Post to SinFongChanRE.wix on 18/1/2018 at 1:01 PM
Commenting on “Apartment glut could crash property market”
http://www.news.com.au/finance/real-estate/buying/apartment-glut-could-crash-property-market/news-story/a923b3da021e89fba988683ecc602d42
Property development is a very time consuming exercise, and one needs to predict the market demand at least for the next 12 months before construction begins. The bigger the project, the longer it takes.
Besides the hypothetical guess work of future demand and competition, developers must also keep abreast with the laws of the land and countries where the potential buyers are coming from.
Recent two years spell the doom of many developers, or double whammy to say the least. Australian government has reverted back to 50% from 100% of a development could be sold to foreign buyers. Most local cannot support the high price tag chicken coups and those mega-million condos. It is true that some of the wealthy foreigners have found their way to get settled in Australia, and they probably have brought suitcases full of money, but the supply is far too great for these new settlers to absorb.
The assumption that the growing number of migrants settling in Australia demand housing is correct, but that it is nuts to assume that all these migrants are able to buy properties. Many do not have the financial capacity to do so. It must be remembered that some are asylum seekers or refugees from poor countries. They do not have enough to pay for food and utility, let alone raising enough money to pay for the deposit of a house.
Most economists are theoreticians. They work on very complex mathematics that I cannot understand. Well, it is partly due to my lack of the right brain juice, and partly I block off to accept that a general mathematical formula cannot be found to fit the dynamic environment we live in.
It is not just the glut of new apartment that leads the charge of property crash; those investors who want to get out of owning an apartment, realising now that apartments do not give them the sort of return and capital gain may dump the apartments and look into landed properties, can aggravate the market slump.
In the article, the caption of the photo stated the claim of real estate agent Mariecris Tagala that more than half of new apartments in Melbourne’s CBD, Docklands, and Southbank were sold at a loss since 2011.
My sentiment in investing in apartments has been very clear, especially in the new ones. However, there are exception to the rules which I shall discuss in some other time.
While the apartment markets my face the full fource of crash, the other property market may just experience a bad downturn.
Thank you for reading
Commenting on “Apartment glut could crash property market”
http://www.news.com.au/finance/real-estate/buying/apartment-glut-could-crash-property-market/news-story/a923b3da021e89fba988683ecc602d42
Property development is a very time consuming exercise, and one needs to predict the market demand at least for the next 12 months before construction begins. The bigger the project, the longer it takes.
Besides the hypothetical guess work of future demand and competition, developers must also keep abreast with the laws of the land and countries where the potential buyers are coming from.
Recent two years spell the doom of many developers, or double whammy to say the least. Australian government has reverted back to 50% from 100% of a development could be sold to foreign buyers. Most local cannot support the high price tag chicken coups and those mega-million condos. It is true that some of the wealthy foreigners have found their way to get settled in Australia, and they probably have brought suitcases full of money, but the supply is far too great for these new settlers to absorb.
The assumption that the growing number of migrants settling in Australia demand housing is correct, but that it is nuts to assume that all these migrants are able to buy properties. Many do not have the financial capacity to do so. It must be remembered that some are asylum seekers or refugees from poor countries. They do not have enough to pay for food and utility, let alone raising enough money to pay for the deposit of a house.
Most economists are theoreticians. They work on very complex mathematics that I cannot understand. Well, it is partly due to my lack of the right brain juice, and partly I block off to accept that a general mathematical formula cannot be found to fit the dynamic environment we live in.
It is not just the glut of new apartment that leads the charge of property crash; those investors who want to get out of owning an apartment, realising now that apartments do not give them the sort of return and capital gain may dump the apartments and look into landed properties, can aggravate the market slump.
In the article, the caption of the photo stated the claim of real estate agent Mariecris Tagala that more than half of new apartments in Melbourne’s CBD, Docklands, and Southbank were sold at a loss since 2011.
My sentiment in investing in apartments has been very clear, especially in the new ones. However, there are exception to the rules which I shall discuss in some other time.
While the apartment markets my face the full fource of crash, the other property market may just experience a bad downturn.
Thank you for reading
