South Africa vs Zimbabwe real estate
It seems like Afro-Pessimism is so yesterday. Much speculation is been made about Africa as a sleeping giant with potential growth and large unreported real economies. What about Saffer-Pessimism - that is surely alive and well.
If there is any truth in reports that the average SA property is R930k and the average Zimbabwe property is R1,5m where does the opportunity really lie?
The reason we aren't all seeing this obvious discrepancy in property values is because of the "the grass is always greener on the other side" syndrome.
After all the isolation Previously Advantaged South Africans are still thoroughly obsessed with investing offshore, despite the last 15 years showing that Local is Lekka! It is weird that the world considers us capable of hosting the World Cup whilst locals spend their lives trying to convince the World we can't.
Now Mugabe might have the flu and everyone thinks that Zimbabwe must surely be the place to buy some property. I wonder what the chances are that Zimbabwe will ever host the World Cup, or how long it will take for any African city to host anything again. South Africa was chosen and instead of celebrating the last four years many have been postulating potential limitations. So why don't South Africans think this way when things look positive here at home?
Never mind the stats; I have a Zimbabwean friend who lives in Rosettenville where the average house is about R500k. In Zimbabwe she has a similar house worth R800k. Some people are so blinded they do not see the irony. Having been fulltime involved with investing the last 16 years I have found that sentiment is actually very powerful.
I met an Irish guy recently who, after an initial brief holiday brought him here, has lived here for 15 years. The most refreshing thing about the conversation was not all the good points he raised about SA, but that after the 30 minutes he had not run down his home country. Rather refreshing.
More mortgage finance for the future
As can be seen by the banks' decisions to grant bonds covering more of a property's value, it only takes one to do it and within two weeks they all do the same.
In the next three years I predict that a bank is going to change to 35 or 40% on a home for someone who spends less than 10% on transportation, a concept the NCA definitely facilitates. When it happens the most interesting thing is not what will happen to the property market but rather how long it will take for the other banks to follow.
For more on this topic, read: "Keep your money in SA property" - Lew Geffen.
More about the Realestateweb guest expert: Wayne Lee started buying property in 1993 after discovering the internal rate of return calculation in his B-Comm studies. After assisting a few friends and family in some purchases he realised there was a market in assisting people with the purchase and management of properties. He founded Sirius in 1998.
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Other articles by Wayne Lee include:
How Robert Kiyosaki created the sub-prime crisis
Property finance: What bank managers should do
Property developments: A hornet's nest
You don't need an estate agent to tell you what a 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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Comments
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by NRWB on October 22 2009, 08:33
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zzzzzzzzzzzzzzzzzzzzzz
by Johnny on October 22 2009, 09:39
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Not according to on line offers of homes
by ea on October 22 2009, 10:41
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Because EVERYTHING is more expensive in Zimbabwe due to the currency crisis they have had and the resultant Hyperinflation.
In such an environment the cost of sort after commodities go through the roof, ie petrol, food, booze, smokes, property, . .more
by Brennan on October 22 2009, 12:12
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Although Zims inflation has dropped to almost 0 since the adoption of the $, I agree with your sentiments - when the inflation monster eventually comes, you want to be holding lots of hard assets, fewer shares and no cash.
by CT Landlord on October 22 2009, 13:02
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Sure... it has dropped.... only because they have abandoned their currency ie the ZIM dollar.
Hyperinflation is always caused by a monetary crisis and always results in the currency been abandoned.
by brennan on October 22 2009, 15:22
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Nothing wrong with holding shares in hyperinflation. In 2007 Zim index was up some 300.000% and inflation was some 24.000%. If you know how to use leverage in trading then you can profit even more.
Brenan nice comment there but we expect that . .more
by Igor on October 23 2009, 09:55
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You are welcome to trade the Zim market.
My family had investments up there and the only ones that are worth anything today are property, which can now be sold for US$. Businesses were devastated, as were their share prices. No thanks.
by CT Landlord on October 23 2009, 13:24
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http://tinyurl.com/mm4uet
Good old Wayne started Syrius in 1998, a year from the real bottom of 73 ... he then rode it to the top at 211 on the graph, and he now thinks he is a master of the universe.
Hands up those who see the flaw in . .more
by CJ Says on October 23 2009, 19:48
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Bought my first 3 on a bicycle in 1993 and had many by 2000, but no growth to that point.
Never bought for growth in the first place CJ, so your indeces are useless.
You keep leaving out the real spinner !!!!!!
The indeces . .more
by Wayne on October 23 2009, 22:49
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It has always done that after all the other previous booms ?
You are right, roll on 2018 - it will probably WILL be a great time to buy.
In the same way as NOW is a terrible time to buy.
by CJ Says on October 24 2009, 00:42
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Has a Theorist Generalist Pessimist EVER made money.
NEVER - Go do the research CJ.
That should keep you busy for another 5 years in the lab of doing nothing.
by Wayne on October 24 2009, 10:36
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That's pretty negative thinking. My sunny optimistic disposition knows that it will be getting cheaper.
In past years some people bought dot coms as they rocketed. When "pessimists" pointed out that it couldn't last they replied, look how rich . .more
by CJ Says on October 24 2009, 19:01
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You talk Rubbish, check the internet, I would have been able to buy a house in Zimbabwe for R1000.00, Correct 1K. There currency went to pot and so did the price of houses. Since they moved to the US Dollar, prices have increased. I agree with some . .more
by Kevin Green on October 24 2009, 20:45
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properties have gone 30-40% down in Zim but great potential lies in this sleeping Afro giant its worth investing that side i think...
by Joy Mahute on February 24 2010, 10:58
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