And so it goes. Interest rates at an all time low and still the real estate market refuses to budge. Why? Because it’s still overpriced to the moon!
Read the main newspapers and capital city prices are “on the move”, up 2.5% this month alone. Wow at that rate, houses will be 30% higher by this time next year (compound of course). What a load of crap. Drill into the data and again all you see is a median being thrown around by the odd very high priced property skewing the result.
And real estate agents are telling porkies as well. Reading in a local paper today, an article that’d give you the impression the place is literally on fire and if we don’t get in quick we’ll be left behind. Here we go again! The article mentioned particular addresses and their amazing results!
$1.235 million – Wow – what a sale price in “this market” they say. the ill educated reader will think that the market really is on fire. Mmmm – let’s see what it last sold for and when.
2003 – 10 years ago – now, to make a profit one would think you’d probably have paid about $600,000 for it, maybe a little more. Nope – $1.17 million. Brilliant! Effective loss after ten years – what a fabulous investment. So – the market is blazing along is it?
Next property – $1.2 million. Originally advertised at $1.7 million so again, another great result for the sellers – NOT! It was also subject to a major refurbishment so I have no idea what they made, or probably LOST on this sale.
And last but not least a speculative (spec) home – the land cost them $700,000 7 years ago and the house cost a mint. Sold for $1.3 million. Not happy. See, they thought the crazy price rises that were still happening in 2006 would keep going and they got caught.
Do not believe anything you read in the mainstream press about this market. I’ve been chatting to some Bankers and the number of people coming to them suffering Mortgage Stress is soaring, but the Banks will never release a statement saying so as they want to keep it all on the level and not upset the apple cart.
With interest rates at all time lows, this market should be soaring but it isn’t and it won’t until AFFORDABILITY returns.