The ex-Gatwick owners buy luxury apartment in their old hotel

Post to Facebook on 30/10/2018 at 3:21 AM
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https://www.domain.com.au/news/the-block-2018-the-gatwick-sisters-buy-luxury-apartment-in-their-old-hotel-778065/

Beauty is in the eyes of the beholder. For me, I shall give the apartments a miss even if I have the money to outbid the other participants.

The run down property was sold to Channel 9 in 2017 for $10 million after the previous owners had run the hostel for over 30 years. Good luck to new apartment owners, each spent between $2.77 million and $3.02 million during the indoor auctions. The total amount went under the hammer is $14.49 million.

The contestants make some handsome profit, an early present for the coming Christmas. The highest prize money goes to Sarah and Hayden, a cool $645,000.

The different sale agents also benefit from the auction and gain free publicity. Another beneficiary is the buyer advocate who buys 4 out of the 5 apartments on behalf of his clients, and more than likely, he earns as much as the sales agencies combined.

The biggest winner of all is the Victorian government. The total stamp duty fee payable on the property purchases is $815,549.50. This includes transfer fees of $3,605.00x5=$18,025 and mortgage registration fees $114.90x5=$574.50.

I like to live in a property with a happy past, which the ex-Gatwick lacks. According some sources, the property was a privately run hostel for people who could not get a place anywhere else, if they were too violent or dysfunctional.

Will the sale prices be that "astronomically" high if the buyers are to bid personally at the auctions, instead of engaging a buyer's advocate? I believe the price will be much lower. Normal bidding buyers are tensed, and emotionally charged, and tend to hold back with their bids or push up the bid by smaller increment. A professional advocate has no emotional attachment; the higher they bid up the price, the more commission they earn.

In my early years in Melbourne, I used to stay in Elwood and worked part time at the St Kilda Junction. Since I am not a beachy person, living close to the beach is not my preference.

Up till the early 90's, I enjoyed the cakes sold in Acland Street. My wife and I drove all the way from Mulgrave to Acland Street just to buy a piece of Rum Cake, Vanilla Slice and Almond Croissant. The quality deteriorated when the original owners sold out their business, retired or passed away.

Thank you for reading.

Sydney Melbourne property prices face 20 per cent drop

Post to Facebook on 20/10/2018 at 2:06 AM
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https://www.theage.com.au/business/the-economy/sydney-melbourne-property-prices-face-20-per-cent-drop-says-amp-20181019-p50am3.html/

I always believe in my prediction about the magnitude of the price decline. It is good finally to read from the so-call expert that Sydney and Melbourne property prices face 20% drop.

Should the Reserved Bank of Australia (RBA) further reduce cash rate? In my opinion, the answer is definitely not. In fact, the interest rate should go up, much more than double.

Unfortunately, bank interest rate, either for loan or deposit is completely out of syn with the RBA‘s decision. The reason for the banks to increase the loan interest rate is the cost of money from overseas is high, and they cannot attract enough deposits from the local as well.

Who would put money in the bank to get pittance from the interest paid? Many potential home buyers just can’t grow the deposit because most banks offer from miserable 0% to less than 1% interest.

There is no motivation to save for a deposit, and those belong to this category will spend the money on disposable items, cafes and restaurants, or lifestyle such as cheap overseas travels that benefit the destination countries.

Many people do not understand the cost of owning and running a house. Those who live from hand-to-mouth should not consider or ready to own a house, unless they can improve their income position. They are vulnerable to face bankruptcy if mortgage interest rate is to increase or arrival of economic downturn.

Investors look for either capital growth or income stream. Many ordinary wage earners still believe in investment gurus who advise their followers to buy properties that rely on negative gearing, which can offset their tax obligation. My suggestion to small time investors who do not have a big wage packet NOT to take this option, because the future governments may not allow negative gearing as an investment strategy.

Not all investors look for capital growth. They want regular and acceptable rate of return. Negative gearing is not their preferred option, and worse still they may not have the time to realise the capital growth. A reasonable interest rate increase will encourage this group of people to switch from property investment to cash in the bank.

I may not have qualification of the RBA governor or possess a string of degrees of the financial and economical experts, but I have a rational mind to put forward my own sound and logical hypothesis.

Thank you for reading.

Middle ring faces price pressure at weekend auctions

Post to Facebook on 15/10/2018 at 2:35 PM
Commenting on “Middle ring faces price pressure at weekend auctions”
https://www.domain.com.au/news/auction-melbourne-773040/

I am neither a sour grape nor a doomsayer, but one with a virtual crystal ball to read the real estate market.

As an investor, I like to see my property value grow. However, it is unrealistic to expect it to grow and grow each year continuously at the same rate. I am happy to see it not to drop below my target when I sell it.

I recalled giving free advice to two people I know well to be careful with the real estate market because of the forthcoming downturn; both did not respond nor thank me, but told my wife that I was too pessimistic. One paid $1.8 m for a timber house in Mt. Waverley, and $1.5 m for a unit in Glen Waverley. Then another paid $3.4 m for a McMansion in GW, and $1.2 m for a “renovated” 3-BR house in GW, nowhere considered as a prime location. Yes, the properties definitely do not worth as much today, and yet the rates and charges, and land tax will put a dent in the pocket.

The report in the news article confirms my prediction. For many agents who thought that I was spreading fear of drastic price fall, should take back their words.

What many people do not realise is that the amount of 10% fall in price is more than 10% rise in absolute value. Consider a property original worth $1,000,000. If it rises by 10%, the gain is $100,000. But if new value $1,100,000 is to fall by $10%, the decrease is $110,000, resulting in the final value of $990,000.

Timing is the essence, and patience reaps the reward. Some people sell and then buy in the same market condition may not benefit much. Obviously these people need somewhere to live, and so they join in the rush.

You must keep in mind that if you need to use the money from the sale of your property you live in towards the buying of a property for the similar usage, you will be making the biggest mistake, especially in a cooling market. You may end up selling the property for a song in order to have enough fund to finance the purchase.

We are living in a very uncertain time, and this is definitely not a good time to sell.

Thank you for reading.

Couple snap-up Northcote home in cooling market

Post to Facebook on 14/10/2018 at 5:17 AM
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https://www.domain.com.au/news/8216they-got-it-under-their-limit8217-couple-snap-up-northcote-home-in-cooling-market-20181013-h16lm4-772935/

This is the first time Domain reports the clearance rate dips below 50%. I have been alerting that clearance rate was below 50% for a number months, and I could not work out why Domain calculated otherwise.

Is this the best time to put properties in the market for sale? Well this is normally the case, but it seems this time, things do not follow history. The warm weather, bright sunny day and blooming flowers are factors to draw potential buyers out, but all the bad news prevent the buyers to dig deep in their pockets.

Many agents still try hard to convince potential sellers to auction their properties. This enables not only the properties to have greater exposure, but also the agents benefit likewise. The agents get free advertisement and promotion, compliment of the sellers who pay for the agents’ advertising space.

Cooling market is NOT good for auction, because shortage of enthusiastic bidders will not result in high bid. It is a waste of time and money, especially the cost of advertising is never cheap.

If you are ready to buy, try not to get involved in auction; instead work on properties for private sale. If read between the lines, you should have picked up that properties failed in auction will return to the market as sale by private treaty. You tend to have the upper hand than the disappointed sellers.

I am still amazed by young couples paying mega bucks for some timber houses on small blocks of land. Please do not over commit yourself in loan, because mortgage stress is a killer.

Thank you for reading.

Fussy buyers snub houses that don't present well

Post to Facebook on 13/10/2018 at 2:45 PM
Commenting on “Fussy buyers snub houses that don't present well”
https://www.theage.com.au/money/investing/fussy-buyers-snub-houses-that-don-t-present-well-20181011-p5093l.html

Marketing is about selling what people want to buy, NOT selling what owner wants to sell! As a owner of my own home, I am house pride. It does not cost a lot of money to keep the house in good condition. If you can’t move around in the house, you are having too many things that you are unlikely to use or can’t find a place to put them.

Is it really that difficult to keep your shower or kitchen clean? Why wait until you see the white soap scum or black mould around the wet area? Why do you wait till the spiders dangle from the web before you take out the vacuum cleaner? Why do you wait until the grass grow to knee-high before you get off the backside and push the lawn mower to give the poor grass a new lease of life?

House painting is a chore, but do it slowly and patiently. It may take a day to paint a room, so be it. You have plenty of time before you sell the house, anyway.

I had no experience in “real estate” when I bought my first house. I knew nothing about renovation. I did not know how to use a hand saw, let alone understand the use of a power tool. There was no Internet, or handyman training video. I relied on books and magazines from the library, and visits to McEwans, which later became Magnet.

I removed the old and dirty kitchen, made new kitchen frame in less than a fortnight, because the Gas people came to install the gas hotplate after giving me two weeks notice. The story behind was that the previous owner put pots and pans over her electric hotplates during our inspection, and silly us never tested whether the hotplates worked. Yep, they were not working!

It took me three years to complete the kitchen. The rewards were immense. Besides having a rather “professionally made”, good looking, contemporary kitchen, I learnt how to design a kitchen, use of hammer, chisel, electric circular saw, drill and sander. I also learnt to cut, glue and trim Laminex/Formica. I tiled the splash back and a small part of the bench top for hot pots and pans to rest on.

While the kitchen was taking shape, my wife and I stripped and replaced the wallpaper, and laid new vinyl floor tiles.

It was not easy for us both working full time and “renovating” the house. Bit by bit, the kitchen, bathroom, and the backyard turned out great. We had no large machinery to chop the big trees or remove the tree stumps, so we had to get external help to partially landscape the front garden. We did the rest. The lounge and other rooms had new curtains too.

So are you thinking that I am bragging again? So what if it is true. I just like to share with you that “if I can do it, so can you!” If you want to enjoy your house which is your home, then spend small sum of money regularly in maintaining and updating the house. Do not wait until you are about to sell the house then pay big money to update it for the next owner to enjoy. Do be mindful that the new occupiers may tear away all that you have done, because the renovation is not what they like

Honestly, I am a hoarder myself. I still have magazines from the ark, and computers since Apple IIe. These are my museum collections. I still have my Form 5 maths exercise book, and some early university physics laboratory book. These are my pride and joy. However, they are in the way.

Thank you for reading.

Sydney Melbourne bear brunt of fall in housing market confidence

Post to Facebook on 11/10/2018 at 11:08 AM
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https://www.theage.com.au/business/companies/sydney-melbourne-bear-brunt-of-fall-in-housing-market-confidence-20181010-p508vs.html

The fall in house prices of 10% and 8% in Sydney and Melbourne respectively over the next 18-24 months is rather optimistic to say the least. This is how statistics lies. I am not certain whether the fall reflects the median prices or average prices. For this discussion, the key point is that there are prices fall more than the given percentage, and there are prices falls less than that.

Most people do prophecise the doom, and keep the doom momentum going, until such time a reputable economy guru or government minister descends from somewhere to turn the market around. When the guru appears, it will be a mad rush and everyone will be scrambling for a good deal.

You have probably heard and read about consumer confidence Index, also known as consumer sentiment index. Increase in the index value means consumers are likely buy and soon push up the prices if supply cannot satisfy demand. Conversely, if the index value decreases, buyers will retreat and depending on the media publicity and economic condition, it can go into a downward spiral.

If you are in the market, please spend your weekend driving to the various open-for-inspections and note the changes. I suggest you inspect no less than three each week, and preferably in the same suburb, and then move in to the next one.

What you must remember is that you MUST be realistic with what you can afford to buy. Although you can raise 20% and the bank may lend you the 80%, you have to keep in mind all the other expenses associated with the purchase, for example property and pest inspections, fees and charges. In addition, the council rate and water rate are paid pro-rata by the vendor during settlement, you have to pay the balance after settlement.

Thank you for reading.

Australia slips from top-five for Chinese property buyers in Golden Week holiday

Post to Facebook on 6/10/2018 at 4:57 PM
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https://www.domain.com.au/news/australia-slips-from-topfive-for-chinese-property-buyers-in-golden-week-holiday-20181005-h168i1-770367/

I'm departing Zagreb Airport, Croatia after a few weeks' absence. I read the attached article about the Chinese investors are definitely not coming to Australia which is no longer the flavour anymore.

I did make a statement that this past phenomenon is once in living history and will not repeat.

This is good news for Australian home buyers, but not for sellers. Those who bought or gambled on properties as investment during the hype-up period should have learnt a lesson.

The flow on effect of this downturn has many serious negative impacts, and buyers must sieze the opportunity before it is too late.

The lack luster market means disaster to government stamp duty, a windfall that enables the state government to announce all the ambitious projects. These promises will not be able to fulfill.

The federal government will also suffer from other taxes related to overseas investments. With the shortfall, the first buyers grant and other state grant will be reduced or even removed.

Until I return to Melbourne, stay safe and healthy!

Thank you for reading.