The Daily Mail reports on British model Caprice Bourret being crashed by her 2006 South Africa real estate developments. At that time she bought a house in South Africa because she was launching her lingerie range there. She bought the house in Bryanston for a price of £300,000 and spend £400,000 making it twice as big. She paid it cash at the time. It is now on the market for 5,3 million SAR ( £373,000).
At that time (start of 2006), the Rand stood at 9,5p; it lost 25% since then. So; even when the price of her house would have remained the same (which it didn’t, it tanked significantly, see above), she would have lost already £250,000 through currency losses.
The Daily Mail writes: Factor in a 20- 25 per cent slump in house prices and the value of her investment has nearly halved. ‘I know it’s a bad idea to sell at the bottom of the market,’ she says with a moan. ‘ But I am pulling my business out of South Africa and I have no more need of that house. ‘I could hold on to it, but in my opinion it’s going to take years before the market recovers and renting it in the meantime is a risk – and there’s a much higher chance in South Africa that tenants may trash it. It seems best just to swallow my pride and cut my losses.’
Good choice, Caprice, the South African real estate market will take years to recover and the massive current account deficits which keep on building up in SA will keep eating at the currency rate.
The article in the Daily Mail continues:
Darryl Trapido, owner of RJD Properties in Johannesburg, says repossessions are gathering pace and affecting roughly 20 per cent of homes on the market valued under 750,000 rand ( £53,000). ‘Many homeowners took out mortgages at ten per cent two or three years ago,’ he says. ‘Now interest rates have shot up to 15 per cent and they can’t afford the increase.’
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