I am busy looking at rental properties in the Cape Town CBD. Is it just me or have prices gone up? Is this due to people wanting to rent instead of buy?
I think it is crazy to spend R10k a month on a one bed flat but some owners seem to think these prices are justified.
I have also noted this, and have been looking into purchasing an entry level property.
I found a development in Wynberg and requested details from the developer.
The development looks quite nice, but its not in the best area.
The question I'm pondering about is weather can be classified as good investment - as indicated by the developer.
" I am glad you asked, we have a development in Wynberg where the entry level apartments start at R409 000, and have a rental guarantee of R3 500 per month for 2 years.
So after initial deposit of 10%, with your levy payments, you will be subsidizing a figure of around R400/R500 a month.
I have attached a price list, long with some pictures.
What do you think? "
This would mean about a 60K initial investment and a additional R600 p.m.??
How can this be an investment if I have to pay in on it? Sounds more like a liability.
For all you know he may be renting it out at R2000 and paying the extra 1500 as part of the sale - would cost him 36000 over 2 years - he probably built that into the price.
Then in two years time you discover that the price has fallen further and the rent is only R2000 so you are losing 1500 a month ... assuming interest rates haven't gone up ...
Why do you think 2 years into a crash is a good time to invest? Big crashes like this need much more time to play out. What's the rush to lose your money ?
When I Google "property bubble" this is the only SA site that comes up among various sites from Aus, Spain, Ire etc. The frase do not exist in our news reports. Something must be wrong. Clearly SA is not ready to admit that it is inevitable for us to follow the US, UK, Spain etc. property bust.
While many will deny there is a property bubble, there is no denying that the average family (earning an average annual income) cannot an average home. When that happens, you have a problem. Add in (1) high cost of living, (2) strict lending rules and (3) a recession (including low investor confidence), and prices will fall.
I agree a 100% with you, but then I also know realize that in most other countries, property in cities not affordable at all!
I have lived in Dubia, Japan and the UK, and in all these places the average person can never dream of owning property. E.g. In Nagoya, Japan, a small house costs anywhere between R80 - R300Mill, where in Tokyo a apartment can run into billions of Rands.
I do agree that property is becoming un-affordable, but then this has not stopped prices from increasing in most cases.
When converting the price of an apartment in Tokyo from YEN to ZAR, you have divide the price by about 11, not multiply it. If you do that you will find that there are many apartments for sale in Tokyo for under R 4 million.
owning a house in sa i have some interest in this blog.buying a house in the late eighties,for a medium house in a reasonable area was approx 6 times an annual salary.this is in line with todays prices for someone earning R200,000 per annum . In the U.K. the ratio is about 8-10 times national average income.is it just interest rates that are making house unaffordable or salaries that have not kept up with cost of living??
11 comments:
I am busy looking at rental properties in the Cape Town CBD. Is it just me or have prices gone up? Is this due to people wanting to rent instead of buy?
I think it is crazy to spend R10k a month on a one bed flat but some owners seem to think these prices are justified.
I have also noted this, and have been looking into purchasing an entry level property.
I found a development in Wynberg and requested details from the developer.
The development looks quite nice, but its not in the best area.
The question I'm pondering about is weather can be classified as good investment - as indicated by the developer.
"
I am glad you asked, we have a development in Wynberg where the entry level apartments start at R409 000, and have a rental guarantee of R3 500 per month for 2 years.
So after initial deposit of 10%, with your levy payments, you will be subsidizing a figure of around R400/R500 a month.
I have attached a price list, long with some pictures.
What do you think?
"
This would mean about a 60K initial investment and a additional R600 p.m.??
How can this be an investment if I have to pay in on it? Sounds more like a liability.
Would appreciate some thoughts and feedback.
For all you know he may be renting it out at R2000 and paying the extra 1500 as part of the sale - would cost him 36000 over 2 years - he probably built that into the price.
Then in two years time you discover that the price has fallen further and the rent is only R2000 so you are losing 1500 a month ... assuming interest rates haven't gone up ...
Why do you think 2 years into a crash is a good time to invest? Big crashes like this need much more time to play out. What's the rush to lose your money ?
When I Google "property bubble" this is the only SA site that comes up among various sites from Aus, Spain, Ire etc. The frase do not exist in our news reports. Something must be wrong. Clearly SA is not ready to admit that it is inevitable for us to follow the US, UK, Spain etc. property bust.
While many will deny there is a property bubble, there is no denying that the average family (earning an average annual income) cannot an average home. When that happens, you have a problem. Add in (1) high cost of living, (2) strict lending rules and (3) a recession (including low investor confidence), and prices will fall.
Oops... meant to say:
the average family (earning an average annual income) cannot AFFORD an average home.
Hi Jules, CJ, ALL
I agree a 100% with you, but then I also know realize that in most other countries, property in cities not affordable at all!
I have lived in Dubia, Japan and the UK, and in all these places the average person can never dream of owning property. E.g. In Nagoya, Japan, a small house costs anywhere between R80 - R300Mill, where in Tokyo a apartment can run into billions of Rands.
I do agree that property is becoming un-affordable, but then this has not stopped prices from increasing in most cases.
Hi Herman
When converting the price of an apartment in Tokyo from YEN to ZAR, you have divide the price by about 11, not multiply it. If you do that you will find that there are many apartments for sale in Tokyo for under R 4 million.
owning a house in sa i have some interest in this blog.buying a house in the late eighties,for a medium house in a reasonable area was approx 6 times an annual salary.this is in line with todays prices for someone earning R200,000 per annum .
In the U.K. the ratio is about 8-10 times national average income.is it just interest rates that are making house unaffordable or salaries that have not kept up with cost of living??
Here you go Fred - moneyweek have it covered
http://tinyurl.com/maa47h
Another possible 40% to fall
http://www.dilbert.com/dyn/str_strip/000000000/00000000/0000000/000000/50000/8000/800/58816/58816.strip.print.gif
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