Author Topic: Property in Australia  (Read 63661 times)

urbanista

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Re: Property in Australia
« Reply #300 on: April 29, 2017, 05:34:04 PM »
Sorry mate, anecdotes are not evidence, no matter how many of them you have.

Here's data up to fairly recently on a bunch of countries, you will find a range of results under the prices vs average income. Australia is in the top range of all indicators. Japan, South Korea, Singapore have the lowest current ratios but a bunch of EU nations are on fairly average ratios too.
http://www.economist.com/blogs/dailychart/2011/11/global-house-prices

The article is behind the paywall unfortunately.

Anyway, there is no need to argue on this. I completely agree that Australian cost-to-income property ratio is higher than European or Asian. What I am saying is that it meant to be that way. Australian median property is of much, much higher quality that median property in Europe or Asia.

Also it is difficult if not impossible to compare property ratios in different countries. Depending on sources, Singapore, for example, has only 20% of private housing, the rest is public. It is easy to control the market when you own 80% of it, right? Denmark state controls 25% of the housing. In France low-rent housing represents 40% of the whole rental market. What is it in Australia? 4.2% of the total housing stock. Throw the tenancy laws that are severely biased towards landlords, and we have what we have.

Immigration doesn't help either. Property prices in Shanghai (and other 7 Chinese major cities) increased 20% in 2016, and this should have a direct impact on Sydney, no matter what politicians do. Unless maybe 50% of tax on purchases by foreigners introduced? Only half kidding.

urbanista

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Re: Property in Australia
« Reply #301 on: April 29, 2017, 05:43:42 PM »
Suddenly there could be a lot of SMSF's needing to sell at the same time to meet pension obligations.

This is exactly what's "different" this time. In previous booms & busts, most people were not forced sellers - as long as they met their mortgage repayment they were fine.

This time around, many SMSFs could be forced to sell whether they are meeting their loan repayment obligations or not.

According to the ATO statistics (source: article from "the Australian", would love if anyone could find a more credible source) shows that SMSFs do not invest in a single asset class on a major scale. Portfolios are relatively diverse with real estate investment forming part of the fundís overall asset allocation. Australian residential property is only 4 per cent of all SMSF investment and represents only 0.4 per cent of the total of Australian housing market.

As an anecdote, we have 420K in superannuation, none of that is invested in property. Same for anyone I know. For exactly same reasons: inflexibility at pension stage.

BattlaP

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Re: Property in Australia
« Reply #302 on: April 29, 2017, 05:54:48 PM »
Anyway, there is no need to argue on this. I completely agree that Australian cost-to-income property ratio is higher than European or Asian. What I am saying is that it meant to be that way. Australian median property is of much, much higher quality that median property in Europe or Asia.

Also it is difficult if not impossible to compare property ratios in different countries. Depending on sources, Singapore, for example, has only 20% of private housing, the rest is public. It is easy to control the market when you own 80% of it, right? Denmark state controls 25% of the housing. In France low-rent housing represents 40% of the whole rental market. What is it in Australia? 4.2% of the total housing stock. Throw the tenancy laws that are severely biased towards landlords, and we have what we have.

Immigration doesn't help either. Property prices in Shanghai (and other 7 Chinese major cities) increased 20% in 2016, and this should have a direct impact on Sydney, no matter what politicians do. Unless maybe 50% of tax on purchases by foreigners introduced? Only half kidding.

Since it sounds like we agree so I'll point out but not push the issue that you just moved the goalposts from 'affordable property is dead worldwide' to 'australia is different'.

Foreign investment is an issue.



China is the largest single purchaser, yes. However as a proportion of total investment they are less than a quarter. Personally I think that focusing on Chinese to the exclusion of other foreign investors is racist and subject to extreme confirmation bias (think a young couple pointing out all the Chinese families at an auction and getting frustrated and conveniently ignoring all the white American and Canadian investors). I would support government policy that heavily taxed foreign property investment if it was part of a broader approach to affordability. I would not support it if it was a policy standing out on its own that was directed at China in a subtly racist "us-vs-them" manner.

Rowellen

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Re: Property in Australia
« Reply #303 on: April 29, 2017, 06:02:08 PM »
I consider my overall assets for diversification. Since I hold property outside super, I hold none in my smsf. General I fibbing this to be true anecdotally. I am an accountant specialising in SMSFs. Most clients have no property in super. Larger clients tend to have indirect property via managed trusts. Less than a handful have direct property. Even less with lrbas. My firm might not be indicative of the market overall. In my almost 20 years experience I've only seen one smsf be "forced" to sell to meet pension payments and even then, they just stopped the pensions. Just my experience.

urbanista

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Re: Property in Australia
« Reply #304 on: April 29, 2017, 06:37:48 PM »
When I said "affordable property dead worldwide", I actually said "a median property and a family on a median income is dead worldwide". And yes, I meant "Australian quality affordable, ie a house on land".

deborah

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Re: Property in Australia
« Reply #305 on: April 29, 2017, 06:45:18 PM »
BattlaP that is an AMAZING graph. You are telling me that CANADIANS (of whom there are about 50% more than Australians) own similar amounts of Australian property to the Chinese and Americans (both of whom have vastly more people than us)! How can that be? Why would they do it?

BattlaP

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Re: Property in Australia
« Reply #306 on: April 29, 2017, 08:05:28 PM »
It's a couple years old but it was indeed the case at that time. More recent years have seen spikes in investment from China, but at other times in recent history the major contributor was the US or Singapore. Japan jumped high up the list to 3rd in 2015. My point is that it is fluid and depends a lot on what markets real estate companies choose to target. Obviously they are going to target Chinese investors if they have the capital to spare.

For example, here's an article targeting Canadians from 2014 that lists all the advantages for them: http://www.eastcoastbuyersagents.com.au/canadians-are-big-buyers-of-australian-real-estate-boom-times-are-over-for-canadas-housing-sectors/

It shouldn't matter where the investment is coming from, if it's causing issues within the local market it is our own problem to deal with politically. Because I love graphs, here's another one:



Vancouver prices, the dip recently is where they introduced a hefty property tax for foreign buyers. Mainly in the detached houses category. Early days yet, but while it hasn't reduced prices a great deal I would say it would look to be effective in dealing with the 'sharp edge' of foreign speculation on a local market without an apocalyptic housing crash.

Fresh Bread

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Re: Property in Australia
« Reply #307 on: April 29, 2017, 10:58:58 PM »
The graph from the Vancouver market shows that there hasn't been much of a price drop at the entry level / apartments. Whereas detached houses have dropped from 1.8 to 1.5m, that's a massive drop that could send some people underwater. I guess in the medium term improved affordability at the top for those wanting detached housing might free up stock at the entry level? 

marty998

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Re: Property in Australia
« Reply #308 on: April 30, 2017, 04:52:18 AM »
Anyone know if auction clearance rates and medians were up or down this weekend?

Sydneystache

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Re: Property in Australia
« Reply #309 on: April 30, 2017, 07:50:00 AM »
Trying not to be judgey here (but failing to do so) but houses in the suburb I live in Sydney's west are now going for nearly $2M.

It is COMMON for people buying such homes (I live in a flat) to have mortgages in excess of $1.5M.

Now, by my calculations that is a fortnightly repayment of around $5K, or $10K a month or $120K to $130K a year excluding extra repayments. The mind boggles.

All I can say is WTF and how risky the banks are by being complicit here. How can you approve multi-million dollar mortgages to working couples?! Ok, sure there is a willingness on the buyer/s part but sheesh, I would have thought banks would want bigger deposits and family money as surety can only go so far.

If the deposit doesn't kill you, the repayments will. I continue to be boggled by the insanity going on in this fair city. When the tide goes out, there is going to be a lot of debt holders.....

itchyfeet

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Re: Property in Australia
« Reply #310 on: April 30, 2017, 11:16:23 AM »
Anyone know if auction clearance rates and medians were up or down this weekend?

Back up to 80% in Sydney, however, for the past 2 weekends the median price has been almost exactly the same, within 1%, of the same weekends last year. A few more weekends of no year in year growth and the sentiment in the market will shift quickly. Especially if there is an interest rate rise.

urbanista

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Re: Property in Australia
« Reply #311 on: April 30, 2017, 04:44:07 PM »
Trying not to be judgey here (but failing to do so) but houses in the suburb I live in Sydney's west are now going for nearly $2M.

It is COMMON for people buying such homes (I live in a flat) to have mortgages in excess of $1.5M.

Now, by my calculations that is a fortnightly repayment of around $5K, or $10K a month or $120K to $130K a year excluding extra repayments. The mind boggles.

All I can say is WTF and how risky the banks are by being complicit here. How can you approve multi-million dollar mortgages to working couples?! Ok, sure there is a willingness on the buyer/s part but sheesh, I would have thought banks would want bigger deposits and family money as surety can only go so far.

If the deposit doesn't kill you, the repayments will. I continue to be boggled by the insanity going on in this fair city. When the tide goes out, there is going to be a lot of debt holders.....

1.5M mortgage at 4% is $7200 monthly. Add council rates and insurance, call it $8000 monthly. We could easily afford such repayments on 120K and 100K salaries (before super) even with some (not much) child care costs. These salaries are easily earned by a couple of white collar professionals in their 30s in Sydney. Now, the question is what happens when interest rates go up, whether there is any safety margin in these numbers. I guess we will soon find out :)

Sydneystache

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Re: Property in Australia
« Reply #312 on: April 30, 2017, 05:16:04 PM »
I stand corrected. I still am gobsmacked with what is considered the new normal in mortgage loan amounts. And repayments. $8-10k per month is freaking humongous. 😳 I must be so out of touch with the mortgage game in Sydney.

itchyfeet

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Re: Property in Australia
« Reply #313 on: April 30, 2017, 08:02:21 PM »
If as a couple you are grossing 100K and 120K, so are netting maybe 170K, you would be foolish to commit to paying 96,000 in housing costs..... for the next 30 years!!!

A 3% rise in interest rates and boom, your remaining $74K disposable income is cut to $29K per year. Now how would you pay for childcare?

Even with low interest rates my personal opinion is that a couple should not borrow more than 4x their gross income as an absolute max, and if one of the couple's wages is a lot higher than the other, then best take only 3x the salary of the high earner i.e.: a couple earning 70k and 150k should not borrow
more than 4 x 70k + 3 x 150k = 730k.

I took out a very large mortgage with my wife 7 years ago, and whilst it has paid off due to high appreciation of property in sydney (assuming we sell our house), having the large debt weighing on us is becoming increasingly annoying. And as we have fallen in love with our home, selling to settle the debt is also annoying. We wouldn't borrow as much if we had our time again, even though on paper, being significantly leveraged was the right financial move.

Our mortgage at the start was 3.3x our combined incomes.

alsoknownasDean

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Re: Property in Australia
« Reply #314 on: April 30, 2017, 10:34:21 PM »
I'm just hoping prices chill for a while here. I'm just about in a position to buy (and I've found places I could afford fairly comfortably), so I'd rather not have the goalposts shift too much between now and then.

itchyfeet

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Re: Property in Australia
« Reply #315 on: May 13, 2017, 11:26:19 AM »
Looking at Auction results in Sydney this past month or more, it appears to me that despite the strong auction clearance rates, prices are pretty much exactly where they were 12 months ago.

Looking at this weekend, 79% clearance rate is very high, but the median sale price is almost exactly the same as it was 12 months ago.

"Top is in".....hahaha

LonerMatt

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Re: Property in Australia
« Reply #316 on: May 13, 2017, 02:39:29 PM »
I want housing prices to tank for selfish reasons, but I don't want the many people I know who are tied up in property to suffer too much, it's a bit hard.

A 20-30% drop would be great!

GT

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Re: Property in Australia
« Reply #317 on: May 13, 2017, 07:01:46 PM »
Ours will go to market in August and Auction in September, hopefully nothing tanks too much between now and then.

Fresh Bread

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Re: Property in Australia
« Reply #318 on: May 14, 2017, 12:21:44 AM »
Ours will go to market in August and Auction in September, hopefully nothing tanks too much between now and then.

Good luck!

Our IP goes on the market in 2-3 weeks. Bit nervewracking as we were going for the early winter sale when there is less competition but there seems to be a bit about all of a sudden.

JamesSyd

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Re: Property in Australia
« Reply #319 on: May 14, 2017, 03:24:07 AM »
Indeed. Also looking to put our inner city sydney terrace on the market very soon and am paranoid (hopefully unneccessarily) we're on the precipice of a downturn. This has craziness has to stop at some point...

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Rowellen

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Re: Property in Australia
« Reply #320 on: May 14, 2017, 04:04:27 AM »
I'm hoping the crazy Sydney market will rub off on Brisbane in a few months. We're planning to sell our unit there after the end of the financial year. Last time we attempted to sell, the market tanked after the 2011 floods. Wish us luck this time around.

nnls

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Re: Property in Australia
« Reply #321 on: May 29, 2017, 06:10:48 PM »
Altair Asset Management hands back cash to clients citing looming correction

Quote
Mr Parker outlined a roll call of "the more obvious reasons to exit the riskier asset markets of shares and property".

They included: the Australian east-coast property market "bubble" and its "impending correction"; worries that issues around China's hot property sector and escalating debt levels will blow up "later this year"; "oversized" geopolitical risks and an "unpredictable" US political environment; and the "overvalued" Aussie equity market.

But it was the overheated local property market that was the clearest and most present danger, Mr Parker said.

It will be interesting to see how this pans out for his company.

marty998

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Re: Property in Australia
« Reply #322 on: May 30, 2017, 08:52:31 AM »
Saw that article today - quite a bit of discussion amongst my colleagues.

Some are jokingly calling him the Steve Keen of the stockmarket.

I am too tired to give a considered view.... it's 1am and I'm in a cab home from work. Long day!

Fresh Bread

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Re: Property in Australia
« Reply #323 on: May 30, 2017, 06:22:26 PM »
I am now in the situation where our tenants have moved out of our IP so no more money coming in, yet we are throwing money at it to spruce it up and stage it for sale asap. Feeling a bit on edge.

Fresh Bread

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Re: Property in Australia
« Reply #324 on: June 08, 2017, 01:11:33 AM »
Has anyone any experience in selling apartments in this hott-ish (coming off the boil?) market? Our agent has set the auction date at exactly 2.5 weeks after the listing went online and that's taken us by surprise. There was no mention of this before so we had just assumed it would be a standard 4 week campaign.

She is willing to discuss it, but I don't know if I should just be led by her experience - she says that people see it on two Saturdays and are ready to act by the third (auction day). We offered on our PPOR the week after the 1st viewing (there was a shortage of stock) so I guess I understand the principle.  But on the other hand - the weather report is saying a solid two weeks of rain (outside space is supposed to be the star feature of the place), plus we've got the public holiday in NSW this weekend. I feel like the agents are rushing this through and I'm wondering if there is something else at play behind the scenes (e.g. another competing property they want to bring to market straight after).

What do you reckon - see how it plays out with interest this weekend or insist on extending the date now before anyone notices?

Little Aussie Battler

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Re: Property in Australia
« Reply #325 on: June 08, 2017, 02:09:50 AM »
The agent just wants it sold as quickly and easily as possible. They (generally) don't even really care what the price is.

Are there clear market comps (i.e. Do you have a good idea what it will sell for)?  If so, 2.5 weeks should be fine. Otherwise I would be asking for 4. Or setting a particularly high reserve price. Make the agent work for their commission.

Are you selling now because you think the market has peaked?  If the outdoor space is a key feature, I would think that selling in winter is not going to do you any favours.

GT

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Re: Property in Australia
« Reply #326 on: June 08, 2017, 03:35:26 AM »
With your outdoor space being a prime selling point, and rain predicted, I'd be concerned about being pushed into a 2.5 week campaign.

We'll have a four week campaign for our Auction, aiming for a mid July listing.

deborah

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Re: Property in Australia
« Reply #327 on: June 08, 2017, 03:40:50 AM »
I'd say that if you're changing it (I probably would), do it quickly before anyone notices.

marty998

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Re: Property in Australia
« Reply #328 on: June 08, 2017, 03:57:10 AM »
Has anyone any experience in selling apartments in this hott-ish (coming off the boil?) market? Our agent has set the auction date at exactly 2.5 weeks after the listing went online and that's taken us by surprise. There was no mention of this before so we had just assumed it would be a standard 4 week campaign.

She is willing to discuss it, but I don't know if I should just be led by her experience - she says that people see it on two Saturdays and are ready to act by the third (auction day). We offered on our PPOR the week after the 1st viewing (there was a shortage of stock) so I guess I understand the principle.  But on the other hand - the weather report is saying a solid two weeks of rain (outside space is supposed to be the star feature of the place), plus we've got the public holiday in NSW this weekend. I feel like the agents are rushing this through and I'm wondering if there is something else at play behind the scenes (e.g. another competing property they want to bring to market straight after).

What do you reckon - see how it plays out with interest this weekend or insist on extending the date now before anyone notices?

Is this a PPOR you are selling or an investment? If the latter it would be great to have the contract date in July instead of June.... possibility of delaying payment of CGT for up to 21 months.

Fresh Bread

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Re: Property in Australia
« Reply #329 on: June 08, 2017, 04:04:20 AM »
The agent just wants it sold as quickly and easily as possible. They (generally) don't even really care what the price is.

Are there clear market comps (i.e. Do you have a good idea what it will sell for)?  If so, 2.5 weeks should be fine. Otherwise I would be asking for 4. Or setting a particularly high reserve price. Make the agent work for their commission.

Are you selling now because you think the market has peaked?  If the outdoor space is a key feature, I would think that selling in winter is not going to do you any favours.

The funny thing is that the outdoor space is too hot in summer but pretty damn wonderful on a sunny winter day. June has low rainfall normally and Feb/ March are the soggy months. It's just a freak couple of weeks really.

The agent is on tiered commission, so low up to our reserve and then very high for anything above that. So the incentive is to work hard.

Thanks GT and Deborah also. I'll call her tomorrow.

Marty it's our IP. Does the CGT event occur when contracts are signed or settlement? We worked out that it won't matter which year for tax amount but yeah, good to delay. If we extend one week that's 1/7 for auction day.

Rowellen

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Re: Property in Australia
« Reply #330 on: June 08, 2017, 05:16:01 AM »
It's contract date for cgt.

Good luck.

Fresh Bread

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Re: Property in Australia
« Reply #331 on: June 13, 2017, 09:14:24 PM »
So we had our first open and quite a few groups through - but only one interested party. They've made an offer already and we are 99% going to take it as it's fair - it's actually more than I thought we'd get when it first entered our minds to sell and exactly equal to what my hubby wanted when he said "I'll only sell it if we get $X". It's $50k less than what the agent thought we could get if we had two competing buyers. I'm pretty happy with it - not mind blowing but definitely more money than I'd pay for it, and that's the key question right?

We could hang on another couple of weeks for a competing buyer but then we may lose this one as they say they have an option B. They have increased their offer by $20K from their initial and they want to sign tomorrow.

A bird in the hand is worth two in the bush, I reckon.

GT

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Re: Property in Australia
« Reply #332 on: June 13, 2017, 10:32:01 PM »
So we had our first open and quite a few groups through - but only one interested party. They've made an offer already and we are 99% going to take it as it's fair - it's actually more than I thought we'd get when it first entered our minds to sell and exactly equal to what my hubby wanted when he said "I'll only sell it if we get $X". It's $50k less than what the agent thought we could get if we had two competing buyers. I'm pretty happy with it - not mind blowing but definitely more money than I'd pay for it, and that's the key question right?

We could hang on another couple of weeks for a competing buyer but then we may lose this one as they say they have an option B. They have increased their offer by $20K from their initial and they want to sign tomorrow.

A bird in the hand is worth two in the bush, I reckon.

Take the offer, it's there, on the table, waiting for you to accept, and meets both your criteria for amount.

Fresh Bread

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Re: Property in Australia
« Reply #333 on: June 13, 2017, 10:51:07 PM »
So we had our first open and quite a few groups through - but only one interested party. They've made an offer already and we are 99% going to take it as it's fair - it's actually more than I thought we'd get when it first entered our minds to sell and exactly equal to what my hubby wanted when he said "I'll only sell it if we get $X". It's $50k less than what the agent thought we could get if we had two competing buyers. I'm pretty happy with it - not mind blowing but definitely more money than I'd pay for it, and that's the key question right?

We could hang on another couple of weeks for a competing buyer but then we may lose this one as they say they have an option B. They have increased their offer by $20K from their initial and they want to sign tomorrow.

A bird in the hand is worth two in the bush, I reckon.

Take the offer, it's there, on the table, waiting for you to accept, and meets both your criteria for amount.

Yes, it is done. I guess there is a nailbiting 48hr wait now until we have all signed contracts. Less stressful than if it had already been on the market for weeks tho!

GT

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Re: Property in Australia
« Reply #334 on: June 13, 2017, 11:05:14 PM »
So we had our first open and quite a few groups through - but only one interested party. They've made an offer already and we are 99% going to take it as it's fair - it's actually more than I thought we'd get when it first entered our minds to sell and exactly equal to what my hubby wanted when he said "I'll only sell it if we get $X". It's $50k less than what the agent thought we could get if we had two competing buyers. I'm pretty happy with it - not mind blowing but definitely more money than I'd pay for it, and that's the key question right?

We could hang on another couple of weeks for a competing buyer but then we may lose this one as they say they have an option B. They have increased their offer by $20K from their initial and they want to sign tomorrow.

A bird in the hand is worth two in the bush, I reckon.

Take the offer, it's there, on the table, waiting for you to accept, and meets both your criteria for amount.

Yes, it is done. I guess there is a nailbiting 48hr wait now until we have all signed contracts. Less stressful than if it had already been on the market for weeks tho!

Its one of the reasons we are going with an auction this time around, it sells on the day, no backing out.  And if it doesn't sell, than there's always the standard listing and selling practice you've just gone through.

Rowellen

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Re: Property in Australia
« Reply #335 on: June 13, 2017, 11:24:28 PM »
Congrats Freshwater. Fingers crossed it makes it to settlement without a hitch.

limeandpepper

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Re: Property in Australia
« Reply #336 on: June 13, 2017, 11:48:07 PM »
Nice work, Freshwater!

As someone who is looking to buy, it's interesting for me to hear from the side of the seller about the worries you guys have on getting to a successful settlement. So I'm wondering if there are any tips for me as a buyer to harness that to my advantage? E.g. if I was to make an offer, would a seller be willing to accept a lower offer if say finance is 100% not an issue (e.g. if my partner and I have the cash and don't need a bank loan)?

Fresh Bread

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Re: Property in Australia
« Reply #337 on: June 14, 2017, 12:17:58 AM »
Nice work, Freshwater!

As someone who is looking to buy, it's interesting for me to hear from the side of the seller about the worries you guys have on getting to a successful settlement. So I'm wondering if there are any tips for me as a buyer to harness that to my advantage? E.g. if I was to make an offer, would a seller be willing to accept a lower offer if say finance is 100% not an issue (e.g. if my partner and I have the cash and don't need a bank loan)?

I think if you have cash and can offer the quickest possible settlement that would be very attractive to sellers, especially in a market that is plateaued or cooling down. If two people were offering the same or very similar amount, we'd probably go with the cash buyer. Whether we'd take a lower offer... we had a price in mind and we don't have to sell, so we probably wouldn't have accepted a lower offer than we thought it was worth.

limeandpepper

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Re: Property in Australia
« Reply #338 on: June 14, 2017, 01:59:00 AM »
Thanks, Freshwater. Will keep that in mind! :)

alsoknownasDean

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Re: Property in Australia
« Reply #339 on: July 04, 2017, 05:22:55 AM »
Does anyone have any idea how this LMI malarkey works?

If little Johnny wants to buy a $400K home, and let's assume that LMI is a flat $10K and the banks require a minimum of 5% deposit, does that mean that Johnny's required to come up with $20K upfront (5%) or $30K (5% + LMI)?
« Last Edit: July 04, 2017, 09:07:41 AM by alsoknownasDean »

marty998

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Re: Property in Australia
« Reply #340 on: July 04, 2017, 06:07:00 AM »
LMI is usually capitalised into the loan.

You end up paying quite a bit of interest on top of the LMI premium....


deborah

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Re: Property in Australia
« Reply #341 on: July 04, 2017, 11:26:44 AM »
You can do it either way.

LonerMatt

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Re: Property in Australia
« Reply #342 on: November 11, 2017, 06:32:10 PM »
Hey guys, reviving the thread a little.

So the GF and I are considering buying a place in 2019 - we'll have a deposit of around $100k by that time and are budgeting for around 400-500k prices. We're looking primarily at 2-3 bedroom apartments in the Canberra burbs (5-10km from the city), not interested in over-spending, probably not interested in new places.

However, I'm a bit wary of property so I'm looking to learn as much as I can. I've read the thread through and there's a lot of great information (and a lot of information that went above my head).

I have a few questions:
1. If you are looking at property how do you know what a fair price is?
2. If a place is going to auction, but the agent lists a price guide, does that bear any reflection on the end price? Or is it a crap shoot?
3. We're thinking of buying because Canberra will be the place for us for the next 5-10 years, so from our PoV it makes sense to try and set up a longer term base and make it ours - however, happy to hear any criticisms
4. How do I learn more about property - I know very little, almost nothing - about the property itself, about the process of buying and about the loans themselves. I've never had debt or loans of any kind so I'm a babe in the woods
5. Advice? Tips? Words of warning? Things to double check?

Fresh Bread

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Re: Property in Australia
« Reply #343 on: November 11, 2017, 09:09:06 PM »
Hey guys, reviving the thread a little.

So the GF and I are considering buying a place in 2019 - we'll have a deposit of around $100k by that time and are budgeting for around 400-500k prices. We're looking primarily at 2-3 bedroom apartments in the Canberra burbs (5-10km from the city), not interested in over-spending, probably not interested in new places.

However, I'm a bit wary of property so I'm looking to learn as much as I can. I've read the thread through and there's a lot of great information (and a lot of information that went above my head).

I have a few questions:
1. If you are looking at property how do you know what a fair price is?
I'd recommend starting to read through the property mags, especially the sold price section. You can also purchase suburb reports from places like RP Data but things like median data and recent sales are normally freely available. You'll get a feel for reasonable prices.
2. If a place is going to auction, but the agent lists a price guide, does that bear any reflection on the end price? Or is it a crap shoot?
In Sydney, property would usually go for about 10% above the auction guide. It certainly won't go for under the guide. If it goes 20% above either people are going crazy or the agent needs reporting for under-quoting.
3. We're thinking of buying because Canberra will be the place for us for the next 5-10 years, so from our PoV it makes sense to try and set up a longer term base and make it ours - however, happy to hear any criticisms
Makes sense to me to buy where you are planning to live for 10 years. 5 years and I wouldn't be as keen. You're going to sink a lot into stamp duty and other buying fees.
4. How do I learn more about property - I know very little, almost nothing - about the property itself, about the process of buying and about the loans themselves. I've never had debt or loans of any kind so I'm a babe in the woods
There are guides online that take you through the steps. The first thing to do would be to get pre-approval on a loan, which means researching banks and loan options. Some people use a mortgage broker, we just researched rates online - see sites like Canstar. Then you'll know roughly how much you'll get loaned. (Then once you've found a place and made an offer, you do a proper application, and the bank will value the property and review again how much they will loan you.) The whole process of making an offer is terrifying, I'm not great on tips. All I can say is, the real estate agent is working for the seller not you, so take everything they say with a pinch of salt. I've had agents blatantly lie about other offers, the number of people interested.
5. Advice? Tips? Words of warning? Things to double check?
Hmmm, best tip would be - review credit unions for loan offerings. We went with CUA, got a low rate and zero fees. I know people that have got great rates from the big banks because they qualified for a staff discount and aren't paying fees. I don't know that the deal is that great for everyone else though.
If you're really worried about such a big decision, I'd suggest using a buyer's agent. When we were buying a $1m property we were terrified and paid $10k for assistance in valuing and negotiating a price. At that time in that market, places were selling in one week and it was invaluable to have that help, and it definitely paid for itself. In a slower marker it would be less important.
Lastly, if you are buying a unit, you'll get a strata search done, where an independent person will review the strata minutes and finances and flag anything. I'd pay for that, but also do it yourself. Look for complaints about noise, maintenance issues. Although in theory, owners can be fined and so on if they are inconsiderate, practically it is very difficult to change anyone's antisocial behaviour. Ask me how I know.
In a newish build, see if the strata fees seem v low - sometimes they are set low when built to encourage people to buy, but later they are greatly increased to cover maintenance. Find out who built the block and google to check they are still in business / ask around whether they've had any insurance claims - e.g. waterproofing. Again, ask me how I know!


LonerMatt

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Re: Property in Australia
« Reply #344 on: November 13, 2017, 01:10:15 AM »
Thanks for the tips!


Also HOW DO YOU KNOW?

marty998

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Re: Property in Australia
« Reply #345 on: November 13, 2017, 01:37:15 AM »
You don't know. It's a leap of faith you've just got to take.

Check out www.onthehouse.com.au for free sales data, and allhomes.com.au for Canberra realestate ads (more focussed on the ACT, as opposed to the big boys RE.com and domain).

ACT stamp duty is decreasing quite substantially year on year. They're slamming investors with YUUUUUGE land tax bills. Pretty soon there won't be any investors left in Canberra apartments, screwing the lot of us with a ridiculous Land Tax formula that charges a higher marginal rate for low value units than for houses worth many multiples more.

I agree with Fresh Bread, the whole process is terrifying the first time around. You make an offer, sign the contract, THEN go talk to the Bank. Like I said, leap of faith!

It gets easier after that. First loan I got I was dressed in my best suit. Last loan I got I was in a singlet, boardies and thongs. The level of stress tends to go down over time. First week is "holy shit I owe the Bank fuckloads what the fuck am I doing am I a fucking idiot" etc etc you get the gist.

After a while you realise the bank is never going to call in the loan, they want you paying it off forever and your stress levels go down.

itchyfeet

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Re: Property in Australia
« Reply #346 on: November 13, 2017, 10:06:55 AM »
You don't know. It's a leap of faith you've just got to take.

Check out www.onthehouse.com.au for free sales data, and allhomes.com.au for Canberra realestate ads (more focussed on the ACT, as opposed to the big boys RE.com and domain).

ACT stamp duty is decreasing quite substantially year on year. They're slamming investors with YUUUUUGE land tax bills. Pretty soon there won't be any investors left in Canberra apartments, screwing the lot of us with a ridiculous Land Tax formula that charges a higher marginal rate for low value units than for houses worth many multiples more.

I agree with Fresh Bread, the whole process is terrifying the first time around. You make an offer, sign the contract, THEN go talk to the Bank. Like I said, leap of faith!

It gets easier after that. First loan I got I was dressed in my best suit. Last loan I got I was in a singlet, boardies and thongs. The level of stress tends to go down over time. First week is "holy shit I owe the Bank fuckloads what the fuck am I doing am I a fucking idiot" etc etc you get the gist.

After a while you realise the bank is never going to call in the loan, they want you paying it off forever and your stress levels go down.

Yes, that's how I was in my early 30s..... then one day in my early 40s I reverted back to "holy shit I owe the bank fuckloads. What the fuck am I doing. Am I a fucking idiot." This was shortly followed by what are my options? which in turn led me to MMM.

.... at some point I just got sick of being a slave to my job, and my mortgages were making me a slave... they still are for now (bring on 2019).

But whilst it sucks having a big mortgage over your head, having big mortgages has been the main way that I have generated wealth. I got lucky with the timing of my becoming an adult and have ridden a 20 year property boom. I'd roll the same dice in my mid 20s again.

However, I do think the game of taking massive leveraged positions on Aussie property to make big capital gains is not likely to be as fruitful as it has been. There's more downside risk than upside opportunity on Australian residential property today I reckon.

Talking of leaps of faith, the last place I bought was very casual and quite a leap of faith.

I flew up to Brissy for a weekend away with the DW, and decided to poke my head in to a few open houses (much to DW's annoyance) to fill in a spare hour.

I'd never been to the suburb where we were that day and have never been back since. But after a quick squiz at a few places it occurred to me that I could get close to a 6% gross rental yield in Brissy (compared to closer to 3% in Sydney) and could lock in a 5 year fixed interest loan at 4.6% at the time. With almost positive cashflow from day 1, I figured buying in Brissy was a pretty safe bet.

I took the plunge borrowing 110% of the purchase price the next day and did the whole transaction over the phone. I never met my banker, my lawyer or the selling agent. I have never met the agent I use to rent out the place either. Lol. I've never even been back to visit the house I bought.

The house hasn't proven to be a truly great investment yet, but given that I didn't put 1 cent of my own money on the table to buy, and only a little since i call it a small winner. I've had it around 4 years now. Maybe a little more.

I'd say it's been getting 4.0% net rent yield + 3.0% capital gains each year. So a 7% return against a borrowing cost of 4.6%... plus a little tax sheltering from the depn deductions as well. As I said, not a massive get rich scheme, but $10,000 a year net gain from not 1 cent originally invested of my own money is not so bad.

happy

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Re: Property in Australia
« Reply #347 on: January 08, 2018, 03:51:14 AM »
I live a low information diet lifestyle but turned on the radio to find an earnest discussion about policy surrounding rental housing,  negative gearing and the property market.

My ears pricked up since for the first time I've entered the rental game and this year at least will post some sort of negative gear.. So folks what do we think about this? If this got up, will it destroy the property market or will there just be a gentle correction that the Sydney market is certainly overdue. Labour is saying they will remove neg gear if they get in.

( I've recently sold my clown house and purchased a few acres in an urban area south of Sydney with a PPOR, and a 2br cottage and a duplex which are rented. Currently I have a neg gear, which I don't really believe in, but there is some limited opportunity to subdivide, and once at least part of this is accomplished (timeline 1-2years ) my debt will be minimal and I will be well and truly positively geared. There are number of margins of safety in this deal, so I'm not at all worried, more just interested in what you might think about the topic)

deborah

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Re: Property in Australia
« Reply #348 on: January 08, 2018, 04:31:40 AM »

asosharp

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Re: Property in Australia
« Reply #349 on: January 08, 2018, 09:03:13 AM »
Yeah I heard that too on the radio today.

I'm looking to buy another property locally which would be a family home ideally. The market in Perth is soft / dead, and the property people have always been like, "It's picking up!" which is then followed by an article months later saying it hasn't. I am curious to know how long it does take boom and bust markets that WA has to recover though?

I have been house hunting on and off for a while though. Some friends are also looking for 'family homes'. A lot of the homes seem to be not the nicest homes - I think it's mostly debt stress that people are selling off (or divorce). And if they are really nice homes, for some reason nobody seems to want to buy them. There's even two homes I know of that passed at auction and then the property's price jacked up like $200k more or something ridiculous like that. I wonder if it's the same agent recommending that strategy...

There are a lot of new apartments coming up not only in the city but also in South Perth, Scarborough (beach side suburb). It makes me wonder why though because we have an apartment glut...