I monitor several hundred properties that have been recently sold or are on the market across a wide range of sectors. Houses in the suburbs, acreage properties, duplexes, town-houses, apartments, waterfront, ocean front, well positioned, poorly positioned, new, old, renovated, ones that are owner occupied and those that are clearly rental properties.
Despite the best efforts of self serving spin doctors across all forms of media, for most people, the market is just not their friend at the moment.
I read a report last week about a ‘seemingly’ spectacular sales result for an Agent and owner which would have had tongues wagging within a couple of miles radius. Ever the sceptic, I made a few phone calls. The property had not been renovated nor had a pool added, or even solar panels and hot water. Mmmm. What could have caused such a price hike? I called the local Council Town Planning Department. BINGO. A long fought for Town Planning permission to add another house at the rear of the property and a height limit increase from 2 levels to 4 levels, which would give the top level spectacular views, had finally been approved.
Talk about spin and plain old fashioned lies. The property had not appreciated on its own but had value added by the approvals – significant value.
So, that just throws a huge statistical spanner in the statistics for that street, suburb and area and skews the results so that no-one really knows what’s going on.
The following is an example of what is really happening in the market. Family home. Nice street. Well finished. Great pool. Close to everything. Great regular public transport. Ticks a lot of boxes. Sold for $182,500.00 in 1997. Sold again in 2002 for $275,000.00 just when the market started to soar. 7 months later the new owners flicked it for $341,000.00 in May 2003. Just as the GFC hit the owners put it on the market in the mid 600’s and finally settled on $575,000.00 in mid 2009.
The new owners set about renovating, adding the pool, solar hot water, a roof full of solar panels, new landscaping, ripped up and re did the driveway, all new fences. All up I would say they would have had no change out of $100,000.00. Add that plus stamp duty and other costs and they are staring at a cost base of near $720,000.00.
The house has been on the market now for 9 months, starting at $750,000.00. The agent who listed this property at $750,000.00 should have been shot. I know who it is and he’s an idiot and tells people ANYTHING to get a listing.
Several Agencies later and the ASKING price is now $525,000.00 with not an offer in sight. There is nothing wrong with the home except that there are a lot of other homes in better locations with nicer facilities and neighbours, for less…pure and simple…
And that, my friends, is the true state of the market.
DEPOSITS – I’m hearing murmurs about people agitating for the use of Superannuation Funds as deposits to enable first home buyers access to the market. Good Grief what a ridiculous, short sighted idea. One of the reasons we are in such a pickle today is free and easy credit with no discipline. The housing market is a dangerous enough place as it is without drawing out most of your Superannuation to place a deposit on an overpriced property that may well crash in value (will crash in my humble opinion expressed elsewhere in this blog). Result – loss of saved deposit AND a 5 or 10 year setback in your retirement savings. Some people are nuts, really.
More soon – thanks for reading!