One of these days in the not too distant future I am going to have to sell my house and move into somewhere smaller, more manageable and with the possibility of some sort of frail-care facility near at hand.

I like to think that day is far off, but both the Mrs and I are either side of the big seven zero and one must plan for such things as best one can. Fortunately we are both in good health at the moment, but the fickle finger of fate can strike at any moment and I am acutely aware of how life changing illness can be, both for the patient and for the supporting family. It doesn’t help to read the obituaries of those who have died younger from some dreadful condition because all that does is to convince you that you’re living on borrowed time and are long overdue for a meeting with the grim reaper.

We don’t have children who can look after us in our dotage, but even if we did there is no reason to think that their ageing parents would become a priority. In fact, most of our contemporaries have children who have decided that South Africa offers them and their families a dismal future and have transferred their professional skills to friendlier shores.

In the dark days of apartheid it was migrant labourers in hostels who were separated from their families. In an ironic twist of fate, it is now an ageing white population who have been forced by circumstance to be separated from their families. While it is comforting to see one’s children prosper and succeed in places like the UK, Europe, Dubai or Australia, I know of nobody who would not rather have their children or grandchildren within visiting distance.

The problem with selling my house and making arrangements for my declining years is that it simply can’t be done. I have friends who have the same dilemma and have decided that it’s time to downsize as failing eyesight and proximity to shops dictate their next move, except that they can’t sell their home. They’ve found a two bedroom apartment that they would like to buy but they first need the funds freed up from the sale of their current house. This has left both of them extremely stressed and anxious, neither of those conditions being conducive to lasting good health.

The truth is that the property market, even in the Western Cape, is as dead as a Monty Python parrot. It’s been dead for over a year now and the number of people hoping to make a living as an estate agent has fallen dramatically. We are frequently assured that this is just part of the property cycle and that things will improve but I’m not so sure. I am aware of several homes that have been on the market for well over a year and have dropped their asking price significantly only to be met with zero interest. It seems that nobody is even in the mood for a bargain.

This current state of the property market is the worst I have ever seen and is worrying for a number of reasons. The first and obvious reason is that we tend to believe that the property market is a great investment and that property prices will rise given time. That has been true in the past but no longer applies. I would be very lucky indeed to get back the price I paid for my house six years ago. Fortunately I have no bond but if you are borrowing money to fund a depreciating asset then you really do have problems.

The second reason is that we all assumed that there would always be a market for property and that, therefore, there would be some degree of liquidity. So if I wanted to sell my house, while I might not get the fanciful asking price I put on it I would at least get a sensible offer a few hundred thousand rands below. Today it seems there is no liquidity because sellers way outnumber buyers in the market. This week I caught the end of a conversation on radio telling how estate agents in our area are refusing to take on any more properties because they already have so much unsold stock. It used to be the case that the longer a house was on the market the more you should avoid it on the suspicion that there must be something wrong with it. That rule no longer applies.

The flatness of the market may be due to many factors but emigration has to be one of them. Most people who have transferable skills will have explored the possibility of moving abroad. Many have already done so, taking new sets of exams which will give them professional qualifications in their country of choice. These relatively high net worth individuals would have been buyers of property in SA in the normal course of events but the ANC’s proposed land policies and the hostility shown to those with a white skin have turned them into net sellers.

New foreign buyers have been discouraged by the requirement to leave the country after 90 days and return on a new visa. Quite how that is supposed to boost the economy of the Western Cape completely escapes me. So what are those who already own property in SA doing? They’re selling if they can and taking their spending power elsewhere obviously. Some have already decided to cut their losses and are distress-selling their properties for prices which would have seemed absurdly low a year ago. The thinking is that the longer they wait the worse the exchange rate will be after our inevitable downgrade to junk status so rather get the money out asap. The effect of that is to drag down other property prices in the same area.

Now let’s assume the economy continues to decline with no growth and rising unemployment. What is likely to happen is that many of those with bonds may not be able to meet their monthly repayments as business conditions continue to worsen and more people are laid off. The banks who have lent that money would normally be able to recoup it by a forced sale of the property. The chances are that those properties would eventually sell (in current market conditions) at well below the amount lent, and that’s how banking collapses happen. Watch this space.

The views of the writer are not necessarily the views of the IRR.

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