Hi All
The big question at the moment is “where is the market at” and with so many threads re market position, bust, prices in free fall, I was not sure where to post this, so I will start fresh. Here is my real but one off experience I throw into the forum for you to consider……
Firstly I'm in the "correction to come" camp and some of you may know that in July 2003 I sold an IP in Surry Hills (inner city, trendy DINKS suburb in Sydney) and set a new record for the Street/Area. It was 2b plus study, 3.2m wide, renovated in 2001 with polished floors, etc. but only spruced up kitchen/bath, (the Reno cost $15k), front and rear garden (very rare for terrace) no car parking. Long term tenant of 18 months at $400 week (VG rent) and wanting to stay. I had bought to kill off PPOR debt and was nervous re rates and rental so off to market it went.
We sold early July, only days after the RBA held rates with a lot of commentators saying another drop was coming. Had huge interest with two offers before Auction one $490k and over 12 interested parties being prime median size and price for both IP and PPOR in this area. Lastly our agent scored the front page of the SMH Domain Saturday Property Guide day of the auction tied to an article regarding first home buyers in eastern Sydney. Yes $500k plus is FHB territory here. As I said DINKS everywhere, so the marketing could not have been better.
Day of Auction got huge response of 200 in the street, from Investors to Owner Occupiers. Owners loved the area and Investors loved the rental. After a short but frenzied bidding war it sold to lady who only saw it that morning for 5minutes before outbidding the next guy by $10K to offer $570k!
She had two other IPS bought last 2 years and told me her strategy was to keep tenant, Reno more (assume replace kitchen and bathroom) and sell again in 12 to 18 months. We would have taken $525K happily so we were stunned and went to Pub to have a stiff drink (wife went shopping!).
Since then what has happened considering the experts are saying in Sydney, the market topped in July 2003?????
Well, firstly IP is only round the corner so I walk past everyday and:
1. Excellent Tenant Gone. He was Small Businessman and a couple of clients had failed to cash up so money was tight. I knew him and trusted him so I let him go week there or again being one myself. But the new owner stuffed him around with delaying new lease and trying to raise rent and not happy to extend credit despite PM reference. So Tenant moved out to Randwick to cheaper accomodation because of rental glut. Got 2 bed semi for $300wk. Gap in rent then saw a DINK couple for three months but now has been empty at least eight weeks. Don’t know but owner must not be willing to drop rent to market probably around $350 wk.
2. Rates gone up 0.5% and talk of more to come. Hype from investors and Today Tonight from boom to gloom and clearance rates around 50% subject to who you believe.
So I saw our agent yesterday for a client property appraisal and asked him about my Auction and Market generally and what it would be worth now. His Answer????
$520k MAX.
So a loss of $50k or 9% in 6 months or 18% PA plus remember no income at present. I joked maybe I should offer her to buy it back!
Now this was not an Agent telling me what I wanted to hear as I work in property and he knows better. If fact, he himself sold his PPOR in December and lamented it had cost him $20k because he had waited too long.
So I don't know what this means for Brisbane or Perth but in Surry Hills Sydney things are not booming anymore. If anything if it keeps going this way I may be back in the market quicker than I had planned.
But as stated this is real, no BS, no Newspaper comment, but actual reality that I thought all of you may be interested to know.
Regards, Peter 147.
The big question at the moment is “where is the market at” and with so many threads re market position, bust, prices in free fall, I was not sure where to post this, so I will start fresh. Here is my real but one off experience I throw into the forum for you to consider……
Firstly I'm in the "correction to come" camp and some of you may know that in July 2003 I sold an IP in Surry Hills (inner city, trendy DINKS suburb in Sydney) and set a new record for the Street/Area. It was 2b plus study, 3.2m wide, renovated in 2001 with polished floors, etc. but only spruced up kitchen/bath, (the Reno cost $15k), front and rear garden (very rare for terrace) no car parking. Long term tenant of 18 months at $400 week (VG rent) and wanting to stay. I had bought to kill off PPOR debt and was nervous re rates and rental so off to market it went.
We sold early July, only days after the RBA held rates with a lot of commentators saying another drop was coming. Had huge interest with two offers before Auction one $490k and over 12 interested parties being prime median size and price for both IP and PPOR in this area. Lastly our agent scored the front page of the SMH Domain Saturday Property Guide day of the auction tied to an article regarding first home buyers in eastern Sydney. Yes $500k plus is FHB territory here. As I said DINKS everywhere, so the marketing could not have been better.
Day of Auction got huge response of 200 in the street, from Investors to Owner Occupiers. Owners loved the area and Investors loved the rental. After a short but frenzied bidding war it sold to lady who only saw it that morning for 5minutes before outbidding the next guy by $10K to offer $570k!
She had two other IPS bought last 2 years and told me her strategy was to keep tenant, Reno more (assume replace kitchen and bathroom) and sell again in 12 to 18 months. We would have taken $525K happily so we were stunned and went to Pub to have a stiff drink (wife went shopping!).
Since then what has happened considering the experts are saying in Sydney, the market topped in July 2003?????
Well, firstly IP is only round the corner so I walk past everyday and:
1. Excellent Tenant Gone. He was Small Businessman and a couple of clients had failed to cash up so money was tight. I knew him and trusted him so I let him go week there or again being one myself. But the new owner stuffed him around with delaying new lease and trying to raise rent and not happy to extend credit despite PM reference. So Tenant moved out to Randwick to cheaper accomodation because of rental glut. Got 2 bed semi for $300wk. Gap in rent then saw a DINK couple for three months but now has been empty at least eight weeks. Don’t know but owner must not be willing to drop rent to market probably around $350 wk.
2. Rates gone up 0.5% and talk of more to come. Hype from investors and Today Tonight from boom to gloom and clearance rates around 50% subject to who you believe.
So I saw our agent yesterday for a client property appraisal and asked him about my Auction and Market generally and what it would be worth now. His Answer????
$520k MAX.
So a loss of $50k or 9% in 6 months or 18% PA plus remember no income at present. I joked maybe I should offer her to buy it back!
Now this was not an Agent telling me what I wanted to hear as I work in property and he knows better. If fact, he himself sold his PPOR in December and lamented it had cost him $20k because he had waited too long.
So I don't know what this means for Brisbane or Perth but in Surry Hills Sydney things are not booming anymore. If anything if it keeps going this way I may be back in the market quicker than I had planned.
But as stated this is real, no BS, no Newspaper comment, but actual reality that I thought all of you may be interested to know.
Regards, Peter 147.
