*Internal property company memo shocker

Letter from Lew Geffen, head of Lew Geffen Sotheby's International Realty, to his agents - and released to the media this week.

Recessionary Strategies - State of the market 

As you know the recession is biting even deeper and strategies of 3 months ago are no longer relevant.  The mere fact that the banks are requiring 25 % equity indicates strongly that they have factored that the market will drop another 25% on top of what the market has already come down i.e. plus, minus 15%.  

To my mind that means that the market will come down 40% from the highs of last year which is hugely significant.  Take into account that today a man who wants to purchase a R2 million property which is the average selling price in our company will have to earn in excess of R87 000 gross per month in order to qualify and if the market drops by 25% that same person will need to earn R65200 gross which is also no picnic.

There are 60% less buyers in the market than recorded at the same time last year.  Attendances at showhouses are generally poor (Echoes of Sharpeville) and only when the Agent has convinced the seller to use the most aggressive parameters i.e. 40% below asking price, does the showhouse receive 10 couples or more leading to a subsequent sale.  All the guns are loaded against us in this market and it will take your own courage and perspecuity in order to survive. 

This morning I told a member of my own family to drop his price by 25% in order to get a quick sale and I would advise you to tell your clients the same.  It's a question of being truthful to your clients to save them severe pain by procrastinating and not accepting the offer today.  Today's low offer is tomorrow's miracle price.  This market is not going to recover anytime soon. 

The tough must get going!

Signed

LEW GEFFEN

Do you think Lew Geffen is over-reacting? Or trying to talk down prices to score some sales? Tell us, below.

*This article, republished here, was one of the most popular articles on Realestateweb in 2008.

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only when the Agent has convinced the seller to use the most aggressive parameters i.e. 40% below asking price, does the showhouse receive 10 couples or more leading to a subsequent sale

Lew Geffen

 

Related links

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Rough ride looms for property market »

Yikes! It looks like a property crash »

Joburg property: cheaper now than last year »

Reject today's offer at your peril - agents »

Comments

 

responses to this article

Eina! This is not going to make Lew popular with the rest of the agency bigwigs. Next time an agent tell you you must buy now to get on the market, print out a copy of this and give it to them. http://capetownbubble.blogspot.com by CT Bubble on June 04 2008, 08:17 Find this comment inappropriate? Report it

Ho Ho Ho and a bottle of rum! Here go the property Pirates! This is so sad that they live up to thier type cast profiles! Shame on you! by Viewer on June 04 2008, 08:25 Find this comment inappropriate? Report it

And remember... 40% depreciation wipes out 66% appreciation. by CT Bubble on June 04 2008, 08:31 Find this comment inappropriate? Report it

Objective and honest The party is over! by SAM on June 04 2008, 08:35 Find this comment inappropriate? Report it

And remember... 40% depreciation (like Lew predicts) wipes out 66% appreciation. http://capetownbubble.blogspot.com by CT Bubble on June 04 2008, 08:36 Find this comment inappropriate? Report it

I love this Geffen guy. The honesty. His company is now officially my agent. I am buying soon once there is blood in the streets. Where are all the CJ slayers? Those who listened to the likes of Loos, against all the obvious signs in the market, can now it the stinky brown . .more stuff! . .less by Senzo on June 04 2008, 08:39 Find this comment inappropriate? Report it

Sorry, I meant eat the stinky brown stuff! Ladies and gentlemen, the crash is here. It actually has been with us for a while now. Which makes me wonder about the continuously rosy ABSA figures? by Senzo on June 04 2008, 08:42 Find this comment inappropriate? Report it

And I watch the poorly attended showhouses I live in a complex where the for sale signs are sprouting at an ever increasingly pace. I saw more and more removal fans come in and move people out. The amount of empty units is increasing weekly. There are two houses in the complex in that I watch . .more quite carefully. I think they are proof of the times we find ourselves in. The first has been on the market since last year September if not earlier. Every time I drive or walk past the only car there is the agent's car. I watch him pack up at 17:00 with a look defeat in his eyes. That place is not going. It has been empty for close on a year now. The second house has recently come on the market. The estate agent here is still full of enthusiasm. This house is directly opposite me. I watch as she paces through the house. She maybe gets one or two couples but i don't think that they are even interested to be honest. Most of the people that come by are nosy neighbours. . .less by Devil's Advocate on June 04 2008, 09:11 Find this comment inappropriate? Report it

Time to buy yet CT Bubble? Be sure to tell us when it the right time to buy. Then again for those who purchased to rent it seem like a good time to stay put with large increases expected for rental property. by Bob on June 04 2008, 09:18 Find this comment inappropriate? Report it

I say it again, I love this guy! Its time to get back to reality. by Senzo on June 04 2008, 09:27 Find this comment inappropriate? Report it

Keep dreaming on those rent increases. In CT the rental market has been TERRIBLE the last two years and it is not going to get any better. Dropping house prices put downward pressure on rents because as prices drop landlords have to make rental look more attractive to their tenants (who should . .more have been saving their cash for a big deposit) than buying at the new lowered prices. . .less by CT Bubble on June 04 2008, 09:34 Find this comment inappropriate? Report it

TREOC INVESTORS CLUB FOR SALE Anybody interested by Tito on June 04 2008, 09:37 Find this comment inappropriate? Report it

Why pay more rent for this flat when the one next door is empty Bob? I am not being stupid that is really the case in the complex where I live. There are so many places that stand open for rent I find it difficult tobelieve that landlords will have a strong bargaining position. If the tenant doesn't like the increase then . .more landlord next door who is desperately trying to fill the place will gladly take his money. Times for the landlords aren't that rosy either. I agree that the rent to mortgage repayment gap is going to close. But not because rents are increasing but rather that the price of property will continue to fall. . .less by Devil's Advocate on June 04 2008, 09:43 Find this comment inappropriate? Report it

Lemember me. I no overpay. I wait for clash! Here light now. by Chinaman on June 04 2008, 09:43 Find this comment inappropriate? Report it

CT Bubble the tenant Sure there will be those who will be forced to sell at deflated prices, but not everybody bought at the peak of the previous boom. Those who did purchased property's before the last boom will be well positioned to take advantage of fact that there is . .more still a huge difference between owning and renting the same property. Sure renting on the medium term is a good option especially if you are disciplined and can save towards ownership. So when you buying then? . .less by Bob on June 04 2008, 09:53 Find this comment inappropriate? Report it

Sell, Sell, Sell !! Guys, sell now at best. This is your last chance to get out of bricks and mortar before the property revival in 2016. Lock in your losses now, it can only get worse. By the way, the above letter is probably a hoax. The situation is far . .more worse. . .less by Branco on June 04 2008, 09:59 Find this comment inappropriate? Report it

Burp ... so much bear food in one week I love this Lew Geffen guy ... an honest agent who is telling it as it is and who realises that a decent crash will be the best for everyone, estate agents included. 40% down needed he says - if that happens over a couple of years then there is the 64% . .more down real that I believe is needed. . .less by CJ Says on June 04 2008, 10:02 Find this comment inappropriate? Report it

Residential !!!! What part of residential do you not understand. Its where you reside. Why the urgent need to sell NOW. Either you speculated (without having the means to see it through) or you over extended yourself (keeping up with the Jones with the banks money). Get . .more ride of that gas guzzler shiney black 4x4 (that never goes 4x4) and pump the money into the bond. Live within your means which will = debt free, then spend on the fancy "nice to haves". Then you can say "property crash, so what". . .less by Umfiki on June 04 2008, 10:18 Find this comment inappropriate? Report it

Question for Mr Geffen We bought a 2000m2 plot in Bryanston in 2002 for R500,000 and built a 600 m2 house ourselves shortly thereafter at R2500 per sqm. The fittings are great, even if I say so myself. All in all we spent about R2.2 mil on the project and have loved living in . .more the house. If I understand Mr Geffen correctly, we probably shouldn't expect much more than our money back if we were to go to market now? Is R2.2 mil the price that I should advertise on privateproperty.co.za? . .less by Susan on June 04 2008, 10:19 Find this comment inappropriate? Report it

Uhm - typo get rid of - as in no longer ride ;-) by Umfiki on June 04 2008, 10:20 Find this comment inappropriate? Report it

Hier kom groot K** ! I think we are going to halve the number of $ millionaires in SA in the next 6 months. by Tiffie on June 04 2008, 10:20 Find this comment inappropriate? Report it

Mmmmm Remember that estate agents' only incentive is to get sales as quickly as possible and NOT to get the best possible selling price - as was convincingly shown in Levitt's book Freakonomics, and read a little more here: . .more http://freakonomics.blogs.nytimes.com/2008/02/26/real-estate-agents-revisited/ I'd wager that the 40% drop Mr Geffen is MOST concerned about is the drop in estate agents commission earnings, and his dose of "cold water" for sellers is an attempt to bolster their flagging fortunes in a stagnant market. I say "stagnant" because all my research hasn't shown the kind of real price drop he's talking about, but certainly that much (or more) of a drop in sales activity (not the same thing) . .less by skeptic on June 04 2008, 10:28 Find this comment inappropriate? Report it

Today's low offer is tomorrow's miracle price Wise words indeed - these are the new rules - crash rules - every seller should repeat them 3 times every morning for their own good - you hesitate in reducing the house price quickly enough and you lose out and end up having to reduce it even more. Good . .more agents like Geffen are telling their clients this - if your agent is not explaining this then you are probably with the wrong agent. By hiding the truth you are actually harming your clients rather than benefiting them. . .less by CJ Says on June 04 2008, 10:31 Find this comment inappropriate? Report it

This is amazing When I bought in the 90's - This is what it all looked like. Negative - No capital growth - Everyone must rent etc etc etc - Then the boom. The funny thing is I thought people learn from that - But they don't really - hence when the troubles . .more hit everyone sells price falls and the sharp buy and rentals soar ! This is illustrated in all the Investment books of the world and I always think - Well now it's in print and the investing game is over - And then the collapse happens and everyone runs - It's actually so beautiful and Investing stays easy !! Again and again and again. And when it recovers the lemmings follow again and again and again. . .less by Wayne on June 04 2008, 10:36 Find this comment inappropriate? Report it

Diversification is everything... Looks like a lot of speculators are going to find out what an 'illiquid asset' is fairly soon. They will also find out the real meaning of 'diversification'. Having one basket full of very hard to sell houses bought with debt is financial suicide. . .more 99% of folks out there only ever 'own' one real asset - their house. Poor diversification from the get go. (And for anybody who thinks a big fat RA is their 'asset' as well - I have news for them - it isn't. Why? Cos you basically cannot touch it. And an asset you cannot touch is useless to you.) Then buying more of the same (houses) is not very intelligent. Best to buy a small home and then diversify by accumulating stocks, cash and bonds. At least in a 30-30-30-10 split. You can play around with the numbers a little depending on circumstances. But diversify at all costs. . .less by OS on June 04 2008, 10:52 Find this comment inappropriate? Report it

Sorry Wayne, way too early to be contrarian Nice contrarian thinking Wayne but just 3 years too early. When hard core bulls like you are crying because you have lost so much money and you are cursing the people that told you that property was the way to make easy money, when that happens, THAT is . .more the the time to start getting back into the market. All that has happened presently is the market has turned and is heading down and the penny has finally dropped amounst all those new "property investors" who had been sold a dream that property never went down. . .less by CJ Says on June 04 2008, 10:53 Find this comment inappropriate? Report it

GIMME A BREAK 40% DOWN MY ARS. HOW'S THIS IDIOTS LOGIC???? BECAUSE THE BANKS REQUIRE 25% EQUITY IT MEANS PRICES WILL FALL BY THAT %????? BULL S***!!!!! by ARI on June 04 2008, 11:08 Find this comment inappropriate? Report it

Sorry CJ No-one sold me the concept. In my Bcom in 1992 we did IRR calculations. I did them for property in SA and started buying in 1993. You really don't understand the game - All my rentals are high, Properties cheap historically. My NAV . .more is immaterial - All that matters is my monthly rental. I don't talk it up for my current properties, I like the down talk so that I can buy more. PS Have you flown up from your white colony in Cape Town to see what rentals we get in Jozi - Or are you too scared - I told you the numbers. . .less by Wayne on June 04 2008, 11:19 Find this comment inappropriate? Report it

Tales of Woe IF IT RAINS WE'LL HAVE FISH FOR DINNER by Naughtius Maximus on June 04 2008, 11:21 Find this comment inappropriate? Report it

CJ - how come EVERYONE in property is fool according to you??? CJ No offense dude but I have read your ranting and raving negative posts but have to disagree with you. The "investors" that bought in the last 2-3 years will have a reduction in value of their buy to let units (of which there are . .more 1000"s.) However the astute inverstors will stil snap up the bargains like rundown "grand old ladies in established leafy suburbs or the cheap rundown flats that has been neglected etc. As for your comments on how one can NEVER make money out of property take my own case. I bought an old house in 2003 for R715k with no deposit (I had no cash then) I fixed it up for 150k. I am presently letting it out for R12500 a month with an R800k bond. Valued at 2.8 mil but my own guesstimate is closer to 2.6 mil in current market. So let me see. With no money I created an net asset value of 1.2 mil in 5 years with a positive cashflow... I see and hear your coments - some very valid but please do not generalize and make sweeping statements. . .less by Property Investor on June 04 2008, 11:22 Find this comment inappropriate? Report it

Back to school Wayne On what basis do you say property is cheap ? The traditional measures of value are price in relation to rent and salary and both ratios are at all time highs which means the market is seriously overvalued. Please share with us your theory. As for . .more the numbers, actually you have still failed to give them to me, despite me repeatedly asking. PS Stop bringing race into it . .less by CJ Says on June 04 2008, 11:36 Find this comment inappropriate? Report it

I pity all you people who do not understand basic economics!?!? House prices WILL rise again, all that muppet is trying to do is sell more houses! I tell you what you drop your house prices by 40% and sell them to me! by Jonny on June 04 2008, 11:50 Find this comment inappropriate? Report it

Lemmings Lets the lemmings panic and run. Look at the long term trend for property. I'm letting the hysteria hit a peak and then buying. Again. by MG on June 04 2008, 11:50 Find this comment inappropriate? Report it

suspect Anything that an estate agent says is suspect They are bullsh****s of note. You will get much more reliable info from conveyancers who actually do the transfers. by No 39 on June 04 2008, 12:03 Find this comment inappropriate? Report it

For "property investor" You bought a house at a time of low interest rates and the biggest global property bubble this century and made money. Good for you. However those were freak times and will probably never be repeated for generations. Now the world's financial markets are . .more in turmoil because the property market was treated like a pyramid scheme. It is now collapsing. Those who got in early made money. Those who got in late will lose money. Property goes up slighty higher than inflation over the long period. When this plunge is over, normality will return and that is what property will do. And obviously there will then be oppurtunities to make money if you find the right properties.Just don't expect to make the easy money that you made in the last 5 years - those times are over. And be aware that by the time this is all over your present property will only be worth R2m or less. So you will still be ahead because you got in early. Those who got in latter, or heaven forbid now, will not have such a smooth ride. . .less by CJ Says on June 04 2008, 12:14 Find this comment inappropriate? Report it

Aint this funny... When the bears disagreed with the agents/analysts, they were all a bunch of liars and good-for-nothing propaganda machines. Now they cannot stop singing their praises and lapping up every word. Of course, vice versa for the bulls... by AvgJoe on June 04 2008, 12:21 Find this comment inappropriate? Report it

Fly in the ointment wildcard With all pro and con arguments one big factor is missing. We now sit with a black marxist regime. Nobody takes the trouble to factor that in. by Brompot on June 04 2008, 12:34 Find this comment inappropriate? Report it

Waynes BCOM Um Wayne you do understand IRR is more for deciding if a project is worth doing rather than the actual returns? Also how you reinvest the cash flow really effects the final number, especially when you have lots of negative cash flow in the beginning. Are . .more you sure you calculated everything correctly? Getting it right can be really really tricky and it can make bad projects look rosy if you get it wrong. Google for "internal rate of return a cautionary tale" if you don't believe me. As for the rental market here in Jozi, the negative cashflow gap is not as bad as the cape but its still far to big to make buy to let worth thinking about. . .less by junkyard on June 04 2008, 12:36 Find this comment inappropriate? Report it

Thoughts A few things. Firstly the article relates more to the residential market than the commercial or industrial market. Secondly Wayne has a very good point in that for anyone who is in it for the long term the the actual value of his . .more portfolio is irrelevant as over the long term worldwide trends have shown he will make money.Property is all about cash flow and if he bought 5 years ago chances are his current rental yields are covering his bonds and possibly expenses. Thirdly leverage is your friend,treat it well and it will work for you.Over leverage and it will kill you.This coupled with cash flow is how fortunes are built. Fourthly opportunity.Look for it,its all around.Don't buy what every other lemming is buying,look for alternative uses and values in whats around you and chances are out of the 50 deals you look at 5 will be workable.By differntiating yourself you will unlock the value in what you've bought. . .less by Mako on June 04 2008, 12:42 Find this comment inappropriate? Report it

Brompot??? what kind of (brom)pot are you smoking?? a marxist regime??? pls help us, factor it in, what does it mean for the ave joe on the streets??? by Shabir ... the shakemaster on June 04 2008, 12:46 Find this comment inappropriate? Report it

CASH is KING People talk of equity. What does this mean? "my house is valued at R1.5M and my bond is R500K" Therefore i have a Million in equity. You only have the million once you have MADE the sale. Capital growth is only good ONCE YOU sell. Seems like there are . .more going to be some very expensive lessons in the next couple of months/years. I will wait until there is blood on the streets, then i will start buying property. Yes property will go up again, like everything else in the economy. It all works in cycles. interesting times we are living in. . .less by C$SH on June 04 2008, 12:48 Find this comment inappropriate? Report it

Advertising Scheme This is one of the best advertising campaigns I've ever seen. Lew and Co don't make a cent if there are no property sales. by Joe Blog on June 04 2008, 13:08 Find this comment inappropriate? Report it

You are missing the point Yes everyone understands that if you bought property a couple of years and you are an investor NOT SPECUVESTOR that there is no need to sell. You want the rental income. That is great we get it. That is what I would get into property for. BUT for the . .more SPECUVESTORS that bought hoping to get insane capital appreaciation it is GAME OVER for now. I am sure that there will be more booms but this one is bust. The bears are trying to say that rental income is NOT going to save the specuvestors who bought within the last year. Those who bought property years ago and wanted the rental income have nothing to fear. When this sucker starts bottoming out I will buy property, not in the hopes for insane capital appreciation but in the hopes for a steady stream of rental income. If there is another boom then I will score. . .less by Devil's Advocate on June 04 2008, 13:24 Find this comment inappropriate? Report it

Reality Bites (literally) Plan for the worst, hope for the best is the best advice anyone could offer at this stage by GuviJ on June 04 2008, 13:37 Find this comment inappropriate? Report it

All investments are pyramid schemes All investments are pyramid schemes, get in early, wait for the hype to get everybody and their dog to jump on the band wagon, then get out when the base of the pyramid starts to get wobbly. Houses just have better foundations by Bob the Pyramid builder on June 04 2008, 15:12 Find this comment inappropriate? Report it

Lew Geffen - Marketing Genius Ofcourse you must drop the price of your house by 25%. Look at this way - on a R3million the estate agents will make R180,000.00 (6% commission). If Grandpa Lew convinces me to drop my price by 25% to R2.25million - chances are it will sell pretty . .more quickly. Gramps still makes R135,000 (6% commission). R45000 is a bit smaller than the R750,000 I will not get from my sale. Come on - a house is only worth what a buyer will pay for it. I have a home on a secure golf estate - you think I will ask 25% less.........I agree with Joe Blog, what a FANTASTIC MARKETING CAMPAIGN. He is doing it for the good of his company not the good of the seller !! . .less by Cape Bear on June 04 2008, 15:43 Find this comment inappropriate? Report it

Fame at last! I never thought anyone would be dumb enough to also pick the name Tuscanite, but there you go. I've clearly pissed someone off [pats self on back for a job well done...] Now for the article Uncle Lew wants churn, no churn no turnover. Agents, lawyers, . .more bond originators, house movers, banks, insurance agents, builders, etc they all need churn. If people stay in their properties or do not sell their investment properties then agencies and their brethren do not make money. 7% on a 2million sale is better than 7% on a 3 million no sale. He got good publicity for free and REMAX and HOPE.CO.ZA must also be smiling with their paid ads on this article. Only the desperate will sell, most will just not sell, especially through Uncle Lew, this will backfire as sellers will take their properties to other agents. If he succeeds then great there may be some bargains for bottom pickers like me. Either way I will turn it to my advantage. . .less by The Real Tuscanite on June 04 2008, 16:13 Find this comment inappropriate? Report it

beggar belief. afro-pessimisim eurocentric ficle = spooked, panicked, freaked out soup for wise men to take advantage of. Fundamentals will win the day after all the panic has settled. Its a great concept to stimulate short term sales. Good luck this will be a rough . .more ride. . .less by dave i on June 04 2008, 16:18 Find this comment inappropriate? Report it

Still a bit of "denial" out there I see Estate agents have a job to sell houses. There are 60% less buyers at present and 50% more houses for sale. Simple supply and demand. To boost demand you have to lower prices. Geffen sees that and is passing the information on to his clients. If just his . .more agency does that and yours doesn't, then all the sales in the next few months will come from Geffen's agency. The prices his clients then sell their houses at become the market related price. The fact that you insist that you will not sell at that price does not make a difference, it just means you don't sell your house - it's value however has still gone down. When you finally wake up and realise what's happening and that the price you thought your house was worth has long gone and won't be returning for many years, you reluctantly reduce the price 25%, but it is now too late because the market price would have since gone down even further. As the man says,"Today's low offer is tomorrow's miracle price". When you reluctantly say to potential buyers in a years time, OK, I WILL sell at the 25% off price, they will turn to you and say, actually, its too late for that, the market has since fallen further, I want an additional 10% off ... and so the game continues downwards ... and yes, even for "secure golf estate houses" . .less by CJ Says on June 04 2008, 16:27 Find this comment inappropriate? Report it

Did anyone notice its a buyers market? Just wondering, since its a buyers market out there what should one be doing selling? or buying! CJ- yeah I am sure you must keep your money in a shoe box under your bed?? Gotta love all this negativity, great for us buyers, keep it up . .more guys its great! Faced with the option to buy now put in a tenant and cover you bond or do nothing except rent and spend your money on what...? I know what I am doing and its buying. So happy spending boys and girls whilst some of us are actually investing. . .less by Brennan on June 04 2008, 16:43 Find this comment inappropriate? Report it

Supply and Demand An article last week stated 4.2 million buyers own 5.5 million formal homes. Moneyweb highlighted they have 155,000 homes on their database, some will likely be duplicates through different agencies. Even if you quadruple the 155000 to try and take into . .more account all properties for sale in SA that's still only 11% of total formal housing. Not really any excess of supply as there 48 million people in ZA. There is a limitation on credit supply, not property demand. People still want property. Another 2% on interest rates just delays the purchase of property not eliminates it. Pent up demand will unleash when rates drop and credit availability improves. Buy, sell and rent at your leisure. Flipping is dead, long live investment. . .less by The Real Tuscanite on June 04 2008, 16:58 Find this comment inappropriate? Report it

Please Wayne Don't tell everyone the secrets. Else they'll all want to get in again! I like it cheap. by Dom on June 04 2008, 17:11 Find this comment inappropriate? Report it

Property Market The property market in SA is never going to recover. You need to get used to that idea. Why? Because the place is falling apart big time. Roads crumbling, electricity infrastructure close to collapse, health services on the brink of collapse, . .more private health care about to get slaughtered by Dr Mango, incoming communist ANC government talking about nationalisation, crime out of control ...... and so on. And no skills left to fix any of this. The number of passport applications is soaring for both SA and European citizens. British consulate now taking 4 times longer to issue passports because of increased volumes. The signs are all around. Oh. and don't forget land expropriation. No chance of a 100% bond from the bank if that piece of proposed legislation becomes law. More likely banks will only give 30% bonds then. . .less by Property Realist on June 04 2008, 17:33 Find this comment inappropriate? Report it

Property prices may fall below building cost, but must eventually go back to building cost. by LD on June 04 2008, 17:34 Find this comment inappropriate? Report it

Property Crash? Good for All! Well except for the few devils that are directly responsible for this mess (SPECULATORS) Most of us that are still cash flushed are asking what the big deal is with this crash. Crashes come and go, my tenants are going nowhere anytime soon. . .more They are scared to buy because of the doom and gloom, i charge a reasonable rent and do not bend them over so it's a win-win situation. Even if they decided to leave, i'll use the extra payments to cover the bond payments. Nothing to worry about here. Who cares about appreciation, it's just the cherry on top ? I care about income. But i am glad that the prices are going down, extremely. Means more for those that deserve it, and those that were patient and prepared for the rough times. My money is on renting as opposed to buying to live. Now is not the time to make mistakes. As an investment as well, i would suggest all investors wait, crashes are only as bad as the hype around them. So if we remove the demand then the prices have no support and we can get them for cheap then they are now... . .less by Mthoko on June 04 2008, 17:41 Find this comment inappropriate? Report it

LEARN ABOUT CYCLES,CJ IS STUPID ANY MONKEY CAN CALL A CRASH.WHENS THE NEXT BOOM CJ.STOP SHOWING YOUR GIRLFRIEND THE ARTICLES ON MONEYWEB.ASK YOURSELF WHY YOU RENT AND DID NOT JOIN THE PROPERTY MARKET SOONER.GIVE IT 3 YEARS WATCH THE PATTERNS AND JUMP ON.PROPERTY IS GREAT TO OWN,ASK YOUR . .more GIRLFRIEND WHAT SHE PREFERS.TILL YOUR NEXT GUESS,LOSER.ONLY PEOPLE WHO HAVE HAD AN EDUCATION AND DONT OWN(BY AGE 30)PROPERTY ARE TRULY STUPID . .less by NEGATIVE PEOPLE MAKE PEOPLE RICH on June 04 2008, 17:42 Find this comment inappropriate? Report it

"Affordability" the key Almost right Tuscanite ... Demand will increase when "AFFORDABILITY" increases. How does that happen ? Will it be because borrowing rates go down like you say? Not for a long while I think. The low rates of the last three years have been the . .more lowest in 20 years. They were a freak and rates are now climbing fast - rates of 16% or more are normal. OK, will it be because salaries will go up ? They will keep up with inflation, nothing more. Also we are going into recession so money will be tight all around, so not too much extra cash is going to be flying around. Are the banks going to lend more like you also mention ? They caused serious harm to themselves because of their irresponsible lending in recent years. Some went bankrupt. Some lost billions. They are presently reluctant to even lend to each other, let alone to buyers. I think it is safe to say responsible lending of the old fashioned 3 to 4 times salary will be the way of the future. Darn, we are running out of ways to increase affordability. Hang on, there's one left, could it be ... PRICES WILL GO DOWN !!!! Nah, can't be that, far too simple ... and anyway, property never goes down, everyone knows that. . .less by CJ Says on June 04 2008, 17:47 Find this comment inappropriate? Report it

blah I think all can agree that that the prices will at least stand still in the most optimistic scenario. At 17% interest (where it is likely to peak and stay for at least a year) over two years that is - 35% loss real. best case scenario. and just that . .more fact will probably cause the prices to fall even further which means even more loss . .less by johan on June 04 2008, 17:52 Find this comment inappropriate? Report it

Property Investor 11:22 What you have is what we call paper wealth. Until you cash the asset in you cannot count the capital appreciation your net asset value calculation. I'm sure the people that owned Tulips and Tech stocks also had the same toughts just before the respective . .more crashes. On the other hand you are doing well for yourself on the cashflow part. Good going, this where you should focus on, INCOME!!! . .less by Mthoko on June 04 2008, 17:52 Find this comment inappropriate? Report it

blah 2 then is the time in 3 years when I'll be buying my first house by johan on June 04 2008, 17:53 Find this comment inappropriate? Report it

Building costs Building costs have been artificially high for many years due to massive demand. (thousands of townhouse complexes, government projects etc.) Once that demand starts to drop of you'll start seeing a drop in basic material prices shortly . .more followed by cheaper fees from builders. . .less by expat on June 04 2008, 17:53 Find this comment inappropriate? Report it

Spot on Mthoko! I agree 100% The only time the price matters, is when you buy, and when you sell. Otherwise, all I care about it the rent! The number of tenants that need a place to live are only increasing. Even though the prices are cheep, the rates are too high for . .more people to get credit. Along with the NCA. -BOOM! . .less by Dom on June 04 2008, 18:03 Find this comment inappropriate? Report it

Breaking from the herd.... Nice one Lew - bring on the panic. Not selling but buying so the lower they drop the better for you, Remax and me and my paying tenants. Every time I advertise one of my units for rental it is oversubscribed ten times. People can't afford to buy so . .more rent. And demand is growing (my personal experience - not stats) So swing low sweet chariot and bring those prices down. Thanks Lew, thanks CJ, thanks bears - I have been waiting too long (3 years) to go prop shopping again. But CJ - keep it up bud, you are great for business. And all the prop bulls - shhhhhhhh - just take care of business. No need to shout from the rooftops, leave Cj and his merry men do that. Good luck boys and girls, see you on the beach in December. PC . .less by Property Cow on June 04 2008, 18:08 Find this comment inappropriate? Report it

For CJ Cj, did you make money from the last boom? by Eurostar on June 04 2008, 18:09 Find this comment inappropriate? Report it

Affordability and Building Costs Affordability - expect to see more credit applications based on multiple incomes and cc type consortium applications, even if its parents getting their children on property ladder and building up young adults credit history. Expect to see a lot of . .more property being withdrawn from market because they were speculative sells only (bring me x and I will sell, etc). Only the overextended will have to sell. Some companies may pick up difference between selling current home and buying price of new home if they ask staff to relocate. Building Costs- Expect building prices to rocket. Foreigners being chased out of country mean no more cheap labour undercutting local skills. Materials will increase as global demand is still robust. Price of building new homes will raise prices of existing homes. Other factors that can change market in a heartbeat- introduction of REITS would cause huge investment from foreign investors, tax relief on mortgage interest to help the working poor, relaxation of credit requirements law, interest rate decreases, change in tax and residence law to attract well heeled individuals like Middle East and Asian property markets. . .less by The Real Tuscanite on June 04 2008, 18:19 Find this comment inappropriate? Report it

For CJ No Eurostar if you follow all the prop articles on Moneyweb, CJ and I have been having fun for a while. He missed the last boom and is bitter - Then as they all do became a specialist in a vacuum, if you know what I mean. He says . .more that before the last boom he had a maxed out credit card, but saw it and told a mate to take his pounds and invest here. Neither did. Top level leader he is. . .less by Wayne on June 04 2008, 21:49 Find this comment inappropriate? Report it

Keep it intelligent Wayne I know you are getting a bit angry as your property dream falls apart around you Wayne, and if it makes you feel good to twist my words for your own pleasure, who am I to stop you, but unfortunately in doing so you reduce yourself to the level of someone . .more with limited brain cells who is not worth the time debating issues with. Get over the credit card thing. The only time I have got into debt in the last decade is to start a business using a credit card (which had R300,000 of accessible credit on it) and I was happy to pay the large interest because I knew I could pay it off with profits within 5 months, which I did, and somehow it bugs you. A little bit jealous perhaps? . .less by CJ Says on June 05 2008, 09:20 Find this comment inappropriate? Report it

For those interested - why I post - part one It is a bit boring having to repeat stuff which was discussed long ago on this forum but for Eurostar and others interested I will explain my involvement again. In a nutshell, I had spent a life of travel as a bachelor and really had no desire to . .more buy a house. In the last decade I got involved in a committed relationship, created a successful business which gave me some decent savings in the bank and have started a family. At such times ones thoughts turn to buying a house. Not as an investment, but as a place to live. When I started my business I maxed out my credit card in a calculated risk and was in no position to buy a house, nor indeed did I want to. The pound was worth 18 Rand and property was very cheap in pound terms and I calculated that if a UK friend brought his money over he could live like a king in a nice house and pretty much retire on what he had left over in the bank. Many foreigners did just that and by the time the house had gone up 4 to 10 times and the rand and gone down to 10 to 1, they were awash with profits. As I said, it wasn't something that I was in a position to do. My focus was on the new business which became a great success. So when I finally decided to buy a house, I crunched the numbers and realised the market had gone from one extreme to the other. It was hugely overvalued. continued . .less by CJ Says on June 05 2008, 10:45 Find this comment inappropriate? Report it

why I post - part two Being of a curious nature I undertook extensive research and it became very apparent that we were in a property bubble of note. I enjoy numbers and am comfortable playing around with them and it was so obvious, whatever way I looked at it, that buying a . .more property was a bad idea, as renting was so much cheaper. The red lights were flashing all over that this was a huge bubble about to implode yet all around was this hysteria and frenzy from the property hype merchants to "buy before you get left behind ... just buy a house and you will get rich like I have". Like in all bubbles, prices bore no relation to reality. It was a terrible idea to buy property but no one was seeing that. I was angry that this frenzy of greed was depriving me from buying a house at a time when I finally would have liked to - not as an "investment" but as a home. I used to explain what was happening to people at dinner parties until my woman banned me ! It was then that I discovered this forum, I think early last year. There were a few like minded souls like CT Bubble who could see the truth but most were the ranting bulls urging everyone to 'buy now' (as a few are still doing). We warned of the crash coming. Everything we predicted has come true which is making the bulls now feel a bit silly as their assets nosedive continued . .less by CJ Says on June 05 2008, 10:47 Find this comment inappropriate? Report it

why I post - part 3 Renting is so much cheaper than buying and I now rent a 5 bedroomed house at a quarter of the monthly cost it would take to buy. That is great for my bank balance. I don't see this bubble hitting bottom for at least 3 to 5 years so I have resigned myself . .more that I will be renting for a while and I am actually really happy with that decision. An added bonus is if the Zuma years turn out to be the disaster we all think they will be, then should I decide to emigrate, leaving from a rental property would be so much easier. Meanwhile I have become fascinated by this global property bubble. It is history in the making. Banks are being destroyed, the dollar is at risk, the US could plunge into depression and it's superpower status is threatened ... all because of housing greed that turned homes into a giant pyramid scheme. When normality returns to the market I will consider buying if the numbers look OK but it is not something I stress about. I have been right in pretty much all my predictions and I have a fairly good idea where it will be going from here. I am glad the property hype merchants and all those that fed the greed are now feeling the pain. When the few remaining bulls frantically urge people to buy again as they watch their portfolios shrink, I will continue to shoot holes in their dangerous flaccid arguments. cont . .less by CJ Says on June 05 2008, 10:52 Find this comment inappropriate? Report it

why I post - part 4 I don't post for personal gain. I am not desperately waiting for property to bottom so I can finally climb aboard. I really am a happy renter. 50% of Germany rent. It is actually a great thing to do, especially when it is so much cheaper than buying. I am . .more saving something like R35,000 a month by renting rather than buying ... that is my "property investment". At the top of pyramids the innocent get sucked in by the hype merchants and end up losing a lot of money. I'd like to think that maybe my posts have helped some from making such a disastrous decision. For a while us bears were like the little boy shouting that the emperor is naked. It is good to see that nowadays many more can see the truth. I've probably wasted way too much time on this forum but it has been fun. As the crash builds momentum maybe my work here is done :-) I am going to bookmark this thread so if anyone wants to know where I am coming from in the future they can be sent back here, as it is boring having to repeat it every time some pip squeak that can't argue the maths, choses to pick a personal fight instead. . .less by CJ Says on June 05 2008, 10:59 Find this comment inappropriate? Report it

CJ - Here's the fact. I appreciate your feeling of "saving" those who buy in a bubble and yes many non-fundamentalists are burning. The problem with property is that it's like any business - You get experts and most don't have a clue. There's a suburb in Jhb that in . .more the last year of 4,5 % interest rate hikes has grown 30% ! And in the previous 18 months did 80% ! Now had you wanted to live there you would've lost big time by renting. Emotionally CJ, you need to stay out of the press - They average everything because like you, they don't own anything. Investec shares have halved - Does that mean shares are bad ? Kind of silly - when Buffett's so rich. Your Zuma concept is also prejudice, which in this country, will keep you poor when it comes to investing. Until the courts find him guilty - He is innocent ! That's his human right. To lead a country is big, and judging by your defensive attitude and negativity you wouldn't get many votes. So - Thanks for your essay but when it comes to the facts of this country - You don't have a clue - Well done on your business - Stick to it. . .less by Wayne on June 05 2008, 11:55 Find this comment inappropriate? Report it

Question for CJ What about your other investments? Do you have any? Do you buy shares? Are you planning for your future? If not with property, then how? Pension? What does your playing with numbers tell you? by Dokta K on June 05 2008, 12:33 Find this comment inappropriate? Report it

My answer to Dokta K Don't get me wrong, I don't claim to be some investment guru. If you want to know more about property investing please go ahead and read "Rich Dad Poor Dad". But go into it intelligently. He himself said a few years back already that SA was not somewhere . .more he would buy - why ? Because the numbers didn't fit. The market was already overvalued. I have a nice nest egg in the bank from my business. I am getting a decent interest in the bank with it. Not ideal in the long term but in these dangerous times not such a bad idea. I warned last year that shares would also crash - they did. There is a bit of a bounce at present but I believe (for reasons I won't go into here) that there is an even bigger fall coming before early next year. So I am not in shares at present. My love of numbers is well suited to trading so my work in process presently is setting up an automated trading program trading the markets on my workstation - a small amount of my capital will be used on this - high risk but high potential rewards, and fun. I'm an ideas person - an entrepreneur. My present business gives me all that I need. I have another 10 business ideas on ice that I could run with any time I wanted. I have start up capital and confidence each one would succeed. I will run with some of them but there's more to life than chasing ever more money . .less by CJ Says on June 05 2008, 13:43 Find this comment inappropriate? Report it

Grandpa Lew For the record - Lew ain't no grandpa by Cupcake on June 05 2008, 14:12 Find this comment inappropriate? Report it

The point is... all this hype over the truth? Because that is all this article boils down to. Its fact. The truth does hurt. Why not be grateful for the warning? There is nothing pessimistic about being realistic... and that's what so many South Africans need to start . .more being especially concerning the property market. . .less by cevril on June 05 2008, 14:33 Find this comment inappropriate? Report it

Not a grampa? Surprising, with all those dishy sons and daughters floating around by Gramps Geffen on June 05 2008, 17:09 Find this comment inappropriate? Report it

CJ - You don't understand numbers Quite simply had you, instead of paying rent, taken that exact money, and lived in a cheaper suburb for the last five years - You would be richer today - That easy. Kiyosaki said he wouldn't invest here before the 300% boom. He is a good writer . .more but he is not God ! He missed it too CJ, so you're in good company. The difference is he bought mines allround the world in the meantime. To say you Not an Investment Guru is a euphemism ! . .less by Wayne on June 05 2008, 18:25 Find this comment inappropriate? Report it

Numbers I also notice CJ, that when I mention numbers you ignore them and then carry on babbling bubble this and bubble that. I have realised that you're not really enquiring - You just bored and negative. What you invest in says much more about your . .more personality than your IQ. Keep it in the bank CJ - It's your style. Don't worry about the numbers - It's way too emotionally challenging for you - Keep it in the bank boet - That's your style ! It's one up on keeping it under your mattress, which I'm sure was a big step for you - Well done. Stay off the streets though - They tougher than you think. . .less by Wayne on June 05 2008, 19:59 Find this comment inappropriate? Report it

thanks to the ANC the African incompetent government has caused this problem , it the African Way .The ANC WAY . here comes Zimbabwe fast . by david on June 05 2008, 23:56 Find this comment inappropriate? Report it

CJ - Is it a coincidence I noticed CJ, that you sent a message on another site at a similar time that this sexual one was sent under my name. Sorry I have made you so unhappy with no where to run other than stupid sexual garbage - Do you have a problem in that part of . .more your life too !! I thought these were all financial debates - You had no answer and now you play stupid, insecure games. I won't be responding to any more of your garbage anymore - You are an ideas man - Principles would be better though !! . .less by Wayne on June 06 2008, 00:10 Find this comment inappropriate? Report it

Hehehehe, still at it eh? You seem to have some repressed feelings that are coming to the fore- all these sexual references to African houseboys, why not just come out of the closet? I'm quite flattered that someone wants to pretend to be me. But you have completely lost the plot . .more and probably soon your IP address. . .less by Tuscanite on June 06 2008, 08:15 Find this comment inappropriate? Report it

Don't post under other people names people As much as Tuscanite and Wayne are die hard property bulls who haven't quite come to grips with the new downward phase of the property cycle and can be quite annoying at times, they deserve to have their say. If you disagree with them, say so under your . .more own byline. Posting fake posts under someone's name is not clever and just reduces this forum to a graffiti board which is of no interest to anyone. I had the same problem a while back - the best thing to do Tuscanite and Wayne is alert Jackie to the problem and get her to delete the fake posts. It is in Moneywebs interest to keep the forum working and she will sort it out - she might even be able to block the offenders IP Lets keep it clean folks . .less by CJ Says on June 06 2008, 09:05 Find this comment inappropriate? Report it

Wayne, please think before you make accusations Wayne, you don't debate very intelligently and have never given any numbers to counteract mine, instead you spew out random thoughts and ideas as they come into your head thrown in with a few personal insults. However I take offence at you . .more accusing me of writing fake posts under your name. It is of no interest to anyone to do that and I had the same problem myself in the past. Feel free to search the 500 odd posts I have written on this forum over the last year or so and find one that was crude, used swear words or where I attacked the man and not their ideas. If you have some impressive figures on your latest purchases, lets hear them. I am not aware that you have posted any. Candy did and I agreed with her that because she got a 33% purchase discount and a rent that was more than double what is being paid in Cape Town, the number were workable. Feel free to offer your own purchases up for inspection so that we can all see what a property investing maestro you really am. . .less by CJ Says on June 06 2008, 09:18 Find this comment inappropriate? Report it

Fair enough I apologise if it was not you - and hope they can be blocked - I did report it. But I told you CJ - The area with the 80% in 18 months then 30% growth in the last 12 plus a13% rental yield is where we bought 200 properties. What more . .more do you need ? To be honest CJ - In SA I am a maestro, After 15 years I'd be embarrassed if I wasn't. It's a process - No 1 hint - You can not have racism in your blood. That's a big challenge in SA. Secondly, you didn't come back to me about living in a cheaper area and paying a bond - Hint - Downgrading is an emotional concept. . .less by Wayne on June 06 2008, 09:46 Find this comment inappropriate? Report it

To CJ- I also reported it to JC Its up to Realestateweb whether they want to save their website from descending into chaos by identifying my nemesis or not. Although its chaos at the best of times between bulls and bears. by Tuscanite on June 06 2008, 09:58 Find this comment inappropriate? Report it

www.privateproperty.co.za how do you make a offer on www.privateproperty.co.za if they limit you to 20% suppose I will have to use property24 again by smile on June 12 2008, 12:26 Find this comment inappropriate? Report it

CJ why I post part 3..... I too am comfortable with numbers and have also been renting for some years, not least because my capital was in a small business earning a 40% return annually. I must say that if you are renting at 20% of the cost of owning that must make a huge . .more number of property investors to be camping in the last saloon before bankruptcy. If the mortgage cost is roughly 1% of cost per month and you are renting @0.2% per month then if this is replicated throughout the rental market we have an impending credit crisis which is going to make Corlett Drive Estates look like the Crown Agents (if you know what I mean). What surprises and amazes me (as a person who uses cash only for any purchase of less than R20,000.00)) and who only uses a credit card when caught short for cash is just how long consumers seem able to extend the exstacy period of credit. I don't get it, I really don't. It is not rally the interest rate which determines affordability--- it is the capital repayments expressed as a percentage of net take-home pay. In my humble view there are a lot of folk who will still be paying for this months groceries in 5 years time . .less by Plutarch on December 30 2008, 17:47 Find this comment inappropriate? Report it

Property I bought my Glenashley home 19 years ago for R130 000. Still the same old place. The only thing that has changed is the inflated money spinning around. Property hasn't gone up.....money has gone down. With global bailouts and humming printing . .more presses.....added to an ANC Govmnt...... It's only a matter of time before your R1m house is "worth" R10m. Cars will cost R2m and a litre milk R200. Blokes who rent will have to cough up R50000 per month. Hope they cam make it. even today I cannot afford rental of R7000 per month and am eternally grateful i bought. It's saved my bacon. . .less by Old Bollie on December 30 2008, 21:25 Find this comment inappropriate? Report it

To CJ.... CJ, I am one of the renters you saved from making a mistake. I was going to buy in Woodstock in 2005 - it was punted as being "up and coming" - but started reading your posts and they made sense. I was in London for the last crash when people had to come . .more to terms with the concept of negative equity and felt sure it was about to happen here. I now rent in Sea Point for R4k per month and am very happy to do so while I invest my savings in Money Market until equities sort themselves out. On that note, I'd be interested to read your theories on next year's anticipated crash. So there you have it - someone who is grateful for your posts and those of CTBubble. They make much more sense than all the illiterate bulls put together. . .less by Renter on December 31 2008, 10:19 Find this comment inappropriate? Report it

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