

The direction in the rate of change in the Residential Activity Rating correlates reasonably, though not perfectly, with the direction in the rate of change of the OECD and SARB Leading Business Cycle Indicators for South Africa, sometimes even leading the Leading Indicators with directional changes. Both indicators thus point to an economy still in the doldrums, with weakening in the near term a possibility.

Agents point to further deterioration in market sentiment post “Ramaphoria”. Those that cited “Positive Consumer Sentiment” in the 1st quarter of 2018 were a far greater 56.7% of survey respondents. In the past 2 quarters, however, the response has deteriorated markedly. By the 3rd quarter 2018 survey, those respondents pointing to “Positive Consumer Sentiment” had dropped back to 9% of total respondents, while those pointing to “Economic Stress/General Pessimism” have increased noticeably to a very high 77%. The economic weakness thus appears to be increasingly taking its toll on sentiment in the market. Within this response category, agents include “recessionary conditions”, “cost of living increases” which include petrol price and tax hikes, and “policy uncertainty”, as factors.

For new mortgage lending, this can all have implications with a considerable lag.

While also having weakened of late, Gauteng appears to be the region where Residential Activity has held up best in the weakening national market. Of the 3 Major Coastal Metros, it has been Cape Town that has returned the lowest Activity Rating. This should not be too surprising, however, after recent years of far stronger house price growth than the rest of the country, Cape Town has run into home affordability challenges that have dampened demand and general activity.

Segmenting by Income Area, the Lower End outperforms, but the gap between it and the HNW has diminished.

In FNB’s Property Insights report, covering the FNB Estate Agent Survey’s 3rd Quarter 2018 Indicators of Price Realism and Market Balance,  in the 3rd quarter of 2018, we saw a slight quarterly increase in the estimated average number of “serious” viewers per show house before sale. From 10.42 viewers in the 2nd quarter, the estimate rose to 10.77. However, the average remains well below the 14.42 high reached in the final quarter of 2013, just before the early-2014 start of interest rate hiking.

In the 3rd quarter of 2018, we saw a further increase in the average time of homes on the market prior to sales. From 16 weeks and 4 days in the 2nd quarter 2018 Estate Agent Survey, the average time of homes on the market rose to 17 weeks and 6 days. We take the admittedly subjective view that around 12 weeks (near to 3 months) average time on the market more-or-less represents a market equilibrium situation on a national average basis. The market has thus broadly been drifting away from that equilibrium level since 2016.

No further rise has occurred in the high percentage of sellers required to drop their asking price to make the sale. The 3rd quarter 2018 survey showed a slight decline in this estimated percentage of sellers having to drop their asking price, from 96% in the previous quarter to 93%. Stock constraints remain low. We see very few agents pointing toward housing stock constraints in the market and slightly more pointing towards “ample stock”.

I order to corroborate the FNB and estate agents’ perceptions, just a short extract from Standard Bank’s Property Research of 25 October 2018:

“The SA property market was again softer Q3:2018 due to uninspiring real economy data and mixed signals from business and consumer sentiment indices. Also, financial conditions have remained tight, although relatively relaxed when compared to 2007 when last SA was in an economic recession. Consumers remain reticent about big financial obligations despite their relatively upbeat outlook on SA economy.

Regional house price trends show that the inland metros (Johannesburg, Tshwane and Ekurhuleni) still enjoy steady price growth but lost momentum in Q3.

In contrast, the coastal metros of Cape Town gradually decelerated in the past few quarters. Cape Town now is at the slowest pace since 2012. According to SBR’s regional HPI, it is also the first time since 2012 that JHB, SA’s biggest property market by volume, has outperformed CPT which is SA’s biggest market in value terms. We regard the current trends in CPT as a necessary cyclical downturn to realign prices with economic conditions at both regional and national levels.

The recent surge in prices (between 2014 and mid-2016) seems misaligned with the strength of economic fundaments at that time; now, prices are moderating. Waning sentiment due to the SA drought as well as policy uncertainty here and abroad, and a slowing influx of the affluent, restrained property prices in Cape Town. Properties in the higher end of our price segments are now deflating in the region and the volume of cash transactions is trending downwards.”

So we have the two banks pretty much in synch and the FNB Estate Agents’ research is really close to the coalface. To end, some points:

  1. On the lighter side, maybe I can get some sympathy for my early-year assertion that Gauteng would show real house price indices. At the time, I foresaw a good GDP growth and the fact that Gauteng house prices are really cheap in relative terms. At least now, Gauteng is the strongest performing market so I’m somewhat vindicated nearing year-end.
  2. Cape Town is adjusting significantly. No games here, it’s expensive and the only really good news is that we have alleviated Day Zero until the rainy season in 2019. Farmers and residents alike are delighted and the mood is far more positive on that front. It remains now for Patricia and the DA to sort themselves out so we can all get really happy so close to the next General Election.
  3. Don’t underestimate the fact that the SARB has not raised interest rates. Crippling would have been the effect on the back of Oil and VAT if they had. Thank you, SARB.
  4. The extended delay of house sales goes without saying but so interesting that the number of price reductions for a sale has reduced. FNB warns that we should not hang our hat on one measure, but despite the estate agents being “in stock”, buyers are willing to pay reasonably priced houses; that’s good news.
  5. On the other hand, sellers seem to be holding out for their price. Based on an average of 12 weeks on-market, that is increasing to over 16 weeks – a third longer. What that tells me is that genuine sellers are selling for good reason and that distressed sellers are fewer and further in between. In other words, distressed sellers would collapse their price to sell urgently but that’s not happening. I think part of the reason for that is that employment is holding its own except in distressed areas like the Platinum belt.

    Remember, things change quickly. Ramaphoria showed us all how quickly our perceptions become our reality and what an impact that has on our behaviour. The Rating Agencies are holding their horses, Tito is making very positive noises, the Nugent Commission is drawing to a close with an obvious outcome and the SARB has inflation on the side for the time being. Election 2019 will take place and I believe, is predictable. To not have that view is not an option to me.

    Things are positive and if there was any relaxation in the Emerging Markets drama, it would augur well for SA Inc. Look up, it might be sooner than you think. Whatever the case, HLJ continues to be in the market and there for you.

    Yours in Property.


Earlier in the year I stuck my neck out and said that Joburg would show an 8% notional increase in house prices and implied it would be hot property news. Not so, I’m afraid. Sorry. Then, I stuck my neck out [with the IMF as I’ve said in a previous email], and said we’d grow at 1.7%. I was only out by 1, but that’s the 1 in the front. Drat! Another Sorry is due. So before you stop reading and call me a Wuzz, give me a break.

You see, we’re not in technical recession, the first time I heard President Ramaphosa (CR) say that I thought he was taking advantage of the latest weed laws, but then, Roelof Botha, ex-RMB, who I have always considered at the top economist in the country, was reported having the same stance. So maybe, CR has been sticking to Johnny Blue on his Fresnaye property’s stoep. So without boring you with the details, the numbers are skewed by Agriculture in the main, and what remains is some other drought-stricken technicality. All of that said, we should pop out of technical recession fairly soon and recover a tiny growth this year.

Now let’s see why Growth with a capital “G” is on the cards. 

Firstly, the SARB held rates recently and that is good news for our ailing economy. Remember, they walk a tightrope, because the Bond investors love a big differential between the Bond yield and their own country’s interest yields, adjusted for inflation and the Rand volatility. In simple terms, if you don’t raise the rates and the risk of doing business increases for whatever reason, then money flows out of the country. Big risk, but well taken given the current slowdown in our economy. In fact, a complementary decision to my next point.

So, secondly, our President has announced amazing benefits to our economy today. I am so excited even though we know we need far more. On the lighter side, #paybackthemoney would provide more than enough to stimulate our economy; just seeing someone go to jail would really lift our spirits. So again, I have no desire to go through all the details and, if truth be told, I have no idea where we find the money, but a stimulus of R50bn to “stabilize Education and Health Care” is seriously welcome and R400bn to really stimulate the economy is a mind-blow. So much stimulation in one day could be bad for one’s heart; but, thank you, President Cyril and your 10-person Advisory Board, you’re going to announce in the next few days.

We’ll cover a tiny bit of the details, the rest being your homework, but seriously, I cannot tell you how amazing it is to see a President, obviously trained by Pravin Gordhan to read teleprompters, reading a huge economic breakthrough and flawlessly enunciating Four Hundred Billion Rand, that’s R400000000000. So glad the author of 400…Rand…million, billion, ten…he, he, is no more.

We need stimulation. Money flows of private citizens offshore feel to me to be at record highs. People are leaving all around me – kids who comprise our future being snapped up for their artisan, IT and teaching skills. Out there are countries building countries on the back of our young, competent families and I feel like putting my finger down my throat when I think of the loss just when we need the skills the most to rebuild this beautiful, tortured nation, but at least we have a President who sees the issue and has the gravitas and presence to rectify the problem, albeit, over a very long period.

Healthcare needs stabilization. The Minister of Health should have declared a crisis a long time ago, but at least, finally has some money to spend. Heaven knows we need it well spent on priorities that benefit our people. Please don’t steal our hard-earned cash and don’t turn a blind eye to those who would! For education, desks and toilets would be really helpful. Make the former out of recycled plastic and achieve a double whammy. Then, for the latter, build toilets with septic tanks where you can’t easily access a sewerage pipe. For goodness sake, [I heard a guy on CapeTalk saying the sewerage pipe was 4 kms away so they could not give a school a flushing toilet.] Really??!! I used a septic tank in Amanzimtoti for years, because we had no water-borne sewerage and what about every farmer in the country?? Imagine a civil works programme that dug and kitted-out septic tanks at schools using recycled water and then teams of guys keeping them in working order? Now there’s a project worth doing.

So, in the R400bn, is a mega-fund for Infrastructure. Just to put that in perspective, a year or two ago, it was pointed out on 702 that the market capitalization of Mr Price was more than the entire Construction industry. So a company which imports clothes from China and sells them to us is worth more than Basil Read, Grinaker/LTA {Aveng], Group5, Murray and Roberts, and WBHO [the only one making money at the moment] combined. In fact, the shares of Aveng, two massive companies that we grew up with, are currently 4 cents, I am advised. How do we get to this position where the industry would probably battle to revive such is the job-bleed? Well, firstly, you steal from the SOE’s and then you take all the taxpayers’ money and spend it on salaries in government and what do you get? People affording millions of t-shirts, but no repairs of sewerage works and no building and maintenance of roads. It’s called selling your childrens’ future and is great for failed-state ignominy.

So am I depressed? No, very upbeat that we have a President who can recognise the problem and before he jets off to the United Nations and presentations to global business leaders, can announce our best shot at economic revival. His intellect, business acumen and sense of resoluteness is just a breath of fresh air. I’ve said many times before, my faith lies way above him, but if you offered me these packages announced this week and the Zondo Commission in November last year, I would have been amazed at your largesse.

Where does that leave us? As Homeloan Junction we work tirelessly to provide a consistency of service and interface with the banks that surpass expectations. We don’t always succeed we’re sure, but we press on. The wonderful thing about business is that one hand washes the other in a virtuous cycle. As I serve you, you serve me and we serve our customers. Together we do more and everyone wins. From a political perspective, we try our best to encourage each other to lose the “noise” and focus on the good in the system. The initiatives above are good by anybody’s standards and we hope they are implemented and bear fruit – jobs, upgrades, service deliveries and municipalities that work again – for all of our People. We will press on and we and we invite you to join us. We’re not Pollyanna’s, we understand the crime and grime, but we are determined to put in a solid day’s work for a well-earned reward, productive in the knowledge that we know what we are doing and we do it well.

Success to you, our readers, as you take the good, park the bad, and move on to success. We appreciate your support.

Yours in Property.

Go Big or Go Home

A bond repayment calculator makes light work of trying to work out what monthly repayments will be required when taking out a bond. It certainly beats frantically scribbling down numbers and firmly thumping your calculator while your blood pressure rises!

Everyone’s dream is to own their own home, but you need to make sure that you can afford the monthly repayments before you take on such a big financial commitment. Mortgage repayments can change from time to time if the interest rate is linked to the prime rate. A financial provider is sometimes agreeable to a fixed interest rate, if this is what you favour. Terms of a home loan are flexible and range from between 20 to 30 years. As this is an extensive time period, one should carefully calculate the affordability of the loan amount you settle for.

To help home owners get the feel of the responsibility attached to taking out a loan we have a bond repayment calculator on our website. This is a tool which bond originators supply to assist a prospective homeowner like you to calculate various mortgage repayments.

Bond Affordability Calculator

A bond repayment calculator will work out the size of the bond you qualify to apply for. By visiting our website you will be able to get an idea of what bond repayments you can afford each month. There are many factors that come into play and which can affect the bond you are offered. The general idea is that the higher your salary, the larger the bond you would qualify for.

However, a person earning a large-numbered salary but having many obligations (debts) could find that they qualify for a smaller mortgage than another applicant earning considerably less but with no serious commitments. This is called the DTI ratio (Debt-To-Income) and is used to calculate how much ‘extra money’ one has after monthly expenses are accounted for. Every person has unique circumstances and requirements and we will treat each application with these distinctive factors in mind.

Bond Repayment Calculator 

What portion of your salary should you spend on a bond each month? This is another situation which will rely purely on individual circumstances.

  • The traditional rule of thumb consideration is mortgage repayments should be no more than 30% of your pre-tax salary. Another conservative view is that it should be not be in excess of 25% of your take home salary.
  • Most banks prefer a deposit before granting a home loan as 100% loans are hard to qualify for.
  • The calculator will give you an idea of what your monthly repayments could be. A different interest rate will alter your monthly payment as will the time period in which you chose to pay it.
  • By paying back more than the stipulated amount, an exceptional difference in the eventual time and amount your home will cost you.
  • We suggest you to play around with numbers on our bond repayment calculator and have your questions ready for us to help you answer.

The Big Picture

Sound advice is to take into account the whole of your housing obligation and not only the mortgage. Your housing budget should include your bond repayment, municipal rates and taxes and home insurance. Do not be drawn into over-extending yourself as what seems affordable today could be very uncomfortable down the line. Children grow up, educational costs increase and perhaps supporting a parent will come into the equation, not to mention maintenance and repairs.

This is a long-term commitment and it is wise to consider all factors. Research residential areas before deciding on a home that is affordable.  Where is there expected growth? Will the location work for the family’s needs?

Place the purchase price, years you are planning to repay the bond in, current interest rate and your expected deposit amount into the bond repayment calculator to get the big picture on what the real monthly mortgage costs will be. Homeloan Junction has a separate calculator to help you ascertain your bond and transfer costs.

Loan – To – Value Ratio (LTV)

Giving financial assistance to home buyers is a risk for the lenders. They want to be sure that their money is repaid, with interest of course, and in the event of any unfortunate circumstances that they are not the ones to lose financially. Therefore the bond you are granted will also be linked to the property you wish to purchase: what it is valued at and what the asking price is. Being able to recover their money is an important consideration.

Smart Thinking

Being cautious does not mean doom and gloom and your dreams flying out the window. Perhaps a little trade-off is all that is needed: buy a smaller home that can accommodate renovations or alterations at a later stage. The cheapest house in the best neighbourhood is an alternative view as you cannot over capitalise and all improvements will add value to your home. Do you have to buy a small home in the newest trendy area? Think about the well-established areas with older homes that have huge rooms, established gardens but need just a little tweaking to make them your dream home.

Use our online bond repayment calculator to see where you stand, and contact us for expert consultation on applying for your homeloan. You can go big on your dreams and go home with the help of Homeloan Junction.

Your in Property