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.
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.
