local anecdote - market bad

Hi Boys and Girls,

There is always lots of talk about the market, and much of it is noise and self-serving comment with an agenda.

Here's our latest experience, and yes it is only one market, and you can use the info for your own conclusions. No agenda, no self interest.

We have a 2 x 1 unit in Central Frankston, which we have been trying to sell for a little over 3 months now (need some cashflow from the CG). Good location, close to everything, quiet court, rear courtyard, etc.

We are talking lower end of market price range where the majority of buyers are - FHB's, retirees and investors for our type of property (maybe not investors due to current yield on purchase price).

Was appraised by local agents at $265-$270k. I agreed, and we set it at $269k and were hoping for $265k.

After 2 months with this agent, we had exactly NO offers of any sort - other than one old Nanna who needed to sell her place first in order to buy (she still hasn't sold apparently).

There was also next to no interest as well during this time by way of enquiries.

So, gave this agent the heave-ho, and signed another. Still agreed on the price range, but recommended we go with a selling range of $245-$270k.

I said he was wasting his time, and would only get wood-ducks offering low $240's, but he was adamant he could get 'em up.

Fast forward 2 months, and the unit next door was advertised for $269k, very nicely renovated. Sold for $265k after a couple of weeks, but sale fell over due to no finance. Back on the market now at $259k.

Meanwhile, we have had not one offer of any kind with our you-beaut selling range; not even a stupid mid-$230's try.

So, I call the agent yesterday, told him he was wasting his time and ours, thanks a lot and see you later. He wan'ts to change the advertised sell price to $245k+.

We talked about things for a bit, he did his darndest to talk it up and keep things alive; reckoned that maybe - he said maybe the FHB's might come out again now that the stamp duty has been discounted.

I then mentioned the difficulty with getting finance and he said that "this has been and is continuing to be a problem across the board", he also said there were a big number of properties on the market right now, with lesws buyers, so it is harder to sell. No kidding.

I then said that we want to sell it, but will not be giving it away either, and when I said we want to nett $250k and could he honestly say he could achieve this (I knew the answer already) he said "Um...no".

We are going to re-advertise it for rent today - I hear rents are on the increase.

So, in a little over 3 months, the price has gone from $269k to $245k if you are lucky.

Now, Frangers is a big place, a blue collar city, so this - to me - is a good yardstick for the market....DEAD.

Thanks for sharing BayView. If nothing else I think this example shows just how quickly things can turn.

I have family members & colleagues who have sold/are currently selling and similarly offers are not coming in at all or are mostly coming in at large discounts to what was possible 6/12/24 months ago (different states and suburbs).

Melbourne has stalled

I hear ya BayView.

The market where we were selling (Bayside) was falling with each breath we took. Buyers very thin on the ground and certainly in control. I am pleased we got out late April. Were we sellers late last year, the price differential would have been around 10-15% with buyers falling over themselves to get to contract. Never mind we now have some cash and are watching for other opportunities.

It was not a keeper for our intents and purposes as it was our former PPOR and the rubbish yield and pool/spa upkeep would have been a headache. Also I don't see the generic Melbourne market growing anything beyond CPI or sideways tracking for quite some time.

Good luck moving forward..........everything will sell for a price

We just settled on a Brisbane property we had on the market for 8 months, and took a 14.5% discount on appraised value. Listings in the area doubled through 2010. We had a contract on it for 5 months subject to sale of the buyer's house, which eventually they achieved. The price we got was 5% above what we paid in 2007.

Player said:

Good luck moving forward..........everything will sell for a price

Click to expand...

When the demand is not there, then the elasticity in the selling price increases significantly.

Just have to wait for demand to return.

Melbourne has had a huge jump in prices in the last few years.

Im having the same problem with melbourne cbd properties, also sold one last year, was hoping to offload one more this year, but so far no luck.

But with a 5.5% gross yld, there isnt any real pressure to sell, its just trapping capital that could be better deployed elsewhere.

Trouble selling one property? Try 15!

http://www.realestate.com.au/property-house-sa-davoren+park-107120872

Hi,

We sold a 2 brm unit in Black Rock last weekend. We purchased it in November 09 for 485,000. Had it appraised around 6 weeks ago for $570,000 - $590,000, agent was adamant he could get $570,000 for us as it is fully renovated and unrenovated ones have been selling for around $550,000 so we went to auction. Sold after auction for $530,000 with the agent saying we won't get anymore in this market. Had to sell unfortunately due to personal situation. Have another IP in Balnarring on Westernport Bay which we will hold on to as it has done quite well. PPOR also in Balnarring.

BayView said:

We have a 2 x 1 unit in Central Frankston, which we have been trying to sell for a little over 3 months now (need some cashflow from the CG). Good location, close to everything, quiet court, rear courtyard, etc.

After 2 months with this agent, we had exactly NO offers of any sort.

So, gave this agent the heave-ho, and signed another. Still agreed on the price range, but recommended we go with a selling range of $245-$270k.

So, in a little over 3 months, the price has gone from $269k to $245k if you are lucky.

Now, Frangers is a big place, a blue collar city, so this - to me - is a good yardstick for the market....DEAD.

Click to expand...

Yes, beyond any doubt in my mind, the Frankston market is VERY dead ATM.

I would LOVE to know the agencies you have been dealing with if possible, and also the address of your property if you want to tell me.

We are on the edge of buying a cheap investment property whilst it's a buyers market, and you just never know...

PM me if you like... thanks.

i'm sorry to hear you can't move it......but it's one less property on the market not sold for a discount.....now if everyone else would just wake up to that sobering fact we might see a balance in the market.

i was only telling the missus two days ago this would be a recurring trend and that property bulls like REIWA would ham it up about less stock, shortgaes, demand and create another mini-rush.

i'll be looking to get out then. i got nothign happening at my end either, but i've only been on 5 weeks.

I hear ya! It is quite bad where our properties are too.

The last one we bought in late 2009 we paid 238000 rents for 260 pw now. The houses around it are now listed at 180000 and not selling!!! That is 7.5% gross return. Agents are hard put to even get a phone call.

Our duplex that we listed for 450k neg last year we now have listed for 395k and not a single bite- returns 440pw and can be strata titled etc. go figure.

Had lunch with a friend in Brisbane last week who is principle of a RE agency in Sunnybank.

He told me that for the last 12 months the market has been declining and he thinks will continue to do so for the next too.

There's been a slight flurry of buyers getting in before the stupid stamp duty change comes about in August, he said.

BayView said:

So, in a little over 3 months, the price has gone from $269k to $245k if you are lucky.

Now, Frangers is a big place, a blue collar city, so this - to me - is a good yardstick for the market....DEAD.

Click to expand...

I agree the Melbourne market is not looking great for the next few years, but that is to be expected given the huge gains over the past few years, and the resulting supply response (over response). Here's an article from Property Observer discussing the differences between the current Melbourne and Sydney markets...

In early 2010 the effects of the Global Financial Crisis set in motion an upturn in both the inner-Sydney and inner-Melbourne apartment markets. The lower level of construction instigated by the GFC in the latter half of 2008 constrained new apartment completions in both markets. This further tightened rental markets, which, together with the post-GFC fall in prices in 2008-09, resulted in rents and yields rising.

As the economic outlook improved over 2009-/10 (and alternative investment forms such as equities remained weak) investors began to flood the inner-Melbourne apartment market. Investor demand in Sydney also improved, albeit at a more modest rate.

Given the resultant increase in the pipeline of supply, BIS Shrapnel is asking if the conditions in the inner-city apartment markets remain conducive for the upturn in Melbourne to be sustained, and to create a further upside in Sydney...

Continues... Melbourne vs Sydney... a tale of two cities

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Bayview, why is it the agents fault that you want more for the property than anyone is willing to pay?

Because the agent has signed up on the basis of one expectation and then tried to manage the sellers expectation down to meet the market.

having sold or organised sale of 4 properties during the lull in perth in the last couple of years i must say buyers are extremely fussy and with good reason. properties need to be presented very well and priced well to begin with in order to stand out.

all have sold fairly quickly from being put on the market but i do think if you do the old try for what the agent thinks is possible then bring prices down etc you can end up with a stale property no one is interested in

ive got another coming on to the market tomorrow/friday and 2 more in the next 3 months here's hoping they goes ok

on the plus side though, great buying opportunities and what you lose in selling at a lower price can more than be made up in buying something else

Orks said:

Bayview, why is it the agents fault that you want more for the property than anyone is willing to pay?

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What Tom said. I'd be pissed if they over quoted the likely sale price and then came back after auction and said Oh but thats the market, take it.

Bayview,

To me there seems an oversupply of 2x1 villas for sale in central Frankston.

Is yours much better than these unrenovated ones going for 220k and 229k:

http://www.realestate.com.au/property-unit-vic-frankston-107553580

http://www.realestate.com.au/property-unit-vic-frankston-107536255

Or better than this renovated one under contract for ?around 232k:

http://www.realestate.com.au/property-unit-vic-frankston-106970895

Perhaps you need to lower your expectations further?

In a flat/down market, if your property is just ''average'', it won't stand out from the crowd and be more attractive to buyers who are spoilt for choice.

Orks said:

Bayview, why is it the agents fault that you want more for the property than anyone is willing to pay?

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I asked them for their opinions on the value of the property (and I already had my own estimate which sorta matched theirs).

I only want what everyone says we should be able to sell it for. There was no talk at all (from the agents) at the start about the state of the market, and to lower the expectations - it's an omission of facts.

Of course; in hindsight it turns out that the market tanked quicker than everyone was ready for, so they are only half to blame.

I do admit, however, having a dig about the agent when he was trying to talk up a dead horse....can't blame him really - he needs to feed himself, and he was trying to "condition" me down. Bad move.

The wash up is we want a certain price, which we will not be able to achieve, and he was trying to keep the dream alive nonetheless.

But the thread is not about that; it's not a r/e bashing session (time for than another day) - it's about the state of the market.

Bayview,

To me there seems an oversupply of 2x1 villas for sale in central Frankston.
Yes there is.

Is yours much better than these unrenovated ones going for 220k and 229k:

http://www.realestate.com.au/property-unit-vic-frankston-107553580
Better

http://www.realestate.com.au/property-unit-vic-frankston-107536255
Better

Or better than this renovated one under contract for ?around 232k:

http://www.realestate.com.au/property-unit-vic-frankston-106970895
Better

Perhaps you need to lower your expectations further?
No; when we began, we were told the value was around the mid $260's. The expectation was for that, and we set the price at $269k knowing we would be coming down a bit from there. Normal stuff.

This has not turned out to be the case, so we are taking the unit off the market. Am I crying? No

All I was doing was illustrating the state of the market based on what has happened for your benefit/information.

Do I care that the values are down to the $240's? No. Well actually;yes, but not that much. We simply won't be selling at this time.

In a flat/down market, if your property is just ''average'', it won't stand out from the crowd and be more attractive to buyers who are spoilt for choice.
I am well aware of this. That's why it is no longer for sale, and will be rented again, with an increase. I would like to do a bit more of a revamp to it, but I don't have either time or funds to do it, and it wouldn't necessarily achieve a higher price than the cost of the reno - just make it more attractive to sell most like.

You people think I'm having a whinge about this. I'm not; just telling you how the market is. FFS

oneuppmanship said:

Had lunch with a friend in Brisbane last week who is principle of a RE agency in Sunnybank.

He told me that for the last 12 months the market has been declining and he thinks will continue to do so for the next too.

There's been a slight flurry of buyers getting in before the stupid stamp duty change comes about in August, he said.

Click to expand...

We have a townhouse in Eight Mile Plains that's on the market right now. Been 10 weeks, and no offers, with the agent now suggesting we lower our price by about 6%, which happens to be about $15k below our "happy with" price.

I'm going to withdraw it.

So it's not just Melbourne.

Interestingly, our agent has acted pretty much the same as Bayview's; put it out there at a reasonable price, with the expectation that we'll come down a little bit, but now he's trying to talk us down. Apparently there's some $10k grant for new builds or something coming in in Qld that will potentially impact on established stock.