Vredehoek: Not Selling? Time To Raise The Price!

Reader KS writes:

This apartment has been on the market for at least a year at R1495000. Now it's asking price is R1535000. I guess when things aren't selling the logical plan of action is to raise the price R40 Gs.

Me thinks someone is trying to recoup some bond payments...

Vredehoek/Devils Peak On Fire - Residents Evacuating

Photo by Coda. More photos here.

Asking Prices Drop - Vredehoek: 31% (R400 000+) Price Drop

Here's an ad from April for a one bedroomed apartment in Vredehoek:

Charming one bedroom apartment in secure, small, upmarket and sought-after block. Private garden with views of city and Lion's Head. Secure off-street parking

And here's an ad from July for seemingly the same flat (same pictures, almost same description):

Beautiful sunny one bedroom flat with private garden. Small, secure and upmarket building, Vredehoek. Undercover, secure parking. Views of the city and Lion's Head.

The only difference, is the asking prices. The first ad had an asking price of R1 300 000, the second had an asking price of R895 000.

Now that original R1 300 000 asking price was probably never going to be reached but it just goes to show the 'wealth entitlement' people had. They deserve that million rand asking price damn it! It doesn't matter what people can afford!

Rent Vs Buy: Vredehoek

This 1 bedroomed apartment in Vredehoek is on the market for R995 000 and is currently tenanted for R4 250. The ad states that the levies are R697 a month which means that net rental income is R3 553 a month. If one takes out a 100% bond the monthly payments are R13 102 per month, which means that the difference between the monthly payment and the rental income is R9 549 a month, nearly 2.7 times the net rental income itself! Here's the payment and yield graph:

Buying the apartment for cash yields a 4.29% return on investment, a good 6% below inflation. To break even on cashflow a massive 73% downpayment (over R725 000) is required, with a 50% downpayment still requiring 3.6% capital appreciation not to lose any money at all. Once rates, maintenance and vacancy are taken into account the yield is even less.