Royal Carlisle: Early Buyer? You Just Lost R100 000.

Remember Royal Carlisle? They're STILL trying to sell units, despite being "80% sold out" after the block was completed in May 2009, by basically admitting that early buyers (who bought for between R650 000 - R690 000) just watched R100 000 - R130 000 vapourise into thin air.

Milnerton: Royal Carlisle Developers Slashing Prices

Royal Carlisle is an about to be completed (transfer in May 2009) development in Milnerton and is supposedly 80% sold out. That last 20% however is turning out to be tougher than expected.

2 bed/1 bath apartments were on the market for R790 000 and are now going for R590 000 while 1 bed apartments were going for R550 000, then according to the developers own site, reduced to R490 000 and now down to R420 000. And these reductions are taking place for a block that only requires a R10 000 deposit and offers R3 500/month rental assistance!

I would hate to be one of the early buyers who bought off plan at R790 000 (or even R490 000) only to watch over 25% of my 'investment' disappear.

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.

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.

Rent Vs Buy: Milnerton - Royal Ascot

Purchase price: R1 180 000. 100% bond: R15 975/month
Rental: R5 500/month before rates, maintenance and vacancy.

65.57% (R773 760) deposit required to break even on cash flow. 5.59% ROI when paying in cash. 2.53% capital appreciation required with 50% deposit.

Rent Vs Buy: Milnerton - New Suckers Required

Here's a 2 bed apartment in Milnerton that needs a "new landlord". It's priced at R830 000 and has a gross rental of R4 200, but once rates and levies are taken into account (R234 and R789) the net rental is R3 227. Which means that with a 100% bond you'll be paying R11 237 a month for a bond and the difference between that and the net rental is a hair over R8 000 a month; nearly 2.5 times the rental itself! Here's the income and yield graph:

Putting down the entire asking price nets you a 4.67% ROI. I think I've seen checking accounts with competitive returns on investment. A 71.28% deposit is required to break even on cashflow alone.