Observe the following snippet from this listing selling a loft apartment in Port Elizabeth. PE is usually outside of my interest area but his just perfectly illustrates the completely idiotic ideas that were rampant, and probably still are, during the bubble.This loft is already tenanted at +/- R2500 pcm, bond monthly installments +/- R4500 - you can therefore own the apartment and only have to pay in R2000 per month!!! Great Investment.
If you're paying in R2 000/month for an asset that is not increasing in value (and probably dropping in todays market), that dear readers, is not an investment; it is the very definition of liability.
6 comments:
So, how much do people think this place should go for? I wonder how much it was in the year 2000...I also wonder what the hell kind of jobs are out in PE!!!!
Yip, this is a jip.
When the market was booming (bubbling) I heard that much of the insanity was due to foreign investors. Can anyone tell me if this is true and to what degree it may be true? Will things go even more pear shaped once those Brits and Europeans HAVE to sell their SA vacay homes...thus flooding the market and ruining our economy further?
This place looks suspiciously like an apartment block on the main drag in South-end as you head towards the harbour? But if it is in Westering then it's to heck and gone and has a nice 'sub-prime' neighbourhood right next door.
Here are some gems right from the Fed's Feb09 Beige Book for the first district, Boston:
Source: http://msnbcmedia.msn.com/i/CNBC/Sections/News_And_Analysis/_News/__EDIT%20Englewood%20Cliffs/fullreport20090304.pdf
Commercial Real Estate
The commercial real estate market showed signs of further deterioration throughout the region in recent weeks. Contacts in Boston drew attention to the fact that rents are falling rapidly across the metropolitan area, for both office and retail space. One contact described a rental markdown of close to 25 percent for space in a downtown office building, just within the last two weeks. Another Boston
contact estimates that downtown office rents are down 20 percent on average since September 2008.
Contacts also point out that, in a growing share of cases, rental rates are not being published in property listings, a sign that rates are negotiable.
Residential Real Estate
Home sales and prices showed steep declines across the New England region in December 2008 and January 2009. Home sales and prices showed steep declines across the New England region in December 2008 and January 2009. Home sales in December declined year-over-year by 6 percent in Rhode Island, 16 percent in Maine, and 20 percent in Connecticut. In January, home sales dropped 12.5 percent year-overyear in Massachusetts and 35 percent in New Hampshire.
Bottom line is the real estate market in the US is in a 'shambles' and not near stabilising. Our drop is only starting.
Anon,
Yes foreign investment in a few forms. Carry trades, direct foreign investment, individual property speculation and investment etc. These all have knock on effects.
If you have the bandwidth I would suggest you watch this doccie in about 20 parts. It wont cost you more than renting a DVD actually.
Although it is UScentric it has many answers
http://www.youtube.com/watch?v=I0WuQ5-t3xM
Ok, in regards to the foreign investment. I almost bought a apartment like 8 years ago. Back then the prices were somehow ok from a German perspective. This changed completely in the last couple of years. I always thought how stupid people are and buy this kind of junk for prices that are completely out of proportion.
Now for this you have to understand that Germany does not have a property bubble. House prices are continuously growing with inflation/income in Germany. We looked at so many houses that I have a good idea what I would get in Cape Town for the money. So lets say, one year ago, at the peak 500.000 Euros, were about 5 million Rand. You got a somehow nice home in Hout Bay, or lower Consatantia.
For about the same price you get a decent home in different parts of Germany, near big cities. But now compare the houses. In Germany every house has: Central Heating, a basement, double to tripple Glass windows, a good roof, solid structures ... and so on. So you get something for this amount. We looked at houses in lower constantia 2 years ago, for about 4 Million Rand. Seriously, I told my wife that you have to take a bulldozer, just drive through these huts and rebuild from scratch.
So basically you pay this price for the plot and nothing else.
Back to the main topic of the influence of Europeans on the house market. From other European friends, specifically UK, I heared the complete opposit. For them it was always so cheap here in SA, so they bought like crazy. UK is in deep trouble and houses are loosing their values like crazy.
Hopefully people will start thinking in the future, what price they pay. Hey, but what do you want to do against gambling, and that is basically what happened in many parts of the world.
I travel to the US a lot and have a few friends in New York. They all bought houses a few years ago. And every time I go there, they looked at me if I would be completely mad since I just rent. I still hear them: "You are throwing your money out of the window. Buy something and own it!!!"
Now some 5 years later, they are still paying off their mortgage, and recently I asked them how much of it is principal and how much is interest. I was shocked: 4000 USD interest and 500 USD goes off the debt. And we are not talking about the rates, repairs, and other home improvements. This I call insanity!!! I am happy with my 2000 USD rent for a apartment in Germany and a nice house in Capetown ( all inclusive of course :-)
I agree with German Anon, the quality of houses in SA is just atrocious compared to buildings in Europe and even US. I just saw a couple of 3M+ places in Sunset beach -- mind boggling quality and design. I still can't understand what's up with all those numerous shapes and surfaces that serve no useful function...
new houses and flats are very badly built. you should see the ones in Camps bay for which people pay over R15 millions. they leak like sieves, have terrible cracks all over, the tiles have been badly laid etc..
however, houses around constantia that were built on farms over 50 years ago are just solid, very well built and no leaks at all
Post a Comment