This has gotta hurt
- Thread starter Simon
- Start date
Would have hurt the bank.....but considering their profits recently, not that much....
Can't believe Sydney investors didn't push it beyond a 6.8% gross yield.......maybe it was raining the day of the auction, or it wasn't advertised well....
Would be interesting to tap into property sentiment in Sydney's west....suppose ill feeling is building due to newspapers' attempts to cool the market, and the threat of another rate rise.
Can't believe Sydney investors didn't push it beyond a 6.8% gross yield.......maybe it was raining the day of the auction, or it wasn't advertised well....
Would be interesting to tap into property sentiment in Sydney's west....suppose ill feeling is building due to newspapers' attempts to cool the market, and the threat of another rate rise.
Tip of the ice-burg?
The SMH article highlighted that there had been an increase in repossessed property as people in the mortgage belt come to terms with increased petrol prices and interest rates.
It is well known that the level of debt in Australia is the highest it has ever been. The property boom of 2003 was fuelled for the greater part by record low interest rates, increasing wages and the FHOG.
To me this illustrates those investors/home owners on the margin that over-committed during the property boom, did not allow for significant interest/other expense increases or simply made bad investment choices.
Could this be the tip of the ice-burg as those marginal suburbs more subject to investor sentiment loose value as banks start reigning in debt? Or is this simply a case of those 'deal of the decades' that crop up every week just gaining some media attention?
For the record the weather yesterday in Sydney was glorious; perfect auction weather!
The SMH article highlighted that there had been an increase in repossessed property as people in the mortgage belt come to terms with increased petrol prices and interest rates.
It is well known that the level of debt in Australia is the highest it has ever been. The property boom of 2003 was fuelled for the greater part by record low interest rates, increasing wages and the FHOG.
To me this illustrates those investors/home owners on the margin that over-committed during the property boom, did not allow for significant interest/other expense increases or simply made bad investment choices.
Could this be the tip of the ice-burg as those marginal suburbs more subject to investor sentiment loose value as banks start reigning in debt? Or is this simply a case of those 'deal of the decades' that crop up every week just gaining some media attention?
For the record the weather yesterday in Sydney was glorious; perfect auction weather!
2.5% return!!! Where was their brain when it was first purchased?
Way above market.Yikes!!
Does anyone know this area well - did the vendor purchase way above market price to begin with back in 2003?
I haven't seen anything in Melbourne like this, yet....
Cheers,
Jen
Even at that time you could find 2 br units for the $200K mark.
Some very slick RE agent must have sold him that unit.
Mind you I like the original valuation. Makes my portfolio look even better.
Cheers
http://www.realestate.com.au/cgi-bi...eader=&s=nsw&snf=rbs&tm=1158472783&c=11755418
This one is on the same street. TWO bedrooms advertised for $129,500. I'm assuming that meant the contract price was less than this.
Alex
This one is on the same street. TWO bedrooms advertised for $129,500. I'm assuming that meant the contract price was less than this.
Alex
Alex, you are obviously a realestate.com.au junkie....here's the full list......
http://www.realestate.com.au/cgi-bi...inbed=&maxbed=&parking=&minlandsize=&p=30&o=p
Now why can't the papers do the same research......
http://www.realestate.com.au/cgi-bi...inbed=&maxbed=&parking=&minlandsize=&p=30&o=p
Now why can't the papers do the same research......
Of course it is Shane - that's due to inflation alone.
Pst property prices were much lower, hence debt levels were lower - even if people invested a higher proportion of their wages into property repayments.
More important than absolute debt levels is relative debt levels. The proportion of a person's income required to pay the mortgage.
(note that I'm not saying that the relative measure isn't too high atm - I'm just pointing you to the more useful figure to watch).
To my knowledge, no bank is 'reigning in debt' - AKA forcing people into selling up.
They prefer the cashflow to holding a property that they cannot sell for enough to get their loan amount back
On average Australian default levels are significantly lower than defaults in most other countries. People give up a lot before they give up their home.
Hence it's less risky and earns better PR if banks do not force people out.
Cheers,
Aceyducey
From the re.com properties listed for sale, I'd say $95k isn't unfair. Rent hasn't gone up much in the last 3 years, and I can't believe everyone bought at 2.5% yields. It's not that prices are significantly down now, but that the seller of this place paid a completely crazy price for it back in 2003.
No doubt you're seeing the lunatic fringe here: the most overly extended (i.e. paying the most stupid prices) would hit the wall first. There are plenty of people who are sitting on negative equity but can still make payments. For now.
What idiot buys at 2.5% YIELD for a UNIT in CABRAMATTA??? For those who don't know Sydney, it's a suburb in the West known (in the 80's, especially) as a hangout for Vietnamese gangs. It's better now as property prices moved up a bit, but not much. Put it this way, a little further East at Parramatta (big centre with offices, etc) cheaper units are just under $200k. FURTHER west at Mt Druitt, etc (nearer the Western Sydney centre of Blacktown) cheap units are also just under $200k. So you have a few suburbs between them (Cabramatta being one) that is significantly cheaper, and always has been.
Now, if only enough battlers read this, panic and sell their investment properties!!!
Alex
No doubt you're seeing the lunatic fringe here: the most overly extended (i.e. paying the most stupid prices) would hit the wall first. There are plenty of people who are sitting on negative equity but can still make payments. For now.
What idiot buys at 2.5% YIELD for a UNIT in CABRAMATTA??? For those who don't know Sydney, it's a suburb in the West known (in the 80's, especially) as a hangout for Vietnamese gangs. It's better now as property prices moved up a bit, but not much. Put it this way, a little further East at Parramatta (big centre with offices, etc) cheaper units are just under $200k. FURTHER west at Mt Druitt, etc (nearer the Western Sydney centre of Blacktown) cheap units are also just under $200k. So you have a few suburbs between them (Cabramatta being one) that is significantly cheaper, and always has been.
Now, if only enough battlers read this, panic and sell their investment properties!!!
Alex
Alexlee
I think you need to realise that every property puchase is not made by an investor or by a home owner that thinks like an investor.
Acutually these type of buyers are the ones that drive the market at the end of the day.
Maybe the person who bought this property is a FHOG that didnt want to miss out.I have witnessed a young couple doing the exact thing in the last month in the Perth market. They say at least we are now in the market an it just keeps going up we will get out of this unit[very small ] in a couple of years and take our profit and set ourselves up. ok good luck to them l hate to see anyone loose but l have to admit the odds are against them
ps if every sale was based on yeild it would be a sad market and one that would be hard to profit from quickly
cheers yadreamin
I think you need to realise that every property puchase is not made by an investor or by a home owner that thinks like an investor.
Acutually these type of buyers are the ones that drive the market at the end of the day.
Maybe the person who bought this property is a FHOG that didnt want to miss out.I have witnessed a young couple doing the exact thing in the last month in the Perth market. They say at least we are now in the market an it just keeps going up
we will get out of this unit[very small ] in a couple of years and take our profit and set ourselves up. ok good luck to them l hate to see anyone loose but l have to admit the odds are against them ps if every sale was based on yeild it would be a sad market and one that would be hard to profit from quickly
cheers yadreamin
Yep,
My latest IP is a 2.26% yield. I'm renting it for $300pw on a purchase price of $690K.
Mind you, that's a discounted rent to secure the property. It will revert to market after the 12 month lease expires.
In the meantime, the cash flow is a killer.
Cheers,
Michael.
*********************
Xenia,
Say that again?... but this time tell that to the average Dad and Mum investors in Perth before they got similarly hurt in 2-3 years time too.
Cheers,
Kenneth KOH
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Very interesting + differing responses and perspectives to the same issue indeed.
Thank you for the timely reminder and for my own further self-education, please.
Cheers,
Kenneth KOH
Kenneth,
I think Xenia was referring to the original purchase price - not the recent one....
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