Following discussions with a friend this morning I agreed to produce a Comparative Market Analysis (CMA) to help him decide his next step. Keep. Sell, Rent.
There were so few sales in recent times within a 500 metre radius of his home that I had to increase the radius to a mile (1.6 kms) to gather sufficient evidence to produce a worthwhile CMA.
One house in the area struck me as a PRIME EXAMPLE of what is really going on in the market.
This property sold in 1994 for $253,500
It next sold for $313,000 in 2001. In those 7 years it grew by about 2.6% per year compound.
The property next sold for $337,500 in 2002, at the very beginning of the crazy price rises here. At $337,500 the property was showing an average growth of nearly $2,000 a month!
Next recorded sale is less than 12 months along in 2003 where it went under Contract for $405,000. Up nearly $6,000 a month!
The area (only a couple of miles away) in which I was active as a real estate agent at the time was seeing an average $8,000 a month rise – and it kept going, and going.
The home was sold the following year for $545,000, a massive rise equivalent to nearly $12,000 a month.
From 2004 we scoot ahead 7 years to 2011 where it was sold for just $525,000.
If the owners had sold this house in, say, late 2007 to 2008 at the very peak of the market, looking at other sales in the immediate area at that time, I would say it may have seen $650,000 to $685,000.
The correction has been under way for some time now. No amount of interest rate cutting or fluffing of statistics by Government or self interested parties will make this go away. I have no agenda or interest in telling you anything but the truth. The history of a particular property where all sales have been made under “normal” market conditions is a very good and sound example. This example can easily be repeated all over the Gold Coast one-on-one rather than being amalgamated with other large data statistics where the truth is often masked by complexity.
The large waterfront house not far from me, bought for $1,500,000 in 2003 and on the market now for an asking price of around $975,000 should act as a wake up call.