Just an opening comment about Ramaphoria. How cute we are as a nation to adopt words like Rainbow Nation, Zumanomics, and, our latest euphemism, Ramaphoria. When we give it a name, we somehow settle back into our armchairs and watch Chicago Fire. Without a name, we stress. Ramaphoria was never going to last. So, we should not make it “the next big thing” to complain about. I have asked a friend to correct me whenever I moan about the country and my reason is simply this, if you think that Ramaphosa is moving too slowly and we should be arresting more people, getting more money back and recapitalizing the SOE’s faster, never forget you could have had Mrs Zuma and a horrible catastrophe as Eskom breached the fiscal cliff, the Rand collapsed [I mean COLLAPSED] and every scrap of international investment left our shores.
Listening to this morning’s Talk Show, Cas Coovadia of the Bank Association of South Africa, was speaking about the willingness of the Banks to support a restructure of the SOE’s. “They have been robbed and now we’re expected to risk our savings to bail them out”, one Caller lamented – but just imagine if the President didn’t have the ears and brains of the bankers and other relevant parties to turn this mess around. Yes the ANC allowed Zuma to run wild but at least, some self-correction is creeping back under very difficult circumstances for those willing to be tasked with the unwind of State Capture. It was all too frightening to consider but thank Goodness the Good Guys won and we have a chance at Hope and Reconciliation again. It could have been worse, MUCH WORSE! Don’t lose Hope and when you have it, Encourage Others – you could see it as your National Duty. You can never build anything focused inwards; it’s outwards or bust. Look Up, Look Out and make yourself, drag yourself if need be, to be part of the solution.
I often refer to John Loos and I like the manner in which FNB brings the estate agents into the picture. I know you read the Property Barometers so forgive me for extracting from them, but they do allow me to make some points which I hope you find valid. In this blog, I refer to three latest Barometers……
“Early signs of the positive national sentiment shift impacting on national house price trends“
This was the headline of May’s Property Barometer and it continued to say:
“May 2018 saw the FNB House Price Index growing by a faster 4.6%, year-on-year, up from the previous month’s 3.8% in April, and from a February 2018 low of 2.8%. This 3rd consecutive month of house price growth acceleration is an early sign that significantly improved sentiment in South Africa early in 2018 is beginning to impact positively on the housing market and house price growth.”
So there we have it, SA Inc set off like a steam train and house prices were rising significantly. But was it realistic and sustainable? Realistic? Yes, but simply because we all took a huge breath of fresh commercial and confidence air from the ANC December conference and we were willing to pay the price asked by Sellers. Sustainable? No. You can’t turnaround the wounds of State Capture in three months. To think you can is puerile.
But we continue: “Strengthening was witnessed in our own FNB Estate Agent Survey, with agents reporting a significant jump in residential market activity in the February 2018 quarterly survey. Further support for the perception of a strengthened Housing Market in the 1st quarter of 2018 was provided by a shortening in the estimated average time of homes on the market prior to sale, from 17 weeks and 2 days in the final quarter of 2017 to 14 weeks and 1 day, according to the Estate Agent Survey.”
In other words, our “window to house prices” was telling us we were motivated to buy and pay the price. In conclusion, FNB says, “2018 is expected to be stronger on the back of a further small interest rate reduction as well as leading indicators having pointed towards further strengthening in economic growth as we’ve moved into 2018. We thus expect average house price growth to be in the 5-6% range for 2018 as a whole, which would imply some mildly positive real house price growth given the FNB CPI inflation forecast of 4.9% for the year.”
I agree with John, we could see a positive house price growth this year. The reason is that despite some recent news around Inflation and interest rates and the usual politicking, we will have a better year than last year. Surely, it can only be better!?
Now we return to our “window”. I have a high regard for the estate agents. In our economy and property market, they are the front line of property sales. They have and need the skin of a rhino and the hearts of a saint in order to traverse the minefield of Buyer and Seller negotiations. On their behalf, FNB proceeds to say that: “they perceive the sentiment “spike” from the early-2018 political leadership changes to have passed through, and it is back to “business as usual” in a weak economy. On a national average basis, the 2nd quarter 2018 FNB Estate Agent Survey showed a noticeable lengthening in the average time of homes on the market prior to sales, pointing to a renewed housing market weakening in terms of housing demand relative to supply. This is reflective of “Ramaphoria” tapering off.”
I accept that they are right. Humans like us, they could have felt more enthusiastic going into 2018, but that aside, the numbers are telling and don’t lie. The “average time of homes on the market lengthen noticeably, from 14 weeks and 1 day in the prior quarter to 16 weeks and 4 days, reflecting improved housing demand relative to supply in the 2nd quarter’ and, “from a previous quarter’s 91%, the percentage of sellers being required to drop their asking price to make the sale also increased to 96% in the 2nd quarter of 2018” and by an average drop in the Sellers’ asking price from “-8.2% in the prior quarter to -9.2%” in Q2:2018.
You can read the rest of these Barometers, but to sum up, the estate agents are telling us that there is not a stock problem generally and that negotiations are hotting up and Offers being accepted at a slightly lower price. It would be foolish not to accept that this status quo does not mean a slowdown in the housing market.
But really, despite the news mentioned above around pre-election [I really hope] politics, Inflation and the possible rise in interest rates to protect the inflation target bands and the Rand [read: your petrol price], we are doing well under the circumstances. I wish I could wave a wand and “talk it up”; I cannot. But going back to my opening comments, we have no idea how bad things were and how terrible they could have been for every one of us; especially the Poor and the Unemployed.
Telling people that things are not as bad as they could have been always feels like a cheap shot from me. But, from my heart and the commercial heart of Homeloan Junction, we have the opportunity to rebuild and to restore, opportunities for jobs, housing and things that matter to common people like us. Do I sink back in my comforter unaffected and at peace? No, not really. But, on the other hand, I can see that once again SA has dodged the bullet – may I say, miraculously? – and we have leadership that is fighting our way back against the odds. Whilst my hope does not ultimately rest there, it is a damn side better than anything I could have foreseen.
Like success, hope breeds hope. Have it and share it; it’ll be good for You.
Yours in Property.