Post to Facebook on 12/11/2018 at 5:00 PM
Commenting on “Housing slump set to be the largest in nearly 40 years”
https://www.theage.com.au/business/the-economy/housing-slump-set-to-be-the-largest-in-nearly-40-years-macquarie-says-20181107-p50ejz.html
At the start of August, AMP chief economist Shane Oliver said he expected price falls in Sydney and Melbourne to max out at 15 per cent from peak to trough. Only two months later, in October, he expected price falls in those markets will reach 20 per cen
On 7 November, Macquarie Bank said the downturn in Australia’s housing market would be larger than it first thought, with price declines of between 15 per cent to 20 per cent likely in Sydney and Melbourne.
These two are financial and economic experts, and yet they have to revise their forecasts, not once but several times to come to similar magnitude of decline.
According to available data from CoreLogic, such decline will bring prices back to 2015 level.
Will the property prices go further down? I believe the chances are high. Recently, I read a report on Toronto and Vancouver real estate market, and it is just bad news. Melbourne market is very similar to those cities, and the light at the end of the tunnel for real estate investors has been turned off.
Is it good enough to place your bet on a property which has dropped to 2015 price?
If a property was bought in 2015, and returns to the market for sale in 2018, you must ask the question why it is back to the market so soon? There is nothing wrong to be suspicious and inquisitive to double or even triple check with the selling agent.
Most good properties or should I say good value properties do not return to the market after a short time, unless they have been renovated or flipped for a profit. If they are sold at a loss, they were likely to be overpriced previously. If the properties are renovated or flipped and return to the market at a lower price, you should be more cautious about the quality of materials used or workmanship - was it done with a shoestring budget, or ran out of money towards the end?
Sometimes it is better to buy a property that has not been renovated, because the defects are not hidden by a new coat of paint or a new driveway. Fresh pine bark or red gum chip in flower beds can mean abundant tears after you buy the property. Weeds will pop up because the bark or chip are for cosmetic reason and serves no purpose in stopping the weeds from sprouting. This needs to be completely removed and the garden beds redone.
I have said many times most properties were over priced or over valued in the past few years. This is bad for a property owner’s pocket because Council rate is based on the Capital Improved Value. It is very difficult, if not impossible, to argue with the Council about the real worth of the property and adjust the rate accordingly.
When you inspect a property, do check the Council valuation in the Vendor Statement also known as Section 32. Is the asking price comparable to the valuation? If the variation is too big, either to your advantage or otherwise, you should raise that question to the selling agent.
Thank you for reading.
Commenting on “Housing slump set to be the largest in nearly 40 years”
https://www.theage.com.au/business/the-economy/housing-slump-set-to-be-the-largest-in-nearly-40-years-macquarie-says-20181107-p50ejz.html
At the start of August, AMP chief economist Shane Oliver said he expected price falls in Sydney and Melbourne to max out at 15 per cent from peak to trough. Only two months later, in October, he expected price falls in those markets will reach 20 per cen
On 7 November, Macquarie Bank said the downturn in Australia’s housing market would be larger than it first thought, with price declines of between 15 per cent to 20 per cent likely in Sydney and Melbourne.
These two are financial and economic experts, and yet they have to revise their forecasts, not once but several times to come to similar magnitude of decline.
According to available data from CoreLogic, such decline will bring prices back to 2015 level.
Will the property prices go further down? I believe the chances are high. Recently, I read a report on Toronto and Vancouver real estate market, and it is just bad news. Melbourne market is very similar to those cities, and the light at the end of the tunnel for real estate investors has been turned off.
Is it good enough to place your bet on a property which has dropped to 2015 price?
If a property was bought in 2015, and returns to the market for sale in 2018, you must ask the question why it is back to the market so soon? There is nothing wrong to be suspicious and inquisitive to double or even triple check with the selling agent.
Most good properties or should I say good value properties do not return to the market after a short time, unless they have been renovated or flipped for a profit. If they are sold at a loss, they were likely to be overpriced previously. If the properties are renovated or flipped and return to the market at a lower price, you should be more cautious about the quality of materials used or workmanship - was it done with a shoestring budget, or ran out of money towards the end?
Sometimes it is better to buy a property that has not been renovated, because the defects are not hidden by a new coat of paint or a new driveway. Fresh pine bark or red gum chip in flower beds can mean abundant tears after you buy the property. Weeds will pop up because the bark or chip are for cosmetic reason and serves no purpose in stopping the weeds from sprouting. This needs to be completely removed and the garden beds redone.
I have said many times most properties were over priced or over valued in the past few years. This is bad for a property owner’s pocket because Council rate is based on the Capital Improved Value. It is very difficult, if not impossible, to argue with the Council about the real worth of the property and adjust the rate accordingly.
When you inspect a property, do check the Council valuation in the Vendor Statement also known as Section 32. Is the asking price comparable to the valuation? If the variation is too big, either to your advantage or otherwise, you should raise that question to the selling agent.
Thank you for reading.
