So, during the last week of May, foreigners were nett sellers of our bonds, to the tune of just over R6 billion. On Thursday, 30 May, foreigners sold a nett R5.5 billion of our bonds. To put this into perspective, this was the biggest one-day sell-off since September 2011. This led to significant bond market weakness and the subsequent jump in long bond yields (R186) from 7.055% to 7.57%.
Due to the high positive correlation between property and bonds, property yields followed suit and rose from 5.81% to 6.34%. This represented a percentage point jump of 9.21.
So, due to the inverse relationship between property yields and property prices, as can be seen in the graph below, property prices plummeted.
Property prices dropped a massive 8.25% during the last week of May. This obviously has a knock-on effect on property unit trust funds. The worst-performing property unit trust over the last week of May lost 10.88%. The best-performing property fund lost 4.57% and the category average retuned -8.57%.
The SA Listed Property Index has subsequently recovered "some" of the above-mentioned losses. The index is up 2.63% since 31 May, 2013.
