Monthly Archives: November 2012

UPSIDE DOWN – THE MARKET – 28 NOVEMBER 2012

You just have to laugh at the Sydney Morning Herald (SMH) this morning with their article headlined Sydney housing most affordable since 2009

It quotes the “Housing Industry Association-Commonwealth Bank housing affordability index” as revealing “…the city’s housing is now more reasonably priced, relative to incomes, than at any time in the past decade.”

Where this report really drops itself in the can is with the following statement…”A year ago it took two average full-time wages to affordably service a mortgage for a median priced Sydney house, but that has dipped to 1.84 average full-time wages.”  What on earth does “affordably service” mean?  After you’ve paid the mortgage you can have an overseas holiday every year, send two kids to private school and go out to posh restaurants twice a week or, its baked beans, no holidays and we can’t afford to have kids?  What a load of rubbish…

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THE VALUER GENERAL

The Queensland Valuer General is the independent head of the State Valuation Service, Department of Natural Resources and Mines (DNRM). The Valuer-General has a statutory responsibility to provide fair and accurate land valuations for use by local councils as a basis to calculate general rates, the Office of State Revenue to calculate land tax and DNRM to calculate State land rental (if applicable).

The Valuer-General values all land on behalf of the State Government and maintains the Qld Valuations and sales (QVAS) data base.

These folk are really conservative.  To all of those who say everything is stable, there are no price falls, and every house or piece of land always goes UP in value, please take a look at the following Official Valuation table on a fairly expensive piece of land…

Issue Date Valuation Date Effective Date Amount Termination Date
28/03/2012 01/10/2011 01/07/2012 $950000
03/05/2011 01/10/2010 01/07/2011 $1050000 30/06/2012
22/03/2010 01/10/2009 01/07/2010 $1050000 30/06/2011
23/02/2009 01/10/2007 01/07/2009 $1400000 30/06/2010
03/03/2008 01/10/2007 01/07/2008 $1400000 30/06/2009
26/02/2007 01/10/2006 01/07/2007 $1150000 30/06/2008
04/02/2006 01/10/2004 01/07/2006 $1023000 30/06/2007
29/03/2005 01/10/2004 01/07/2005 $1023000 30/06/2006
01/07/2004 01/10/2002 01/07/2004 $620000 30/06/2005
24/02/2003 01/10/2002 01/07/2003 $620000 30/06/2004
25/02/2002 01/10/2001 01/07/2002 $410000 30/06/2003
26/02/2001 01/10/2000 01/07/2001 $340000 30/06/2002
27/03/2000 01/10/1999 01/07/2000 $340000 30/06/2001
01/03/1999 01/10/1998 01/07/1999 $225000 30/06/2000
10/02/1998 01/10/1997 01/07/1998 $225000 30/06/1999
10/03/1997 01/10/1996 01/07/1997 $215000 30/06/1998
19/02/1996 01/01/1996 01/07/1996 $195000 30/06/1997
20/02/1995 01/01/1995 01/07/1995 $195000 30/06/1996
31/01/1994 30/06/1993 01/07/1994 $144000 30/06/1995
30/11/1992 31/03/1992 30/06/1993 $131000 30/06/1994
25/11/1991 31/03/1991 30/06/1992 $131000 29/06/1993
26/11/1990 31/03/1990 30/06/1991 $131000 29/06/1992
27/11/1989 31/03/1989 30/06/1990 $131000 29/06/1991
01/07/1989 31/03/1988 01/07/1989 $105000 29/06/1990

A 32 PERCENT DROP IN 3 YEARS by the ultra conservative valuers at The Valuer General.  When they DROP these values, collection of taxes and other imposts are heavily affected…

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BRISBANE MARKET UPDATE – 22 NOVEMBER 2012

Snapshot of Brisbane from quality research. The most influential factor surrounding Brisbane’s real estate market at present is a lack of buyer confidence. Over the March 2010 half year this had reached a peak with an “imminent“ interest rate rise looming following the surprise
November rate rise, January’s floods, falling house values, rising cost of living and increasingly debt averse and conservative households.

The half year to March 2011 has seen Brisbane record its lowest level of house sales in at least a decade as values weakened over the year. This equates to a 28% drop in house sales from the March 2010 half year. A 28% drop in volume and people are trying to tell you that ALL IS WELL!

Similarly to houses, Brisbane’s unit sales have reached their lowest volumes in over a decade causing values to subside as fewer buyers enter the market. A 35% drop in sales year on year. The $million plus market is down nearly 50%!

So far – hard statistics.  No interpretation needed.  Fairly basic and easy to understand.

Next comment made Q3 – 2011 is, however, pure speculation – “Looking forward there are a number of promising indicators boding well for a stabilising in the market, with the bottom of the cycle likely to occur towards the end of 2011 or during 2012.”

REALITY – the slide has continued like an all conquering lava flow for the rest of 2011 and throughout 2012, which is nearly over! 2013?

 

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ICARUS

When you aspire to bigger and better things be careful what you wish for. Your state of wealth is subject to the phrase “this too shall pass” meaning I guess…an ability over time to make the happy man sad and the sad man happy.

Be too aspirational and buy what can only be described as a ridiculous house for $7.34 million in early 2007 – pay an estimated $400,000.00 in stamp duty and other costs to find yourself in a SEVEN AND THREE QUARTER MILLION DOLLAR HOLE.

Along comes the Grim Reaper of the late noughties, the GFC and it all goes pear-shaped. No-one wants your ridiculous house and even when it’s sold, the Contract falls over.

Once the receivers, agents and others involved in the eventual DISTRESSED SALE take their cut, you’re left with perhaps $2.8 million.  I’m not privy to the size of the mortgage but I doubt from what I’ve heard that $2.8 million even comes close.

IN 5 YEARS THE SILLY HOUSE HAS LOST YOU SOME $75,000.00 A MONTH!

HOUSE PRICES DO NOT ALWAYS GO UP IN A STRAIGHT LINE…

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LIARS, THIEVES, MALCONTENTS and IDIOTS PART 1

Sadly a fair number fit into the heading’s description.

On Site Managers, or the Owners of Management Rights (OSMs I’ll call them) in Complexes fall into a wide number of categories.  I’ve worked with some, butted heads with others, been subjected to their lack of professionalism and incompetence as a tenant, and watched as they’ve been caught cooking the books.

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RED ALERT

2003.  I have several lovely clients from Malaysia who’ve bought and sold a few investment properties through me.  One of them refers an equally delightful man to me and I eventually receive an email from him.

Hapless (I use that word a fair bit I guess but it’s such a good descriptor) fellow was “stitched” into buying an Apartment “Off the Plan” and settled in 1998 or thereabouts.

The “deal” included a Rental Guarantee of 7% per annum on his $299,000.00 purchase price for the first two years, rising to 8% for years 3 and 4.  From Year 5 the rent reverted to market return.

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MARKET REALITY – 20 NOVEMBER 2012

Sometimes you just have to laugh at so called “Expert Reports” made up by self serving organisations.

I refer to one by the Real Estate Institute of Australia (REIA) entitled “Australian House prices: Bursting the Bubble Myth” published in November 2010.

The REIA Secretariat came to this “amazing” conclusion….

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MARKET – 19 NOVEMBER 2012

Mortgagee-In-Possession, In Receivership, Divorce, Bankruptcy Forces Sale, Bank Repossession, Overseas Vendor Quitting Market, Major Investor Consolidates.

Over the last 25 years I’ve read, watched, analysed, bought, sold and commented on the realities of the real estate market.

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PROPERTY INVESTMENT “SEMINARS”!

If you want to go to one or more of these, please do, as long as they come free-of-charge and you promise me you won’t give them your name, address, email or any other personal details.  Resist their pleading.  Just go along, listen with a cynical ear, and leave.

They’ll tell you they have “inside secrets” to which only they have access.  Rubbish.

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