I have the keys to a friends "holiday" apartment in Blouberg. He bought it last year (off plan) in Sandy Bay, Athens Road, Blouberg (300m from the beach).
Stats are as follows:
- 35m2
- Bed in lounge (folds into cupboard)
- 1 open parking bay
He bought it for... wait for it... R650k! (I bought my apartment, 2 bed, 65m2 Royal Ascot, around the same time, and paid R630k).
The apartment is costing him R8,500 every month, and has been empty for the past 9 months! He has advertised it online for short term, long term and holiday homes, and no-one is interested in it (too small, and they prefer a seperate bedroom).
Up until September 2008, the agents were still selling the already-built apartments "off plan" AND were giving a FREE car with each purchase! Some of those apartments are still empty and the building has been standing for just over a year.
Another story:
A friend bought a place last year August in Blouberg. Its called The Sands, just around the corner from the Cheri car dealership at the beach. Stats are as follows:
- 55m2
- 2 bedroom (second room can barely fit a double bed)
- 1 open and 1 undercover parking
- 5m2 store room in basement
She bought it for... wait for it... R780k. After buying it, she had some structural issues. (Whenever it rains, the slabs from the balconies above, literally starts falling down in chunks (of concrete)). She took this up with the body corporate, etc only to find out that the building structure was never approved by the municipality. Her repayments are R9,000 per month. Spoke with her the other day and she and her husband are saving up a lumpsum, so that they can sell it at a lower prices, make a loss, and use the lumpsum to fill in the balance of what they would owe the bank!
And this folks is why Blouberg/Table View is the divorce capital of South Africa.
6 comments:
Eina!
That is also the reason why we will not see the full picture until late 2009. People are finding ways to cope..... but time erodes all cash flow.
Ouch!
Why is anyone surprised ?
Not all property is an investment, just cos you buying it from a developer does not mean you will get a good return on it. Infact i believe that most properties from a developer will not bring any return to you.
Those with money are in a different risk / reward game when it comes to property.
I always say if you wont live there why would someone else, when taking risk could you and you family move into the place if you had problems paying it off ? So many people answer no ways to that, so if ones gut says something is not liveable why would someone think another would pay to buy it.
Property is not for everyone.
The majority of South Africans are unfortunately very financially illiterate.
Most of the past boom in prices was as a result of millions of people buying at inflated prices just because they could qualify for a bond. Most of them bought blindly at any price possible in order to get on the ladder.
Now with the bust in full swing, most of them are shocked to find out that they are sitting in negative equity.
What amazes me and being in the property game, there are loads of homeowners who cannot understand what negative equity is and when it is explained to them, deny that they are in that position.
Robben Island should be re-opened and the majority of developers and estate agents should be put to hard labour out there... at least that way they will contribute something useful to society.
It amazes me as well how financially illiterate South Africans are. Easy credit made for some stupendously stupid decisions. I got out of property in 2005 as I saw this coming. Since then I still take one Sunday a month and go 'view' properties to keep current on what's really happening. I generally hang around a couple of benchmark properties and keep my mouth shut and my ears open...
Did you know that most people simply do not know how to value a property? They simply go along with the Agent Provocateur's mantra of 'position, position, position'. I am absolutely gobsmacked at how stupid people can be when they're spending money they haven't earned yet.
Thing is that I'm still seeing people paying in excess of R9k per sq/m for properties that were built for less than R5k per sq/m. That's a premium of 40% for the developer folks!
I mean, the basics are:
[1] Square meters under roof and square meters of the whole erf
[2] Finishings and quality of build
[3] Price per sq/m under roof relative to quality of finishings and actual building costs
[4] Only then do you consider position surely?
Why are people so stupid? Why pay debilitating amounts of money for pie-in-the-sky? Why don't people just do a few simple calculations and a bit of homework?
I suppose it's the same mass psychosis that causes people to simply not accept the concept of negative equity... well, reality will force the issue sooner than later
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