Real life examples of downturn

Jacque

Jacque

Another real life example of why you should always consider property as a LONG TERM (ie: at least one property cycle of approx 8-10 yrs) investment.

Tonight I attended an auction and witnessed one very happy buyer purchase a near new 2 bed 2 bath unit on the Baulkham Hills/Castle Hill border for an amazing $301,000. The vendor must have been one very desperate seller, as he paid $470,000 for it as a new unit (or possibly OTP) back at the peak of the Sydney boom, end of 2003
Very sad for the vendor, but what a bargain for the buyer
My pre-auction estimate had actually been low $400K's
I wonder how much more the vendor could have got if he'd sold it private treaty. One wonders.....
 
Wow what a bargain! You didn't want to bid on it? Only house I know of was a house a 4 Bedroom, 2 bathroom house in Illawong which had been previously valued at 700-750k sold for 560K.. Still expensive, but cheap for the area, the new owner couldn't believe his luck!!
 
A Good example Jacque.
I brought a townhouse in Townsville at the height of the market in 1993 and sold it seven years later for a 15k loss. It was my first property and I didn't have a clue as to what I was doing. An expansive lesson, but it has shaped how I invest now. I now only invest in Capital cities and look at where that particular cities is in relation to the property cycle.
I reckon there will be alot more people learning the same lesson as I did, especially if interest rates head up like Ian has been warning and people are forced to sell.
 
FrankGrimes said:
Wow what a bargain! You didn't want to bid on it? Only house I know of was a house a 4 Bedroom, 2 bathroom house in Illawong which had been previously valued at 700-750k sold for 560K.. Still expensive, but cheap for the area, the new owner couldn't believe his luck!!
Click to expand...

I was tempted, Frank :)

In my opinion, the seller would have been better off listing in the high $300's via private treaty to attract buyer interest, as recent comps illustrate that low $400's for this type of property is not actually unattainable in the current market. Guess he must have been one motivated vendor.........
Well done to the buyer I say :)
 
Cycles Repeat & Repeat. Herds following

My thoughts exactly on present market. My first boom in 1979 I did not know what happened. @nd boom in 1989 learnt a lot. 3rd boom 2000 really got to know history.

Lot of bargains ahead.

I recall years ago when the late Kerry Packer sold off a lot of stuff his quote was;

There is nothing I have sold that will be worth any more in 5 or more years. And I can use the money now. (Or something like that)

That thought always stuck in my head.

And I think it is where we are basically now.
 
301,000 dollars, sounds like a bargain, but who knows this time next years it might only be worth 270 or 280K, who can call the bottom of a falling market?

nobody i tells ya i would think pure coincidence or luck if you get it right
 
Wouldn't you use yield analysis to estimate a bottom? Say the implied yield approaches the interest rate. That's a good indication it's not going to fall much further, right? (i.e. makes renting as expensive as buying, which means buyers will start going in at that price).

Rough, of course, but it gives you some indication. The current Sydney market still has a lot to fall, IMHO, but rents will increase.
Alex
 
What's a Jizzlobber? :confused:



Anyway Jacque, I reckon the tragedy is that noone at Somersoft had instructed you to snare that bargain on their behalf! :D
 
gee cee the bargains after a boom are amazing

hows this one.....

1990 investor bought IP 1.1 mil
sold 1991 by bank at mortgagee auction 360k

also lost their PPOR....

totally overgeared.....

you might be right...lots of bargains ahead
 
hb1 said:
gee cee the bargains after a boom are amazing

hows this one.....

1990 investor bought IP 1.1 mil
sold 1991 by bank at mortgagee auction 360k

also lost their PPOR....

totally overgeared.....

you might be right...lots of bargains ahead
Click to expand...


Wow! Where was that example from? I'm assuming somewhere in Melbourne?
 
JP.

Thanks for that example.

That's the sort of purchase that suggests a bigger shake down is starting to occure.

I've set a goal of buying at close to 50 - 60 % of the peak of the previous top. Whether I do that , remains to be seen , but I know people on the forum have done it in previous cycles and not just once.

I saw two properties sell in good locations in the last cycle at around that discount , and that was without specifically being in the market looking for bargains. We were buying our previous PPOR at the time.

See Change
 
Auctions work best for unique/period/high demand properties. An OTP unit in middle Sydney in a falling market seems a very poor fit for an auctionable property.

That vendor selling for $301k must have been very desperate. I don't see it as a flaw in the auction system though, although the vendor should never have gone to auction, once they had there's no shame in having your property passed in and then putting it up latter for PS.
 
another example of the house market struggling!

I have a friend who handles repossessions for the banks, does the evictions lock ups and organises the selling agents. Between 2000 and 2005 they were barely making enough money to put food on the table, now they have more files than they can handle. Even had to put on staff :)
 
liverpoolharryk said:
I have a friend who handles repossessions for the banks, does the evictions lock ups and organises the selling agents.
Click to expand...

Does your friend have contacts as to how they move these propoerties? As a general question - are there known places to go for these type of sales?
 
I think some people are sensationalising the 'falling market'. The vendor most likely paid way too much in the first place. Castle Hill is not inner Sydney. You can buy houses on land, closer to the city for less than $470k. I bought OTP in 2000 but from 2001 on i saw very little valued in the Sydney OTP properties advertised. OK, i did not look extensively but there would have been a lot of people blindly paying too much without doing proper research.

Regards
Alistair
 
Good Buy

One of my best buys was in mid eighties. A fairly large developer was strapped out. Put his worst properties on market. A hobby farm, and a block of 4 units. The units at the time were supposed to be valued at almost 200k. On the day I was the only bidder at a starting price of $83k. Everyone laughed cool:

But after it was passed in I negotiated a buy at $86500 with a 4 week settlement. It was a bit stressful as i had no financed arranged. Fortunately my Works Credit Union had alreaady seen what i could do and approved the loan. For the next 3 years I gradually re-furbished each unit. Doing all the work myself. Usually after night or afternoon shift.
Once cleaned up I had a better class of tenant at a higher rent.

During the 1988 boom I had a good offer so I sold up. Sat on the fence for a while.

Do I keep repeating things and Boom Bust Theories??:confused:
 
Repeated history

Just looked over this post from a couple of years back.

Seems like still waiting for the next boom. And i don't think it will be this year:(

Gee Cee
Greg
 
Good post to dig up...

I think in 2010 we'll look back and say the market market turned in 2008, its hard to see when we are in the middle of it.

A few reasons:

% rate reducations stimulates market
people opening their super fund statements and seeing the loss from equities means the younder of the baby boomers will re enter the IP market (one last go before retirement - its a proven trend - google Harry S Dent)
And we are due for an increase in Syd and Mel
 
Jag, i read this and thought same thing... i do belive we are on a convergance.... wait for people to jump on the bandwagon. there are some very undervalued parts of sydney.
 
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