The Facts Not The Hype

November Sales Results

Apartments

The number of November Apartment sales was down by 27%, while the total value of these sales was up by 34% over November 2006.  

The effects of both the New National Credit Act which was designed to inhibit reckless granting of credit together with the interest rate rises have truly had a damping effect on the number of sales.  

For the period of January through May 2007, just before the introduction of the Credit Act on the first of June, the number of apartment sales was up by 25% over the corresponding period in 2006.

Yet, for the most current period from June through November 2007, the number of apartment sold decreased by 12% over the similar period from last year.

The average price of an apartment increased by 9% from June through November compared to January thru May 2007. 

Compare this increase with the 2007 year to date average price increase of 39% over 2006’s average price.  So, that means that the rate of increase in prices has been reduced for the second half of the year.

Houses

The number of houses sold in November declined by 52% over November 2006.  And the value of these sales was actually down by 58% over November 2006.

My research demonstrates that for the similar periods for apartments, namely, January through May compared to June through November, the average price of a house bought was actually 2% down for the current period, whereas the apartment price had appreciated by 9% for the like period.

The number of house sales for the period of January Thru May over the corresponding period for 2006 was up 3%  but for the period from June through November, the number of houses sold was down by 11%.

Thus, both apartments and houses sold during the period June through November 2007 were down by almost the same percentage 11% and 12% respectively.  

My Observations

I am concerned about the decline in the number of houses sold and the average price decline over the past six months.

Houses are to me a leading indicator. When the housing market is on upward trend, the number of houses sold increases faster than the number of apartments sold.  And the converse is true. When the number of houses sold declines and prices decline, the apartment market will also feel the effect. 

With another interest rate increase likely, although in my opinion, it will have an inflationary impact combined, with the prospect of petrol price increase in February, I believe that certain sellers will be under pressure.

So, here are my recommendations. If you need to sell your property, better price it on the more realistic side, otherwise, you will be sleeping in it far too long as others who need or want to sell, will adjust their prices to find the fewer buyers who are out there. 

Now, if you are a buyer, you have the opportunity to be more selective. Yes, there maybe bargains out there, but my belief is that if you buy a bargain, you’ll probably wind up selling a bargain!  

And, of course, I believe that a buyer can only make one serious mistake, that’s not too buy, Don’t keep hoping that prices will decline significantly. They won’t, just the rate of appreciation will decline for the next six months. 

So, the longer, a buyer waits, the more the buyer will ultimately pay for a property.

So How High is High?

I thought you might find of interest the following research on how much the most expensive properties by area are selling for per square metre for areas along the Atlantic Seaboard.

 I’ve calculated the average of the three highest prices paid for apartments per square metre.   Now, you know what the best costs by area!  

Area	Average Highest Price Per Square Metre
Bantry Bay	R52,509
Camps Bay	R34,940
Clifton	R75,601
Green Point	R31,298
Mouille Point	R31,189
Sea Point	R30,931
V & A Marina	R61,711

The Car Market

Yes, the car market for both new and used has also shown declines this year.  New car sales are down by over 5% and used car sales even more.

Now, here’s why I prefer economic cars to flashy ones. In South Africa, you’ll pay 125% more than you will pay for the same car in the States or most countries in Europe.  Compare this to our property prices which are only about 30% of comparable property there.

So buy property, it appreciates, cars depreciate and insurance and petrol are only going one way - Up!