Capital Appreciation Clowns Revealed

This ad for a bachelor flat in Long Street on sale for R399 000 is indicative of how some people (Capital Appreciation Clowns as they've been christened on Realestateweb message boards) have been buying property and relying on nothing else but capital appreciation wheb buying property:

Bachelor flat on Long Street. Superb position. Keen tenants paying R3000 per month - it is a lower than average rental because we told them we were going to be selling. Selling at way under value. Our bond is R450000.00. Remax gave a written valuation saying we should be marketing the flat at R530000.00. Reasonable offers will be considered.

The bond is R450 000 with a tenant paying R3 000 a month, which means every month they're currently paying in R3 092 to cover the difference between the bond payment (R6 092) and the rent, and remember that's gross rental - after expenses like rates, levies and other costs decrease the net rental income.

But you say "The seller is a victim of high interest rates!" but even if we reduce interest rates to 10%, the record lows they reached a few years ago our the seller was still losing R1 342 a month from paying in the difference to the bond.

If the R450 000 bond is indicative of the purchase price of the apartment then we are looking at a potential 11% nominal price drop. Factor in inflation and the loss is closer to 20%.