Expect "Aggressive" Interest Rate Hikes

Ooops. Looks like local economists were caught napping again. Seems SA's trade deficit is worse than people were expecting... again!

This data shows that the structural imbalances remain very much intact but suggest that the South African Reserve Bank needs to hike more aggressively than we originally anticipated.

Okay we were expecting a 1%-2% rate hike by the end of the year before this news. Can we expect perhaps a 3% hike by the end of the year now?

Rent Vs. Buy Extravaganza!!!

Ok I haven't done this in a while so here's a whole smattering of Rent Vs. Buys!

First up. Woodbridge Island Milnerton. a 3 bedroomed townhouse rents for R4800 and sells for R1 570 000.

Down Payment	Monthly Cash Flow	ROI
100000	-10373	-124
300000	-8309	-33
500000	-6244	-15
700000	-4180	-7
900000	-2116	-3
1100000	-51	0
1300000	2013	2
1500000	4077	3

3% return! You'll be rich!

Next up 3 'investment opportunities' on the Atlantic seaboard. Here's an apartment that rents for R4500 (max) and is on the market for R850 000. What's the return like?

Down Payment	Monthly Cash Flow	ROI
100000	-3241	-39
200000	-2209	-13
300000	-1177	-5
400000	-145	0
500000	887	2
600000	1920	4
700000	2952	5
800000	3984	6

6%? Might as well put it in a fixed deposit and avoid the hassle of running after tenants.


Another apartment this time renting for R4000 a month till the end of January and on the market for R1 100 000. What kind of return can you expect?

Down Payment	Monthly Cash Flow	ROI
100000	-6322	-76
300000	-4258	-17
500000	-2193	-5
700000	-129	0
900000	1936	3
1100000	4000	4

Where do I sign up?!? And finally an apartment described as perfect for the world cup that is currently rents for R3200 but you can buy it for R625 000.

Down Payment	Monthly Cash Flow	ROI
100000	-2219	-27
200000	-1187	-7
300000	-155	-1
400000	878	3
500000	1910	5
600000	2942	6

Again at 6% probably our best bet, but with interest rates on the way up putting you R625 000 in a high yield fixed deposit ain't the stupidest move either.

Western Cape IOL Index

Rent Disparity

Here are a few ads posted in the Independent Group Classifieds:

CAMPS BAY Beautiful seaview, lux fully furn, 3 bedrms all en suite,
study, large kitchen, pool, R18 000. Avail imm. Phone 072 392 6794 (CAPE
ARGUS - 21/08/2006)

CAMPS BAY:3 bedrooms, bic, carpeted, small quiet & secure building. Suit
mature couple, R4 560. Garage R400. Permanent Trust 4259790 / 4254747,
a/h 072 369 8054 (CAPE ARGUS - 21/08/2006)

Century City The Island Club 2 bed units at R4500 p/m. 3 Beds at R6000
p/m, available at this award winning development. Gym, indoor pool and
outdoor pool available for exclsaive use of residents. Contact Claire on
5513354 or 0825606481. (CAPE ARGUS - 21/08/2006)

Century City Villa Italia and Bougain Villas 2 bed units at R4000 p/m. 3
Beds at R5500- R6000 p/m. Gym and heated pool facilities available at
Villa Italia. Clubhouse and braai facilities available at Bougain
Villas. Close proximity to Canal Walk and all other amenities offered at
Century City. Contact Michelle on 5513354 or 0833436805. (CAPE ARGUS -
21/08/2006)

Now notice that second Camps Bay listing. 3 Bedrooms for R4900. Now look at the first. I'm not sure if a pool and a nice view is worth an extra R13 000 a month.

Also look at the bottom two ads made up of 2 and 3 bed units in Century City for between 4000 and R6000 a month.

So a 3 bedroom apartment in Century city for R6000 where the closest attraction is a giant gaudy shopping center and huge junk food court and where it takes 40 minutes to get through the traffic to town. Or R4900 for a 3 bedroomed place in Camps where one of the best beaches in the world is just down the road, lined with loads of restaurants and town a 10 minute drive away.

Decisions... decisions..

Western Cape IOL Index

Financial Mail Articles Online

The Financial Mail has released their issue on the property crunch to the web. Check it out!

Western Cape IOL Index

This Week's Financial Mail Cover Story

PROPERTY CRUNCH

Bubble In Johannesburg

It's not just in Cape Town. Here' a report about Johannesburg's attempt to revitalise the inner city by building high price designer flats

Designer flats empty

Despite the perception that downtown, inner city living is fast becoming a preferred choice among Jo'burg's trendy set, owners of upmarket office-to-flat conversions are apparently battling to find tenants.

Property commentators say it's one thing for developers to sell high-end CBD products off-plan to buy-to-let investors - typically priced at between R10 000 and R15 000m² - but to let these units once completed is an entirely different matter.

Western Cape IOL Index

Reserve Bank Hikes Rates Again

Mboweni rings in another rate hike

As momentum from a consumer spending spree continues and inflationary pressures remain, South African reserve Bank governor Tito Mboweni announced a 0.5 percentage point hike in the central bank's repurchase rate to 8 percent on Thursday.

The rise in rates follows a surprise 0.5 percentage point hike - from 7 percent to 7.5 percent - on June 8, the first rate hike since September 2002, when the rate went from from 12.5 percent to 13.5 percent.