Residential property: bouncing back

Lightstone's June repeat sales indices, released on Wednesday, confirm that house prices are leaving the doldrums and heading towards positive terrain.

South Africa's residential property prices slipped into negative terrain in late 2008 after growth slowed steadily from late 2004.

Interest rates have been chopped repeatedly since December, and data released by banks and other organisations are increasingly showing the benefits of lower interest on debt repayments.  As interest rates have declined, so house price deflation appears to have slowed.

Mortgage originator ooba said this week its books are already showing price growth year-on-year of about 1,8%.

Absa bank, meanwhile, said last week year-on-year price gains could be in the region of 2% by the end of the year. However, overall house owners can expect their properties to have fallen by about 3% in value in 2009.

Estate agents are also reporting an increase in interest from buyers.

The Lightstone Repeat Sales Index is based on data from the Deeds Office, Surveyor General and other sources.

The national house price figure (year-on-year) for June was -0.3%. The Eastern Cape has been South Africa's best property performer, with a price gain of 4.8%.

The Western Cape had also tipped into positive terrain (0.5%) by June.

City of Tshwane was the worst performer (-3.7%), while overall affordable houses produced the highest capital gains for sellers, at 10.8%.

Want to know what your own property is worth? Click here to access Realestateweb's new property valuation tools! For less than R100 you can find out who owns a property, what they paid and whether they have a large mortgage - and what others have been paying in a suburb.

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Eish CJ - Don't worry yourself about these stats & numbers. Just keep paying me rent & I'll renew your lease. Good night & sleep tight by CJs Landlord on October 14 2009, 16:07 Find this comment inappropriate? Report it

Eina, bad news indeed for the likes of Cj. Don't worry, bud; just hang in there, I am sure there will be another chance to buy at a 50% discount. Yeah, right. by Charlie on October 14 2009, 17:52 Find this comment inappropriate? Report it

Lets look back to the last major crash in the 70's and 80's for some insight- Ok lets look back at the previous major boom and crash in the SA property market. As per ABSA Hp index data 1975 we where at a bottom and from there we had a huge property boom peaking in 1981 and the bottom of that massive property boom was . . .more .more 1985. So thats 6 years from bottom to peak and a further 4 years from peak to bottom. Ok so lets look at actual prices back then : 1975 - R23k (bottom) 1981 - R56k (peak) 1985 - R72k (bottom) The property market then recovered 3 years later in 1988 with prices at R94k. Thereafter the next few years did not see any major rises or falls. This is the only history we have of a complete cycle to refer to. Up until the boom of the 2000s the cycle i refer to was the biggest boom and crash we have on record. Its interesting to see where actual prices went from bottom to bottom ie R23k to R72K. Thats still up in my book ! Thats why I am always harping on about inflation and its effect on property prices even in down cycles.. . .less by Brennan on October 14 2009, 18:00 Find this comment inappropriate? Report it

Thumb sucking... Looking at that blurry graph above it looks like the down leg of the cycle from peak to trough is 4 years where as the up leg was 6 or 7 years (guesstimate) which would give us a wave amplitude of a nice tidy 10 years. So next trough in 2019/20. Of . .more course I don't study these things as closely as others, so will be duely corrected. . .less by Charlie on October 14 2009, 18:02 Find this comment inappropriate? Report it

Just looking at the above graph and comments thereon... Bottom was 2000 Peak was 2004 Bottom was 2009 So thats 4 years from bottom to peak And they say what comes up must go down.. So 5 years after the peak of 2004 we have 2009 and a bottom. It fits with . .more the saying doesnt it? Remind us again whats the problem CJ? (Except for the fact that you still cant afford to buy?) . .less by Brennan on October 14 2009, 18:05 Find this comment inappropriate? Report it

TODAY CJ GETS HAMMERED Me, I like things built with bricks and cement. Tried the SSF trading thing - nearly had a heart attack when I saw how quickly real money could dissapear into not so real assets. I see the Easten Cape is performing reasonably well. Maybe now is the time . .more to subdivide that seaview plot and squeeze two houses in on it... Then I can try the SSFs again. It is addictive like gambling I think... . .less by SP on October 14 2009, 18:57 Find this comment inappropriate? Report it

@SP Carefull with the SSF's. I lost 5K in just under 15 minutes. I fortunately made it back the next day but go very caefuly there SP, it's risky business. Houses are much safer :-) by Renter Venter on October 14 2009, 20:20 Find this comment inappropriate? Report it

OK suckers, you want a big boys graph, chew on this one http://tinyurl.com/mm4uet Real SA prices over the last 40 years - the last 3 years are missing so let me fill you in - the recent peak went up to 211 for 2 years and has now returned back to 180. So we are still higher than the PEAK of . .more the last bubble - doesn't sound like a bottom to me chaps. In fact we need to fall 13% more to get to the last boom PEAK (yes peak) and we need to fall 33% real to get to the peak before that. Then we can start the journey to the bottoms - notice THEY are pretty consistent: 83 every time !! Notice that nice bull trap in 1975 and again in 1995 - who knows, we may well indeed have a tiny blip up for a year, but it is then dive, dive, dive. You really can't fight this graph. This is not prediction. This is REALITY. It WILL happen because it ALWAYS happens. That is the nature of the beast. See that bottom at 73 that occurred in 1999 - that's where we will end up, whether you guy's like it or not. That will be the overshoot down. Back to where it all started, just like it did so in 1987. It looks like the norm price would be around the 90 mark - so 2001,1994, 1986, 1977 - these were all fairly normally priced years. Notice that base to rent peak is 8 years. Based on the previous down moves, we need at least 6 years to bottom. We've had 1.5 years. So 58% down real needed over the next 5 years. . .less by CJ Says on October 15 2009, 01:01 Find this comment inappropriate? Report it

For people like Brennan already looking for the next peak You want to know when the next peak is. Well the last main real peak to the present one was 24 years - that should give you some idea. And remember, the next peak will be nothing as dramatic as this last one. Like I have said so many times . .more before - property as an investment has had its day in the sun for now. Those days will return some day in the distant future ... but no time soon. If you want to buy as a home at a time when you get most house for your salary then in about 5 years time will be about the right time. When my graph above is around 80 then you are in a fairly good place. We need a 55% real fall to get there. And if we have deflation for 2 or 3 years then that manifests into significant negative nominal falls needed to generate the 55%. . .less by CJ Says on October 15 2009, 01:19 Find this comment inappropriate? Report it

@CJ "Bla bla bla".....thats you trying to save your sinking ship "Money money money, its so funny..in a rich mans world!".......thats me singing while I look at my Balance sheet and see my equity increasing monthly!! If you spent more time . .more looking at houses and prices rather than figuring out which way the graph should be turned, you also would sing a happy tune. . .less by NRWB on October 15 2009, 07:36 Find this comment inappropriate? Report it

So why is this CJ graph not up to date? Is it perhaps that the so called "expert" who plotted it lost his job because he does not know what he is doing? Come on now we cant believe some backyard data with no credible source? Give us credible data thats up to date and we can at . .more least consider your theory. . .less by the reader on October 15 2009, 07:40 Find this comment inappropriate? Report it

Be that as it may You can do better right now that invest in property. A 2% gain is way below inflation. That's the thing with the internet: everybody is an expert. by Pieter Tief on October 15 2009, 08:38 Find this comment inappropriate? Report it

one swallow doesn't make the summer and if you believe in "trajectories" as the author of this article seems to, then it appears to be down, not up by charlie on October 15 2009, 08:51 Find this comment inappropriate? Report it

Realestatesweb "new property evaluation tool" URL doesn't work... zzzzzzzzzzzzzzzzzz by GungetsTuft on October 15 2009, 08:51 Find this comment inappropriate? Report it

The problem with just reading graphs part 1 Is they just show pure cold data. They need to come with annotations of historical info. Fundamentals that come into play are only captured in the price (if you are a technical anylist, then you believe all data is in the price). But you have to go back . .more to other data scources to find the reasons. Recessions, low interest rates etc. Now the problem with your graphs Cj, or rather the way you are interpreting them, is they reflect the price line, but not what data is priced in. There is no doubt that we had a housing bubble built on cheap cash made available post the previous market (IT) crash... . .less by Wee willie wonker the pseudo-wannabe-chartist on October 15 2009, 08:55 Find this comment inappropriate? Report it

The problem with just reading graphs part 2 But to go all the way back to find a long term "base" can be problematic because we look at the data line but forget the fundamentals at the time. I am no expert at this subject but refer to others like Rode who explain that we came from a very low base . .more in the seventies, caused in part by sanctions etc. See, this is shown in a price line, but the reasons are often forgotten or misinterpreted. Bottom line, to say we will return to some long term base can be problematic if the very reason for that base is no longer valid. It's like saying housing prices in the East of Europe will return to real values (inflation adjusted) of the Soviet era. It's not going to happen. Unless they go back to those Soviet era conditions. . .less by Wee willie wonker the pseudo-wannabe-chartist on October 15 2009, 08:56 Find this comment inappropriate? Report it

Devil in the details What Lightstone, ABSA, FNB, Standard bank charts do is track year on year house price growth. Some graphs are nominal and others are real, some times a mix of both. Average Joe the buyer is interested in nominal prices as these are the actual . .more sticker price he pays for his house with is hard earned cash. Where people like old CJ twist the tale and get average Joes hopes up is in the detail. Perhaps he does it on purpose or perhaps our CJ just does not actually really understand the housing market himself, but how could he as he has no real world experience anyway. So I do understand I dont think he does it on purpose... The devil in the detail is that nominal prices dont really fall. Even though real prices do. To explain Nominal is the actual price not adjusted for inflation. Real prices are those adjusted for inflation or deflation. What real prices actually mean is that if Nominal price for a average house is R950k the Real price is R950k less inflation (say 5%) = R902500. But hang on what does Joe actually pay? Well R950k... The thing is the sticker prices dont change its just that adjusted for inflation houses seem cheaper. . .less by Brennan on October 15 2009, 09:07 Find this comment inappropriate? Report it

Fools Paradise You gotta love the pied piper and his band of goggle eyed followers who believe that it is good to invest in a house in lalaland on the tip of africa! I have got to try those rose tinted glasses! Where do I get them???? Any . .more suggestions....I see Jacob wears black sunnies, possibly he knows the answer? . .less by The wise man built his house ...where? on October 15 2009, 09:14 Find this comment inappropriate? Report it

devil in the details part 2 So the assumption is that inflation will erode away at the value of houses. Not that houses all of a sudden become cheaper. However with inflation wages should rise at the same rate of inflation. Making the price of houses more affordable. It is . .more my belief is that Nominal prices will stagnate for the next few years and that inflation is set to go hyperinflationary ie high double digits and this will erode the REAL prices making property more affordable as wages will need to increase substantially to keep up with this inflation whilst actual house sticker prices will remain stagnant thereby more people can buy at the level of R950k because their wages would have caught up. . .less by brennan on October 15 2009, 09:14 Find this comment inappropriate? Report it

CJ as per your graph here are the nominal prices for those years Based on ABSA nominal prices: 1978 - R25 000 (bottom) as per CJs graph 1983 - R79 000 (peak) as per Cjs graph 1987- R82 000 (bottom) as per CJs graph So from bottom to bottom from 78 to 87 (9 years) sticker prices of houses . .more went up by 228%... ! But but you will say CJ... I did not allow for inflation... Of course I did not. But I can tell you inflation was not anywhere near 200% in those 9 years. . .less by brennan on October 15 2009, 09:31 Find this comment inappropriate? Report it

@wee willie wonker I believe you are understating your chart reading abilities www. Can be expect another posting before bedtime by your colleague wee willie winkie? by Tuscanite on October 15 2009, 09:35 Find this comment inappropriate? Report it

Beware of averages I accept that the average house price growth is down as CJ says and I will personally be surprised if the AVERAGE growth explodes to double digits anytime soon. However, having said that, those are the averages. From my experience there are . .more special properties that outperform the averages by far. For example, we recently transferred a Clifton property that was bought by the owner in Feb. 2005 for R7,2 million. The June 2009 selling price was R11,5 million. Not bad going given the current circumstances ! The point I'm making is that if you buy strategically, you should be able to out perform the averages. If you think about it, roughly half of the properties are above average anyway. Don't settle for an average price if you buy. Buy only if you find a spectacular bargain, otheriwse, leave it to some other buyer. Make that your motto in life and you will out perform the statistical averages. . .less by Conveyancer on October 15 2009, 10:09 Find this comment inappropriate? Report it

@Tuscanite I am sure we can. :-) by Wee willie wonker on October 15 2009, 10:34 Find this comment inappropriate? Report it

@Conveyancer My sentiments exactly, well put. by Joe average on October 15 2009, 10:45 Find this comment inappropriate? Report it

AVERAGES An average house at an average price does not exist. It is like the "average man" in law - just used to illustrate a point. When you buy a real house (not the average one) you can be picky and go for one that is in a good area. Just like Conveyancer said: . .more Strategically. . .less by SP on October 15 2009, 11:12 Find this comment inappropriate? Report it

Remember! One can get as technical as you want, but irrespective of inflationary preassures, et al, if unemployment rates remain high, Government officials remain corrupt, personal safety issues remain problematic, government spending remains unconstrained, et al, . .more then this will all eventually lead to a reduction in purchasing power and impact negatively on house prices. By the way the banks will presently talk property prices up as they are sitting with massive repossessed stocks, viz. dead capital. Rule of thumb, on auctions do not bid more than 50 to 60 % of the prevailing bond on the property - if you don't listen you do so at your peril!!! . .less by Zorba on October 15 2009, 13:17 Find this comment inappropriate? Report it

Average The average person has one testicle. Never aim for mediocracy. by Yoda on October 15 2009, 13:50 Find this comment inappropriate? Report it

@Yoda I suspect your IQ isn't much higher than your testicle count. by Frikkie on October 15 2009, 14:02 Find this comment inappropriate? Report it

Banks not auctioning In my view, the only reason we are seeing this tiny blip is because banks have elected to stop sending their distressed properties in mass to auction. They kakked themselves with the reality of a 40 - 60% drop in real price and quickly decided to go the . .more route of estate agents and PIP web listings. When they realise that the consumer is still screwed, and offers don't arrive on their PIP web listings, then they'll go back to the auctioneers and plead to offload. Then we will see reality again and prices will start falling, again. Just as CJ has said. . .less by propxchanja on October 15 2009, 14:55 Find this comment inappropriate? Report it

@propxchanja Interesting theory buddy, but can you back it up with facts or are you merely dabblin in conspiracy theories ? by Frikkie on October 15 2009, 15:30 Find this comment inappropriate? Report it

@propxchanga Doubt this is a "blip" as you suggest. But time, say about 6 months, will tell. by Sceptic on October 15 2009, 16:33 Find this comment inappropriate? Report it

@propxchanga In previous decades banks did not release many houses to auction. It would affect their mortgage book quality. In previous decades only people I recall getting bargains at property auctions were bank employee relatives and friends....however things have . .more improved since those bad days...right? . .less by Tuscanite on October 15 2009, 17:08 Find this comment inappropriate? Report it

Thanks for the "real price" lecture prof Brennan This is a real estate forum so I think most of us are up to speed with such basics. What my real price graph shows brilliantly is how over valued or under valued houses are. Presently, if you ignore the last 2 years, then they are more overvalued . .more than they have been for 40 years. In the next few years to come, compared to people's salaries, they will become 60% cheaper. . .less by CJ Says on October 15 2009, 18:07 Find this comment inappropriate? Report it

@cj says What about food CJ Says? Will that become 60% cheaper compared to peoples salaries? Or cars 60% cheaper? by Tuscanite on October 15 2009, 19:11 Find this comment inappropriate? Report it

Fill me in I failed maths at school so maybe this is a lank dof question, but doesn't that blurry little graph show pretty much no decline in prices? All I see is a gradually increasing and then gradually declining rate of increase. It only goes negative for a short . .more bit at the end, and then hardly reached -5%. So doesn't that mean that if we have had a bubble, that it hasn't even started to pop? Again, apologies if this is Standard Grade talk from me, but I am curious. . .less by Chucky on October 15 2009, 20:29 Find this comment inappropriate? Report it

I am with Chucky, my lower grade math tells me that If prices are going to stay about the same as they are now and that compared to peoples salaries houses will become 60% cheaper I can only assume these peoples will get a 60% wage increase. And for the bosses to give us 60% more wages inflation will need . .more to be 60% higher? If that is da case why not buy now and at least start paying off some of the debt. Like the guy says houses got more expensive even during da crash 1978 - R25 000 (bottom) as per CJs graph 1983 - R79 000 (peak) as per Cjs graph 1987- R82 000 (bottom) as per CJs graph why ? please explain to me I got lower grade math. . .less by Simple Simon on October 15 2009, 23:05 Find this comment inappropriate? Report it

You really don't have to hide behind multiple names Brennan Your premise is quite true. Give me static house prices and 60% inflation and we are there. Down 60% real. Right, so we have minus 2% inflation this time next year, 0% the year after, maybe 2% the year after. Great, so 3 years have passed, . .more salaries are the same, house prices are the same and ... damn ... we still haven't got any nearer to that 60% fall. This is frustrating because in all the previous busts we had this initial big fall in real prices for a few years. Now what else could happen to make that come to pass ... lets think ... big lightbulb appears ... got it ... so simple really... NOMINAL HOUSE PRICES MUST FALL !!!!! For the time being there is no inflation around to save you like there was in previous crashes. Indeed, this very morning Bill Bonner's letter welcomed the globe to deflation. In the US even salaries are falling. Without inflation you need house price falls to get that 60% real loss. Hope that helps Bren my boy - don't worry, I've got used to you being a slow learner. Just try and pay attention a bit more. And stop hiding under false identities. We all accept that you are a bit dim so don't be timid and just go ahead and use your own name. Bladdy hell, one minute the lad is preaching to us and the next he becomes the school idiot. . .less by CJ Says on October 16 2009, 01:35 Find this comment inappropriate? Report it

@ Chucky I appreciate, graphs might not appear so obvious to some as they do to me. The blurry graph above shows the percentage house price change each year from 12 months previously of an average house. All the lenders have slight variations because they . .more all calculate the house price changes slightly differently. Now if that house goes up or down at the same rate as inflation, then relative to everything else like salaries, it is the same price. If your salary and house price double, then in real terms it is the same price. If it cost 10 times your salary last year then it will still cost ten times your salary. Similarly, just because your salary has doubled, doesn't mean your you are twice as rich. Your spending power remains the same. So the real house price change is the average house price change minus the years inflation. So coming back to my graph, you start off with an average house worth 100 unit. Each subsequent year the real average changes that occurred are added to the previous years figures. In the perfect world prices go up exactly with inflation. So every year would remain 100. It would be a flat line. If prices go up higher than inflation then the graph rises. Lower than inflation, the graph drops. Inflation confuses the issue. These prices are "real" because they reveal the true reality of what is happening. . .less by CJ Says on October 16 2009, 02:04 Find this comment inappropriate? Report it

In conclusion Chucky The 40 year graph shows that around 90 is the place the graph want to go up and down around. Sometimes it will go up and become overvalued. It then has to return, usually overshooting a bit past the norm on the way down. Some years it lingers below 90 and . .more that is when houses are undervalued. Our recent peak went up to 211. It should be at 90 so it has risen 120% more than it should have. That has to go. That is what is presently happening. We need prices to fall substantially LESS than the inflation rate each year to bring that graph down. Much of this move traditionally happens in the first 3 or 4 years. 1.5 years have passed since the peak. We have dropped from 211 to 180. We now have to drop to at least 83. Inflation is heading for zero so the only way for that to happen is to get decent nominal house price falls (these are the prices that appear in adverts etc). So if inflation is minus 2% and house prices fall 12% then that will get us 10% lower - that takes care of the first 10% of the 54% needed to get us down to 83. Hope that helps anyone who was getting confused. . .less by CJ Says on October 16 2009, 02:20 Find this comment inappropriate? Report it

graph hello i believe this isnt a very approprite graph that shows vital and usful infomation! by Luanne on October 16 2009, 03:46 Find this comment inappropriate? Report it

@CJ Copy all of your posts... ...and put it into a book, and name it "How I missed the boat", or maybe "How to misinterpret a graph", what about "100 ways to beleive the little voices in your head" I strongly beleive you have some type of disorder! SEEK PROFESSIONAL . .more HELP!!!!! . .less by NRWB on October 16 2009, 06:49 Find this comment inappropriate? Report it

graphs and usefulness Graphs are like those ink blots used during psychological tests. In this instance it helps everyone understand the underlying confirmation bias from the many varied interpretations of the limited data set. Willie wonker (above) give some good points. . .more Maybe we should study all Jungian psychology with its emphasis on dream, myth, and folklore to better understand the graphs....Graphs do however look pretty and visual images do influence emotional response. Influencing perceptions through data visualizations of the same data set is an art, but some bears are still at the colour by numbers and join the dots stage... . .less by Tuscanite on October 16 2009, 07:06 Find this comment inappropriate? Report it

little voices in CJ's head Dont be paranoid CJ.. calm down and take a few deep breaths... We are not all out to get you and we are not all the same big bad monster. But perhaps not, perhaps I am Chucky and NRWB too.... you ever know. Or perhaps I am just me.. . .more LOL There are 2 assumptions you need to make and they are BOTH wrong : 1. That Nominal Prices must fall. History does NOT show this you are a man of historical data so SHOW me where prices have fallen in NOMINAL terms above 15% ? 2. That we are in deflation. Stats SA tells me that inflation is at 5%. Thats inflation and thats a fact. The day that inflation is -1% then only will it be deflation. Yes inflation has slowed but its still inflation. So do prove me wrong I want facts that show which year we had nominal prices fall by 15% or more and stats SA data to reflect that we are in deflation. You cant can you? game/ set/ match I tell you.....Its not that I like been right and I do ! Its the sad part that you are heading to the poor house. or is it the mad house? . .less by Brennan on October 16 2009, 07:44 Find this comment inappropriate? Report it

@ Simple Simon Thats what I have been trying to explain to CJ, but he does not understand. But next time you quote me please put my work in quotes" " and give me reference for my work or else its plagiarism buddy ! by Brennan on October 16 2009, 07:50 Find this comment inappropriate? Report it

Beeen talking to yousrself late at night again Cj, aka Chucky aka SS? And this from one that states he doesn't use multiple personas. Oh well, it must get lonely out there in cyber world late at night, so we understand. Never mind, you always have yourself to keep you company. by Mass debator on October 16 2009, 07:59 Find this comment inappropriate? Report it

@Tuscanite Maybe we need a snap lesson on Graph Reading for Bears 101? by Wee willie wonker on October 16 2009, 08:09 Find this comment inappropriate? Report it

Easy stuff Brennan First, it seems you agree that we need to drop 60% real. I mean the graph doesn't lie. It HAS to happen. The big question is HOW this is going to happen. You think inflation will kick in and save you like those previous times. The small problem . .more with this theory is that the world has been plunged into deflation. The inflation is just not there to save you. But, but, but, we have 5% you wimper. Yes indeed, for the PREVIOUS year the CPI has increased 5%. But that is not what we want to know. We want to know what the NEXT years figure will be. And all evidence I am looking at shows that we will go to zero or negative. The evidence being - Global deflation in most major countries already, a strong rand, strong signals that oil is about to drop, PPI in SA in deflation already, as are our imported and exported commodities, the year on year food basket in argus is negative and looks like it will be minus 10% in 2 months time, the inflation graph is in a downward channel which has a target of minus 2% ... all in all, pretty compelling evidence in my eyes. So we need some serious negative real drops over the next few years and it doesn't look like inflation will help us - what's left ? Quite simple, house price drops. There is no other way. The huge nominal increases during the boom will be matched by equally huge drops. . .less by CJ Says on October 16 2009, 09:55 Find this comment inappropriate? Report it

@ NRWB Look mate, if you want to dispute any part of my analysis, feel free to point out where the argument is flawed. If you can't do that then I assume that either you don't understand or that you can't. If that is the case then my . .more suggestion is to remove yourself from the debate because frankly, you have nothing to contribute. . .less by CJ Says on October 16 2009, 10:02 Find this comment inappropriate? Report it

Deflation next year you say? Me thinks not Cj old boy. Again, watch out about extrapolating current trends too far into the future, ala HP growth. Because PPI is currently negative and there is a current drop in inflation rate of foodstuffs (note, generally not an actual . .more drop in cost, just a slowing of the increase there of), this bodes well for low inflation for a period. But this does not mean things can rapidly change, as we have seen in the past. The Rand is at new highs, the US dorra is weak, oil is low, but things change. Rapidly. So to extend those channels and trend lines too far out is putting it out there to take one on the chin, to be frank. As they say in the classics, the only thing that is certain is uncertainty. . .less by Wee willie wonker the pseudo-wannabe-(likeCjsays)-chartist on October 16 2009, 11:15 Find this comment inappropriate? Report it

@ No CJ you are twisting and turning and not answering the question.. as usual! I am not agreeing that we need to drop 60%. What I am saying in order for you to be right certain things need to happen. This goes back to my post where I say in order for a 60% REAL drop to happen we need : 1. Nominal prices to drop drastically . .more and that history does not support that theory. So unless you show me facts that this has happened in previous crashes why can we say "this time its different" ? 2. Inflation to run out of control. Deflation wont do it only rampant inflation will give you those 60% REAL price declines you need. Reality is that nominal prices dont fall in the real world the data supports that even in down cycles nominal prices creep up. There are many reasons for this and a major one is that property is backed by bank finance and when the banks equity and security comes under threat the Reserve bank drops rates as well as banks drop their lending criteria standards. We are seeing this with all the major banks slowly rolling out 100% loans to buyers As I have said the bottom would have passed once banks start issuing 100% loans again. To be honest it has started a bit sooner than I was expecting but its happening. Do I want prices to drop 60% sure. I would love it to happen but nominally it wont of that I will bet you anything I own. One needs to be in lala land to think nominal prices will drop 60% . .less by brennan on October 16 2009, 11:16 Find this comment inappropriate? Report it

Now we know why you are co confussed... .....Your Australian, "mate"!!!! Listen "mate", dont talk rubish, I have argued with you extensively on your models and graphs. I have even given you a long term scenario where I compared renting vs owning.....but you failed to answer....I . .more assumed its because you were cornered! To be honest I am tired of debating your arguments when you cannot flaw mine. What about naming your book: "My biggest fan is a sheep!" . .less by NRWB on October 16 2009, 11:42 Find this comment inappropriate? Report it

To be honest I am tired of debating your arguments when you cannot flaw mine. To be honest I am tired of debating your arguments when you cannot flaw mine. So true..... NRWB so true ! by To be honest I am tired of debating your arguments when you cannot flaw mine. on October 16 2009, 11:55 Find this comment inappropriate? Report it

All economic models are fatally flawed Because they do not encapsulate all variables in life and are bounded by the assumptions made. Data is imperfect, interpretation is imperfect and as per our recent new addition Willie Wonker...the only thing that is certain is the presence of uncertainty. by Tuscanite on October 16 2009, 13:30 Find this comment inappropriate? Report it

Jisterday, ask a simple question... ...and you get accused of being CJ Says! Thank for the reply CJ, I really just wanted to know about the Lightstone graph. Your graph seems to make sense IF AND ONLY IF you believe that this thing will play out normally. I don't believe it will. I think . .more the Tories and Obama are going to chuck everything into keeping house prices up - pensions plans, infrastructure spending, their own currencies, you name it. This bubble started with all the blinkered specuvestors saying "This time it's different!", and now it's come full circle: this time it really is different because property is too big a chunk of "wealth" to fail. They bailed out the banksters, the bonuses are flowing again, so why should anything be different with property? . .less by Chucky on October 16 2009, 16:13 Find this comment inappropriate? Report it

Tories and Obama are too late to keep prices up Prices in the US and UK have dropped by about one third to a half, about the same as our SA auction market, which reflects the real price of property in SA, and not the 'gullible SA willing to pay price' touted by our desperate advocates at Realestateweb, . .more and their equally desperate followers. Wait for interest rates to turn and our little "property is bouncing back" crowd could be wrong-footed. The bias of Realestateweb is so palpable its embarrassing, which make me really worried about the commercial realestate market.. . .less by Amused on October 18 2009, 05:20 Find this comment inappropriate? Report it

@ Chucky It's going to be interesting to see how the mood changes when the equity market turns down again. Another major signal that the long awaited equity turn down is imminent has just kicked in. There is talk it could drop another 50%. That might put a damper . .more to the "imminent recovery" talk. The US house market has been allowed to fall without too much hindrance. In the UK, however, you have an unpopular Prime minister who realises that if housing plunges then it is all over for him. I agree, we could see all sorts of shenanigans over there to delay the inevitable. In SA, the denial is just bizarre. As my real price chart plainly shows, house prices have only been so overpriced compared to salaries 2 other times in the last 40 years. What would anyone even remotely think that we are returning to a recovery. I mean, we are still 14% higher than the previous booms peak and more than twice as expensive, compared to salaries, than we were at the last bottom. Bill Bonner's newsletter this week announced that the world was in deflation. Even salaries in the US are falling. Unemployment amongst the youth is 18%. I am not seeing signs that inflation, for the moment, is coming to the rescue. . .less by CJ Says on October 18 2009, 14:13 Find this comment inappropriate? Report it

Lester Mathews in S Times Interesting comment by Lester Mathews in the S Times - he was advising against holidays homes - his definition of a "homeowner" was someone who spends a lot of time visiting hardwars stores. He mentioned some expert who reckons housing . .more corrections take at least 6 years - can't be bothered to look up the name but I agree with what the guy says. The present 1.5 years from peak is simply not nearly enough time as some on this forum seem to think. . .less by CJ Says on October 18 2009, 14:20 Find this comment inappropriate? Report it

Hmm..things that bad? Must be if you end up quoting Sunday Times AND Lester Mathews AND Holiday homes... Any comments on how things are in Kenton-on Sea? Any tips on planning? by Tuscanite on October 18 2009, 17:09 Find this comment inappropriate? Report it

CJ, keep reading the Sunday Times and pay my rent... As long as you continue paying my bond, levies and rates, you can read all the newspapers and graphs that you want. by CJ's Landlord on October 19 2009, 15:32 Find this comment inappropriate? Report it

No problems Landlord I'll keep paying the 11000 rent - you be sure to keep paying the 25,000 interest to the bank - thanks again for taking the pain - you're a real trooper. by CJ Says on October 20 2009, 00:17 Find this comment inappropriate? Report it

CJ is correct as always, he didn't stumble on to this site yesterday his past predictions have ben spot on. I think he is being optomistic in his predictions, I believe it's going to be worse than he predicts. I am just too respectfull to dissagree. When a 500 store strong chain like Steers reduces prices when input costs . .more are rising you can be sure as other chains and stors follow suit trying to increase business, combined with the other economic factors and reasons deflation is on the way. Plus unemployment, a house flooded market, lower salary or no salary increases the prices of homes as well as the sales must drop. Plus go check the insolvency declarations across all newspapers. It will get worse long before it gets better. . .less by Basil on October 20 2009, 10:15 Find this comment inappropriate? Report it

Basil is actually CJ CJ are you still talking to yourself? Come on now mate stop it ! Trying to convince us that you are being conservative. We dont believe you mate ! by Simple Simon says on October 20 2009, 19:10 Find this comment inappropriate? Report it

@Simple Simon If he ain't Cj he certainly is his biggest fan. What a trooper, as Cj would say. by Fred on October 20 2009, 20:12 Find this comment inappropriate? Report it

CJ says = Malema of property We have our own Julius on here by Trump on October 21 2009, 09:33 Find this comment inappropriate? Report it

CJ says = Malema of property We have our own Julius on here by Trump on October 21 2009, 09:33 Find this comment inappropriate? Report it

Trump you capitalist pig comrade julius is not a clown. CJ well that i dont know he may be i cant be sure by Stalin on October 21 2009, 14:22 Find this comment inappropriate? Report it

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