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Sean Wheller
Aug 09 2004
It's deja vu all over again
Monday, 09 August 2004

Yogi Berra, a former major league baseball player, manager and member of the "Baseball Hall of Fame" said some wonderfully colorful things. Pondering the South Africa property market brings to mind the Yogi quote, "It's deja vu all over again."

For any of you who where a part of the technology boom prior to the year 2000, I am sure you will agree that the parties were better before the end of the millennium. After the technology boom bubble bust the property market started to accend. Judging by last years histeria, I guess the bulls left the technology sector where everything is virtual and decided to try something more tangible. Thankfully, it now seems that a sense of reality is starting to take a hold of the property market, but the bulls don't want the property party to end.

For months now the top analysts have been denying any notion that the property market in South Africa is in a bubble. We're heard some 'corker' excuses why not, but nobody dared to say that property was simply becoming unaffordable.

It's almost as though the institutions they work for forbade them some speaking the truth. But you can only push a non-truth so far before you start to lose credability yourself. Finally one analyst, Dr Cees Bruggemans, Chief Economist First National Bank, has dared to say what should have been said by industry leaders months ago,
"The windfall that brought Rand recovery and then firmness during 2002-2006 is history (R.I.P.)"

Amen for that.

Seems however that the bulls in the market are still living in 'neverland' and remain hooked on finding the last fool in the queue of buyers. The message to the market is confused. The bulls continue to feed the optimism of sellers and the hopes of speculators looking for their next big cash injection.

For property speculators who are subsidizing their property portfolios with a view to a big exit. I want to wish you well, but you may find that stock harder to move than you think. With interest rates on the rize those subsidies are only going to grow.

Now that the property market is on the decline, perhaps we can finally get some real investing done. 

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Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved.

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