It seems at last my “Sky Is Falling” predictions are coming home to roost. The Brisbane market is still flooded with apartments with 8,000 coming on stream before the end of 2018 and another 5,000 or so due in 2019. The important part to note is what the Registered Valuers and Banks are doing to the asking prices… The Valuations are coming in at 15 to 30 percent below the asking price. This will cause a few undesirable effects. Existing owners may panic and put their apartments on the market, causing the glut to only increase and put further downward pressure on prices. Brokers and Banks with no morals will continue to stitch people up into loans for these overpriced properties by lending against another property to make up for the shortfall in “real value”.
I’ve been following “Nappy Land” north of the Gold Coast in real time. There are already a startling number of mortgagee in possession sales going on with the Banks putting pressure or caveats on Agents to NOT USE the term Mortgagee in Possession on any form of advertising lest it create a panic in the marketplace. Interest rates look set to rise in 2019. A One Percent rise in Nappy Land, where most of the people have no in depth knowledge about what kind of loan they signed up for, will cause terminal failure mortgage stress. The median repayment will jump from their INTEREST ONLY LOAN to PRINCIPAL AND INTEREST LOAN, some $800.00 a month in the majority of cases. These people have NO IDEA what is about to hit them. No idea!
Locally, I am sick of reading about people buying 3 years ago for $600,000 and selling at auction for $720,000. Marvellous I hear you say. In one recent instance I took a trip to the house itself and spoke to the neighbours. This house had a half floor second story added, another garage, a wall on the street frontage, electric gate, carport and the double garage converted to a rumpus room. Honestly, after that expenditure do you think they made any profit at all? I don’t think so. It is just this kind of bullshit journalism that continues to feed the Fairy Tale that even in these times, buying a house is a great idea.
The Sydney market is toast! I have many friends who live in Sydney and report real time sales in their area to me. Same story. Big falls off highs and auction clearance rates that say that Buyers are now in “Bargain Hunting Mode” at Auctions and are not being as caught up in the fever as they were a year ago.
If you have a property and especially if you are relying on its sale to fund your retirement, sell it NOW, realise any gains, go rent for a while and then buy your old place back at $200,000, $300,000 or even $400,000 less than you sold it for.