Tag Archives: agents

THE ELEPHANT IN THE ROOM

Sydney Morning Herald today – all credit to them for this article – thanks ladies and gentlemen….

I continue to argue to all who’ll listen, that this rate cut is just fuel to a fire that will burn a lot of people when it finally rages out of control.  What is not reported is the high number of people who are diving into this super heated market who are not sophisticated investors. I recently chatted with a young couple at a Cafe who I overheard talking about buying a house.  Their SOLE source of advice – their blue collar, working class parents who owned precisely ONE HOUSE between them, bought 20 years ago!  And of course their “friendly” Broker who had given some really awful advice, far outside his legal ability to do so.  I left them pretty sure they were going to buy a nasty house in a nasty street and a nasty suburb for a “top of the market” price and rue the day they did.  This scenario is repeated hundreds of times a day all over the country.

Let us not forget the dodgy companies who still prey on people’s fear and greed to “stitch them up” into overpriced negatively geared properties with “rent guarantees” and other incentives paid for out of their overpriced purchase.

And, of course, our crazy overseas buyers who, in many cases, just want their money out of their “old” country and into the supposedly “safe haven” of Australia.  These people are losing all sense of propriety and in certain sectors of the market are causing chaos.  This chaos filters down and sideways into other sectors, fuelling speculation, rumour and fear that others may miss out on an endless bull run, and greed for the capital gain that, in my not-so-humble opinion, will never eventuate – or if it f does, will be short lived….

Sydney Morning Herald, today —- A deteriorating economic outlook sparked the latest interest rate cut, but the Reserve Bank remains concerned about the continued strength of house prices and investor activity in some pockets of the housing market.

The minutes of the RBA’s February meeting, released on Tuesday, show the board decided to cut Australia’s cash rate to a new record low of 2.25 per cent after new figures revealed the economy wasn’t doing as well as was previously expected.

But the bank also remained concerned about the continued strength of the Sydney and Melbourne housing markets.

“Housing price inflation had moderated from the rapid rates seen in late 2013, but remained high and in Sydney and Melbourne had been well above the growth rate of household income,” the RBA said.

The RBA said growth of investor credit had continued to increase “at a noticeably faster rate” than owner-occupier housing credit.

And a range of indicators suggested further growth of dwelling investment in the near term, the bank said.

The RBA said it would keep a close eye on developments in the housing market, as well as the impact of moves late last year by the Australian Prudential Regulation Authority, designed to temper investor activity.

“Given the large increases in housing prices in some cities and ongoing strength in lending to investors in housing assets, members also agreed that developments in the housing market would bear careful monitoring,” the RBA said.

“They noted that it would be important to assess the effects of the measures designed to reinforce sound residential mortgage lending practices announced by APRA in December.”

Despite the housing concerns, the RBA said it decided to cut the cash rate after indicators of economic growth began to look weaker than it previously expected them to be.

Economic growth was expected to pick up later than the RBA expected, while unemployment looked set to peak higher than originally forecast.

The central bank also took another swipe at the Australian dollar, repeating its familiar line that “a lower exchange rate was likely to be needed to achieve balanced growth in the economy”.

The RBA said it had considered acting at the March meeting instead but decided to cut in February, giving the opportunity for more detailed communication of its decision in the quarterly Statement on Monetary Policy, released three days after the February 3 meeting.

“On the basis of their assessment of current conditions and taking into account the revised forecasts, the board judged that a further reduction in the cash rate would be appropriate to provide additional support to demand,” the minutes said.

END OF ARTICLE

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MARKET UPDATE – 25 MARCH 2014

I receive a fair bit of ‘junk mail’ from local real estate agents squawking about their ‘successes’ in the market. Today I once again did the exercise of digging into their claims about speedy sales, plenty of buyers and wanting more listings.

One would think that if, as an agent, you’d sold and settled a property sale in December 2013, you wouldn’t still be proclaiming it as a “Recent Sale” in late March the following year…or would you you?  Well, YES!  That is really sad, and by any measure, false and misleading.

The newspapers are full of “leading agents” saying they can’t get enough listings, the market is white hot right now, you’re surely gonna miss out…and so on.

So now to the “analysis” of the listings, sales and other nonsense contained within one piece of junk mail today. Just Listed for Sale at $480,000.00.  This place was sold to the current owners in mid 201 for $485,000.00.  Gonna be a great outcome for them by the looks.  Snap this up at offers over $550,000.00 – it was bought by the current owners for $570,000.00 in January 2009 – another success!  And lastly, Offers over $825,000.00 please, so you know its going to sell for mid to high 700’s. It fetched $1,040,000.00 in early 2007 (at the near height of the madness), changed hands at $875,000.00 18 months ago and now the new owners want out.  That’s just nasty.

I cannot find anywhere, a real story of anyone making a real, tangible profit.  Sure there are buys 4 years ago at $500,000.00 with a recent sale at $535,000.00 but that doesn’t take into account buying and selling costs, nor, in most cases, the tens of thousands of dollars spent on repairs or additions.

I’m still looking for this “golden era” but alas, unless a Chinese buyer has their hooks in the deal, it’s all smoke and mirrors.

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I LIKE CHINESE

I like Chinese food, almost as much as I like the many Chinese people I’ve met and had stay in my house as a part of the “couch surfing” movement. Chinese people are no different to anyone else.  They have the same basic needs and wants as any of us on the planet, so individually they are not to be thought of any differently.

The only thing is that there are so many of them.  Lots.  Billions in fact.

When you gets “billions” of anything and that “anything” decides to shift its weight around, well, things can happen.  Its kinda like trying to turn a huge aircraft carrier around in a small harbour.  If it misses by even a little, a lot of damage can happen – and you just cannot stop it, because its so big and has so much force behind it.

Billions of anything can distort the environment in which it moves.  Billions of tonnes of ice dumped into Sydney harbour would probably make it too cold to swim in the summer…maybe.  I don’t really know – just saying…

So, you have to be careful where you put billions of anything and you have to mindful of the short term gains vs the long term pain, which is why I’m reproducing an article in full today from the pages of NEWS.COM.AU ….

CHINESE investors are driving up property prices in hot spot Sydney suburbs by as much as three times the city average.

Carl and Marie Mascarello sold their four-bedroom house in Strathfield for $230,000 more than they expected to an investor who had just stepped off a plane from Hong Kong.

“The house sold for $2.28 million. Far out, I was cheering when I heard. It was really unexpected,” said Mr Mascarello, who is downsizing because his two children have left home. “He was a Chinese investor who got off the plane from Hong Kong the day before. He had missed out at two earlier auctions and clearly did not want to miss out on this one.”

Strathfield is one of at least 10 hot spot Sydney suburbs that have been targeted by Chinese investors who are estimated to have spent $5 billion on Australian residential property last year. The average house price here has risen by up to 27.1 per cent — almost three times the Sydney average of 9.2 per cent.

Brian White, chairman of Ray White Real Estate, said that the Chinese property investment boom “is an absolute fact”.

Together with a number of leading estate agents, including McGrath’s, he has opened a China desk to improve liaison with buyers from the booming new market.

China had the second-highest number of immigrants settling in Australia last year with 27,334 people moving here.

Mr White said he is also opening offices in Beijing and Singapore, which funnels large sums of Chinese investment to Australia.

“A lot of Chinese are very keen to balance their investment portfolios with overseas investments because the Chinese government is restricting people buying in China to try and cool the market,” he said. “In many cases they are buying off the plan to provide homes for their children, who they are sending to Australia to be educated.”

Non-resident foreigners are only allowed to invest in brand new properties under Australian law. The rules have led to a boom in investment in units bought off the plan.

Peter Gray, manager of the 750-apartment Billbergia development at Rhodes, said more than 85 per cent of the development had been sold to Chinese investors. “The first block sold off the plan within a couple of months,” he said.

But it is not all good news. Marketing executive Lara Germane, 28, has been trying to buy her first unit with partner Olaf Wright but has been beaten out of the market.

“We have been looking seriously between Randwick and Maroubra for the last six months but the prices are up $100,000 on where they were last year. It seems to me that it is Chinese buyers who are moving into the area because that is the vast majority of people we see at inspections.”

TROPHY HOMES ARE MUST-HAVES Matthew Benns

CHINESE investors are also looking for trophy properties with Harbour views on the lower north shore and in the eastern suburbs.

Richard Simeon from Simeon Manners real estate agents sold a five-bedroom waterfront home in Pearl Bay Ave, Mosman, last week to a Chinese buyer for more than
$7 million.

“It is bigger than Ben Hur. In recent years I have sold more than $100 million worth of property to Chinese buyers,” he said.

“They are looking for trophy properties with the classic Opera House, Harbour Bridge view.”

“The highest price for a property in Mosman last year, 34 Julian St, Middle Harbour, was $13.88 million and that also went to a Chinese buyer,” said Mr Simeon.

He is now working with cashed up investors from the recent luxury property expo in Shanghai and also developing new, off-the-plan, apartment buildings in Burwood and Terrey Hills specifically for the Chinese market.

“The money from China is just extraordinary,” he said.

“It is a brave new world.”

Stupid, short sighted fools these agents.  The residential real estate market here in Australia needs to cool off and correct to where it’s historically been.  Some sectors of the market are cooling off and some are crashing back to pre 2001 prices (I’m not just saying this, I know and can quote hundreds of real life, real time examples) but to actively encourage this stupidity will do nothing but make the inevitable correction much more fierce, damaging and will embarrass us internationally.  Capital will flow out of here like a broken dam and the correction will bankrupt tens of thousands of Australians…

Just sayin’

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MARKET UPDATE 15 NOVEMBER 2013

I’m seeing nothing that convinces me that anything has changed or turned around.  Whenever you see an article telling you differently, please read it all, to the end, where oft lies the truth or a disclaimer!

In my City the Council has foregone $35 million in developer fees to ‘kickstart’ new projects.  If a project can’t stand on its own with those ‘normal’ fees in place and has to rely on the local authority taking a haircut, then the project’s chances of failure are high. I’ll keep an eye on the list of projects that have miraculously ‘come on’ during this amnesty period to see how they fare.  A couple of phone calls and I discovered that many of the projects were going to go ahead anyway, and that the ‘discount’ on local government fees was just a bonus.  Government interference in free enterprise – it never works.

So everything is going UP is it?  Almost every real estate article you read says so so it must BE SO!  No.

Big sale of a site in Southport for 3 million dollars!  Wow!  Whoop-de-doo!  How about the poor schmuck who got his timing wrong when he paid 5 and a half million dollars for it at the very peak of the craziness in early 2007. Add to the obvious loss of 2.5 million dollars the holding costs over nearly 7 years and I wouldn’t be surprised if he watched double that go down the toilet.

Of course there’s always going to be the “odd” sale that surprises everyone. I know that.  But they are rare and there’s always some quirky reason why someone has apparently paid too much. I know of one in a capital city where everyone said the buyer was “nuts”.  But was he?  No-one at the time (not even local guru agents) knew that the blocks of land either side were already held by interests associated with him and that securing the third parcel made the whole piece of land so much more valuable as a height restriction went from 4 to 8 or 10 stories as a result.  Smart I’d say.

I lived at a fairly famous Resort on the northern end of the Gold Coast many years ago because I wanted to try the lifestyle.  6 months was enough. I was ‘out of there’… In the early 1990’s vacant blocks of land (non-waterfront) were changing hands for $500,000.00 and all the “wannabes” lapped it up.  It was fine marketing spin at its very best.  So exclusive and so magnificent was the Resort that today, more than 20 years later, dry blocks are selling for….wait for it…..$500,000.00… Oh dear.

Last but not least – commercial. Tenants renegotiating rents down 50% or more and basically holding landlords to ransom is the business of the day.  My local newspaper is full of “Mortgagee In Possession”, “Liquidator”, “Owner wants out”, “Overseas investor quits holdings” and other negative headlined commercial property for sale. These local agents are so duplicitous it makes me sick.  One one page they talk up the market like its the 2004 rocket sled, and yet at the back of the paper they try and suck you into a BARGAIN as a bunch of poor sods are forced to offload their property as drastically discounted prices.

I rest my case and step off my soapbox for this week.

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THE AMERICAN DREAM

Following my articles of the relative costs of American real estate I was asked about buying in the USA vs buying here.

The answer is simple – DON’T.  if it were that easy, everyone would be doing it and the US real estate market would be a STAR performer for everyone.

A website was brought to my attention so I decided to research a property they have advertised for about $50,000.00 in an area that I’m generally familiar with.  With the power of Google [TM] I fail to see how people cannot, will not or are just not capable of doing their own research.  American Government Agencies at all levels have a remarkable amount of information available online – not private individual information but they are MAD KEEN on hard facts and, yes STATISTICS.

In ten minutes I found that this property is in an area where the average similar house price is $25,000.00 (no surprise there – this Anglo-American company are a bunch of “flippers”).  Alarmingly the statistics for all sorts of violent crimes are up to three times the USA average per head of population.  The population of this township is less than 2,000!  No-one in their right mind buys a rental property in a one-horse town – way too easy for the house to be vacant and quickly derelict in no time at all.  And then there is Google Street View!  WOW – this is where you find they’ve photo-shopped the photos of the house but more surprisingly is when you pan left and right and take a “virtual walk” up and down the street.  Looks like a scene from an END TIME Movie – good grief – SCARY does not begin to describe the scene.

Anyone who buys anything from these Scammers, sight unseen, is a  FOOL!

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MARKET UPDATE – 03 SEPTEMBER 2013

I refer to the ‘guff’ written in today’s Australian Financial Review about a building boost being credited to continuing low interest rates and Brisbane leading home price rises, not to forget a drastic cut in the number of days on market for properties in all capital city markets.

I made a few phone calls today, mostly out of sheer boredom, but it had to be done.  Building approvals ‘spiked’ as various approving authorities finally pulled their collective fingers out and ‘rubber-stamped’ quite a few major developments.  So the figures were skewed, yet again.  Maybe there was some top-down political interference along the lines of ‘for goodness sake get some good news out there, we’re drowning here’ or maybe that’s just too fanciful to consider?  Maybe… Continue reading

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MARKET UPDATE – 06 JUNE 2013

G’Day again and thanks for dropping by.

I’ve taken a peek at a particular street where I marketed and sold a LOT of homes in 2002-2004.

When the market was crazy I was personally selling 2 houses a month in this one street.  In the last two years there have been just 12 sales.

Bought March 2008 for $469,000.00 sold Dec 2012 for $415,000.00.  That’s a loss of $80,000 on the surface but I know they put a very expensive block wall around the back yard, renovated the kitchen, re painted and re carpeted. Mmmmm – they ‘probably’  flushed $120,000.00

Bought August 2006 for $410,000.00. Sold late 2012 for $450,000.00 WHOO HOO – a profit!  Sorry, NO. The stamp duty and legals going in and the real estate agent and other fees going out mean that for SIX years of blood sweat and tears it returned them ABSOLUTELY NOTHING.

Bought late 2005 for $395,00.00.  Sold late 2012 for $465,000.00  MORE CHEERING I hear! BONG, CLANG, SMASH…  Not if you put an extension on the house, re paint inside and out, new expensive window finishings, new carpet and tiles. Take out stamp duty, legals, agents fees and we have another LOSER.

Bought September 2003 for $310,000.00 and SOLD late 2010 for $450,000.00.  THE ONLY WINNER here.  Good timing.  However, the sale was made by a very dodgy marketing company that took them to the cleaners on fees and questionable marketing expenses but they still did OK.  Or did they?  It cost them $340,000.00 to get in – they “owned” together with the Bank for SEVEN YEARS where they had a series of really bad Property Managers who put terrible tenants in place.  They paid out a fortune in routine and extraordinary maintenance and had to refurbish the gardens three times at huge expense as packs of large dogs had ripped it to shreds. They were charged more than $30,000.00 in sale fees so they netted about $80,000.00 less capital gains tax. Depending on their personal tax circumstances they ‘made’ about $7,000.00a year for all that grief and heartache.

The new owners are also far from happy.  They are from interstate and were also duped by the same dodgy marketers.  They could have bought the IDENTICAL house about ten doors down for $380,000.00.

Turning to the beaches here – WHAT BEACHES?  If we get a couple of bad winter storms where the surf gets much bigger than 6 feet, we will start to see swimming pools and possibly $5 million+ homes and apartments fall into the ocean.  I am not kidding.   Google “Beach Erosion Gold Coast Queensland Australia” and see for yourself.

Later!

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ACE #1

ACE (Aspect, Contour and Elevation)…amongst other things!

This post will be broken into 2, 3 or more parts and is a rambling recollection of issues I’ve encountered over the years.

Many of the points I’ll raise are still the cause of much grief as people fail to ask, heed or properly interpret professional advice and rely far too much on advertising, promotional blurb and spin.

Talk to your future neighbours.  Don’t be shy. They know what’s going on.

Continue reading

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METH LABS

Well that got your attention! And so it should because it’s becoming a real problem for home buyers, sellers and renters.

I inspected a home a while back and noticed a few things. There was some odd-looking capped off plumbing around the outside of the house, which I at first put down to someone having an enclosed garden of some sort, some odd damage to the electrical meter box and inside, unusual wet damage to the plaster cornice. After having a good look at the roof I was perplexed as to why there was so much water damage inside so I decided to grab a torch (flashlight) and ladder and take a peek through the man-hole and into the ceiling space. Continue reading

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A SCAM THAT CONTINUES

Many years ago I lost $250,000.  I’m not stupid, merely as trusting of professionals as most lay people. My life savings were stolen by a group of Company Directors, Accountants, Solicitors, Valuers, Financial Advisers, so-called Consultants and Real Estate Agents, working together in such a way as to totally confuse and bewilder even the most experienced investor or business person.  Since then more Accountants, calling themselves Receivers this time, more Solicitors and more Advisers and Consultants have taken whatever was left after properties were sold and proceeds distributed.  Fellow investors and I advanced $2 million on a land valuation of $3 million supplied by a well-known firm. When the scheme collapsed, the land sold for just $220,000.00! The Receiver’s costs were $270,000!  One fellow investor died from the stress of it all.

Continue reading

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