The other day I drove by a property with a sold sign. I drive by it often. I had previously valued it so I thought I would look the sale up.
It is in Camberwell in Melbourne (one of Melbournes top suburbs), a semi detached 1930s clinker brick one of a pair on 400 sqm of land in a very nice estate.
It has just sold (Aug 04) for $476,500, in Dec 2002 I valued it (on sep title) at $465,000. The owner paid $860,000 for it and the other one (of the pair) on the one title in April 2002. The owner went to the expense of getting a separate title (surveying costs etc) and did some cosmetic renovations (done by the time I had valued it).
Remember property is a long term investment. In this case the owner would have lost money. (although an owner occupied dwelling, yields in the area are rarely more than 3.5%). Stamp duty & transfer fee $24,000, selling costs 2.5% plus advertising and legals say $14,000, separate title fees say $6,000, renovations say $10,000, total costs $54,000. Increase in property value $34,500. Loss around $20k, now if it had been a rental factor in around 3.0% loss in interest on an ongoing basis so add another $14k to the loss.
Long term, property is a good investment, but like any asset class it will go through periods of growth and decline. This is not even an example of a decline, the price went up in nominal terms, but remember that there are big costs involved in buying and selling property in Australia. In other areas around the country there is still growth...I just wish I had that crystal ball......
Remember that past performance is not an indicator of future returns....
The days of fast assured price growth and value increase are in hiatus for a while.
cheers,
RightValue
It is in Camberwell in Melbourne (one of Melbournes top suburbs), a semi detached 1930s clinker brick one of a pair on 400 sqm of land in a very nice estate.
It has just sold (Aug 04) for $476,500, in Dec 2002 I valued it (on sep title) at $465,000. The owner paid $860,000 for it and the other one (of the pair) on the one title in April 2002. The owner went to the expense of getting a separate title (surveying costs etc) and did some cosmetic renovations (done by the time I had valued it).
Remember property is a long term investment. In this case the owner would have lost money. (although an owner occupied dwelling, yields in the area are rarely more than 3.5%). Stamp duty & transfer fee $24,000, selling costs 2.5% plus advertising and legals say $14,000, separate title fees say $6,000, renovations say $10,000, total costs $54,000. Increase in property value $34,500. Loss around $20k, now if it had been a rental factor in around 3.0% loss in interest on an ongoing basis so add another $14k to the loss.
Long term, property is a good investment, but like any asset class it will go through periods of growth and decline. This is not even an example of a decline, the price went up in nominal terms, but remember that there are big costs involved in buying and selling property in Australia. In other areas around the country there is still growth...I just wish I had that crystal ball......
Remember that past performance is not an indicator of future returns....
The days of fast assured price growth and value increase are in hiatus for a while.
cheers,
RightValue
