Australia housing bubble

[Yellow_Festiva]

Originally Posted by zilo

Get a big bag of popcorn and sit back...the blood letting will begin soon enough.

A few places I've saved were passed in this weekend and now for sale by negotiation.

I agree with you. Last 3 months the media was buy buy buy 20% increase this year, get in while you can...

Now its about how many people are going to suffer from mortgage stress etc.

I've now changed my tact. I was attending several open houses each week looking for something semi decent with 3br and double garage circa $650-750k but it was always going to be temporary till I found another decent block or a house I really liked but then that middle section of the market is overheated and I'm dealing with first home buyers etc.

And then I would need to refinance to access my funds and rent it out...

Now I'm looking at the lower end of the market, 2br unit with garage between $320-360k as that bracket didn't go crazy and leave the rest in the bank ready to go when needed.

Easier to rent out after for 5% return, easier to refinance and should the market drop my losses would be minimal.

Was considering renting but don't see the point seeing I've got the cash and the stamp duty is around the same cost as a years rent. The way I see it after 12 months I would be ahead compared to renting.

I put in several generous offers in the past 2 weeks and not even a reply to negotiate... let's see what they go for at auction..

As for real estate agents... nothing ever changes. They should be charged for blatantly mis representing properties. So much wasted time going to places, lining up, signing in, taking shoes off only to walk out 30 seconds later ****ed off and mumbling... NOT AGAIN...

Part of the game I guess...

Sent from my SM-G973F using Tapatalk

[asagaai]

Originally Posted by zilo

Get a big bag of popcorn and sit back...the blood letting will begin soon enough.

Two years interest rates to go up in USA. Three years to four in Australia interst rates will rise. Hate to have a mortgage of a lazy $500,000 then.

[T3rminator]

Originally Posted by asagaai

Two years interest rates to go up in USA. Three years to four in Australia interst rates will rise. Hate to have a mortgage of a lazy $500,000 then.

Where are you hearing this? Management in our organisation is also predicting the same thing. We operate all over the world, and management in the US are also preparing for a rise within 2 years. Hmmmmm

[Yellow_Festiva]

Originally Posted by T3rminator

Where are you hearing this? Management in our organisation is also predicting the same thing. We operate all over the world, and management in the US are also preparing for a rise within 2 years. Hmmmmm

Pretty well documented. Things are going too well for them to drop any further. Only way is up.

I think the of dumping of mortgage stressed properties will start in 2-3 years. Once borders open most will pull any surplus funds to jump on a plane overseas based on the assumption that rates will stay low forever and that the government will bail them out should they screw up.

I wonder what has happened to our birth rate during this time??

Having said that, anyone who bought well over and above reserve would have bridged the difference themselves so their loan would be roughly based on market value.

Got 2 inspections tomorrow.... hopefully I find something soon.

[zilo]

It's not that houses are going up in price it is the fact that money is losing it's value due to quantitative easing....aka.. governments are all printing money.

It's a way of disguising inflation, no wage increases, rising commodity prices....Stagflation.

[Citroënbender]

I often wonder if another country is helping us there, by printing yet more of our money without being asked to. Quite kind and charitable of them, really.

And before a government-of-the-day admits overt “failure” to contain the over-enthusiastic efforts of mortgagees they will likely allow a range of debt softeners; I expect new titling laws permitting separate titles on granny flats, tiny minimum block sizes mandated nationally, sales of parks, cemeteries and other reserves for redevelopment, even conversions of ownership to 99 year leases with more protections than a regular lease. This latter point in conjunction with retained enthusiasm for selling our assets to overseas interests will allow the “Great Aussie Dream” to malinger a while yet.

[Citroënbender]

CGT question, as we’re looking at buying to demolish, develop a duplex and sell within two years. A rough sketch is:

Purchase: $2.5M
Development costs $750K
Interest $200K
Other income in the period to settlement $350K
Projected gross return $4M (settled by 30 month mark)

Do the development costs offset the capital gain, or are they borne by the developer? I would assume the former, but cannot see a clear answer.

Note: I’ve scrutinised a number of similar projects from purchase to completion/sale in the subject area and am reasonably confident (conservative) with final sale pricing.

[blueoval]

Originally Posted by Citroënbender

CGT question, as we’re looking at buying to demolish, develop a duplex and sell within two years. A rough sketch is:

Purchase: $2.5M
Development costs $750K
Interest $200K
Other income in the period to settlement $350K
Projected gross return $4M (settled by 30 month mark)

Do the development costs offset the capital gain, or are they borne by the developer? I would assume the former, but cannot see a clear answer.

Note: I’ve scrutinised a number of similar projects from purchase to completion/sale in the subject area and am reasonably confident (conservative) with final sale pricing.

I think you may need to consult your accountant for those answers. They can usually find the legalities with this.

[Citroënbender]

I think you may need to consult your accountant for those answers. They can usually find the legalities with this.

There’s more than one accountant on the forum, and more than one member who has subdivided for a profit. I’m surprised anonymous opinions are so thin on the ground.

[T3rminator]

Originally Posted by Citroënbender

There’s more than one accountant on the forum, and more than one member who has subdivided for a profit. I’m surprised anonymous opinions are so thin on the ground.

I don't want to give you the wrong advice. I did one about 15 years ago. I think the development cost was capitalised, but its so long ago I can't be sure.

[blueoval]

Originally Posted by Citroënbender

There’s more than one accountant on the forum, and more than one member who has subdivided for a profit. I’m surprised anonymous opinions are so thin on the ground.

I'm being presumptuous but it could be because they usually get paid for offering financial advice like this so they prefer not to comment. I could be wrong.

[zilo]

Originally Posted by Citroënbender

CGT question, as we’re looking at buying to demolish, develop a duplex and sell within two years. A rough sketch is:

Purchase: $2.5M
Development costs $750K
Interest $200K
Other income in the period to settlement $350K
Projected gross return $4M (settled by 30 month mark)

Do the development costs offset the capital gain, or are they borne by the developer? I would assume the former, but cannot see a clear answer.

Note: I’ve scrutinised a number of similar projects from purchase to completion/sale in the subject area and am reasonably confident (conservative) with final sale pricing.

I know where you can get the exact answer to that question in a legally binding, formal way.....


Ring the ATO.....

[FairmontGS]

Originally Posted by blueoval

I'm being presumptuous but it could be because they usually get paid for offering financial advice like this so they prefer not to comment. I could be wrong.

You're not wrong.

Have a look here.

https://www.ato.gov.au/general/capit...r-real-estate/

[Citroënbender]

Cheers, it’s interesting to note that my example is - to my inspection of Sydney - far from unusual, yet the ATO uses much smaller example. The reason I put actual numbers in, was in case it put me into a category that begat certain different strictures.

Interesting to note, too, that on a forum like HAMB, if you’ve got runs on the board there are all kinds of informed inputs forthcoming. People will disqualify their opinion as a legal precaution but it’s often on point because their credentials are current. (I only visit there for the old school tech, the politics don’t appeal.)

[T3rminator]

What do people find to be the best estimate on value of a property? They vary wildly.

Real estate website estimates?

Rates notice estimates?

Bank valuations?

Agent appraisals?

[Citroënbender]

If possible, look at nearby auction results of similar properties first. I’ve found agents to be cagey at best, veering towards covert. If a sale has done well, they usually trumpet the price loudly.

[T3rminator]

Originally Posted by Citroënbender

If possible, look at nearby auction results of similar properties first. I’ve found agents to be cagey at best, veering towards covert. If a sale has done well, they usually trumpet the price loudly.

Real estate website estimates do use nearby sales and attributes as a guide. Must be some sort of algorithm that does the calculation. I found them to be almost on par with what some of the agents are claiming, but WELL above bank valuations and what is on rates notice. So hard to gauge what is sensible.

[Citroënbender]

Every time I’ve compared with the realty websites, they seem quite conservative against hammer fall. I generally don’t go to auctions as they’re on Saturdays but wait for the “sold” sticker to go up.

[nstg8a]

We are currently going through a forced sale thanks to qld govt, and we have to get our house valued for that.

They suggest not using real estate agent style valuations as they tend to be unrealistic.

FYI, the valuators they suggest cost $3000-4000….

[GasoLane]

Originally Posted by nstg8a

We are currently going through a forced sale thanks to qld govt, and we have to get our house valued for that.

They suggest not using real estate agent style valuations as they tend to be unrealistic.

FYI, the valuators they suggest cost $3000-4000….

Who is "they"?

[Trendseeker]

This website gives a reasonably good indication of the market price for property.

https://www.propertyvalue.com.au/

[nstg8a]

Originally Posted by GasoLane

Who is "they"?

The govt officials that came and served us with “notice to resume” papers.

[GasoLane]

Originally Posted by nstg8a

The govt officials that came and served us with “notice to resume” papers.

Gee, I wonder why Gov officials want you to use their recommended valuers and not an agents

[nstg8a]

Originally Posted by GasoLane

Gee, I wonder why Gov officials want you to use their recommended valuers and not an agents

Jobs for the boys… I wouldn’t surprised if they get kickbacks from the valuers.
I know at least three of our neighbors are using the same valuer. $12000-16000 for a days work is pretty decent.

[sr71]

^Collusion time. Control who benefits from the kickbacks! You! Offer a share of the spoils. For every extra $100k the valuer increases property value by, give them $10k.

[Citroënbender]

Originally Posted by Trendseeker

This website gives a reasonably good indication of the market price for property.

https://www.propertyvalue.com.au/

I’ve punched in a few around my area and it’s clocking up to a million low. There’s one for sale with their estimate at $1.8M right beside a near-identical block that sold for $2.4M in April.

[T3rminator]

Originally Posted by Trendseeker

This website gives a reasonably good indication of the market price for property.

https://www.propertyvalue.com.au/

Seems to be on par with bank valuation figures i.e. lower scale.

[Citroënbender]

I wish they could be bought at some of those “valuations”.

[Trendseeker]

Originally Posted by Citroënbender

I’ve punched in a few around my area and it’s clocking up to a million low. There’s one for sale with their estimate at $1.8M right beside a near-identical block that sold for $2.4M in April.

I often used that site few months ago when my daughter and son-in-law we’re looking to buy a house. It was valuing properties a bit low then in comparison to the sold price at every auction they were interested in.

However the prices they were achieving at auctions were a lot higher than the agent estimated (not surprisingly) and incrementally higher than similar places sold only a few weeks before. Prices were jumping $10K every week or two. I didn’t see the margins you’ve mentioned when I was looking, but it seems the algorithm needs some tweaking.

[blueoval]

with SA's current market trend, I have heard homes are going for 50-60k above asking price in some areas. Which is great if you're selling and buying a cheaper house. It sucks the big one if you are trying to put a foot in the market.