Saturday Open Thread

It's Open Thread time!

Rent Vs Buy: Cape Town CBD - You Say Urgent But I Don't Think You Mean It

Here's a 2 bedroomed apartment in the Cape Town CBD on sale for R1 400 000 (hat tip to reader AS for the link), with a current rental income of R6 000/month. This sale is listed as "urgent" but when you consider the terrible rental yields you can expect I don't think they quite mean it. Here's the payment and yield graph:

So with a 100% bond the difference between rental and bond payment is R-12435, over twice the rental itself. You only break even on cash flow if you put down over 2/3 depost (R944 346) and even with a 50% deposit you still need 2.76% capital appreciation to not lose any money. And this is with the gross rental, deduct maintenance, rates, levies and vacancy costs and the numbers get worse.

When It Doesn't Sell, It's Time To Beg

We last saw this Green Point apartment in May 2008. It was on the market for R1 895 000 with a tenant paying R8 500/rent.

Now the seller is asking for a buyer to just take over his bond and take it off his hands for R1 550 000.

More Bank Repos Struggling To Sell - Milnerton

Reader TA sent in a link to this bank repossessed house in Milnerton on sale for R1 300 000. It was listed in December 2008 as on sale for R1 650 000. According to TA it was initially listed at R1 900 000, which means it's dropped R600 000 in price, a 31.5% drop in asking price.

Looking at the pictures on the latest ad, it seems it's never been occupied.

A John Loos Retrospective: 2006 - 2009

Here's some quotes from chief FNB property shill John Loos as collected by Reader Bean Counter:

"I think later in the decade towards 2008, house price inflation will start to pick up." – June 2006

“So I don't see the end of house-price inflation for the country as a whole, and I think that by about next year you could start seeing a recovery in house-price inflation after some further decline this year...I think commercial property returns are going to be excellent for the rest of the decade.” – April 2007

“I expect to see a gradual uptick in demand for residential property towards the middle of the year...I don't think one should probably wait much longer. If one's holding out for price deflation I think you're probably going to be disappointed... I don't think it's a situation where we're going to see price deflation on a significant scale.” – February 2008

“You mustn’t count residential property out, from a point of view of getting into the market. The good time to get into residential property is probably just about here, as residential is probably near the bottom of the cycle.” – September 2008

“Yes, I’m afraid the whole global crisis has gone substantially further than most of us expected - it’s taken the property downturn that started back in 2004 to worse levels, and we’re into price deflation and there’s not a lot we can do about the situation as to where we are.” -- Business Day Summit business show transcript, January 13 2009

Remember folks our pal Loos works for the bank first. What they need to hear he tells them.

Saturday Open Thread

Saturday Open Thread time is here!

When Bank Repos Don't Sell - Milnerton

You know the market is tough when even bank repos don't sell. Here's two ads for the same 3 bedroomed flat in a block called Nautica in Milnerton, one from the end of October 2008 and one from today.

• Oct 2008 - BANK REPO - MILNERON, NAUTICA - R1 700 000


• Jan 2009 - MILNERTON / NAUTICA - BANK REPO - R1 700 000

You'll notice the price has not changed even though it's supposedly negotiable and supposedly below market value.

Buy My House And Let Me Rent From You - Mowbray

With price growth stagnating (or decreasing), bond payments at record highs and rents staying pretty level some people seem to be deciding it's in their financial best interest to sell their house and rent it back:

3 bedroom house for sale. wooden floors in most of the rooms and built in cupboard in 2 of the rooms. fitted kitched, large grounds with access through the garage(remote). Owner is prepared to rent the house for 6 months to 1 year.

Saturday Open Thread

Last Open Thread of the holidays before the regular schedule picks up again.

Saturday Open Thread

The first open thread and the kick off to 2009!