Thanks Thorpey
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You dont wanna miss the upside of a bubble thats for sure (thats how you get rich quick) - and you dont wanna be caught long when it pops (thats how you gte poor quick).
JP Morgan once said that he made his fortune by selling too soon. I like that sentiment.
I spent a year looking for a PPOR in Melbourne and found that whatever the agent quotes were always way off the mark.
This wasted a lot of my time and I missed out on some good buys as I was 'unprepared'. Finally I realised that adding at least 30% and then more to the price they quoted would get me within the competition.
I need to know there's light at the end of the tunnel. Please tell me that you eventually found something that you are happy with that was within your budget.
The unethical behaviour of real estate agents really makes me angry. I went to inspect a 2 bedroom townhouse in Kensington recently. http://www.realestate.com.au/property-townhouse-vic-kensington-106294721?tm=1270076264&c=7475960
The agent told me the EPR was $490,000 to $530,000. A few days before the auction he rang to ask me if I'd be bidding. I said I wouldnt because I thought it would go for more than $530K and was out of my price range. The agent insisted that 'buyer enquiry' was only at $510K and pushed really hard for me to attend the auction. The property sold for $621,000! So your 30% margin above EPR was right on the mark for this one.
The trouble is that some agents actually do give realistic estimates, so I might be ruling out properties that I could afford.
Hi Intrinsic Value - Yep I agree. I sold my holiday house only 5 months ago purely because its a rising market. In a flat and downward market they are virtually impossible to offload. With the proceeds I bought here in Melbourne.
The trouble is that some agents actually do give realistic estimates, so I might be ruling out properties that I could afford.
This is definately true, whilst the majority probably "under quote", there are some that give honest reliable estimates, and I work for one of them.
JP Morgan once said that he made his fortune by selling too soon
Hi aussie...
can I ask....Where was the holiday house...? and did you realise you were buying into a rising market in MELB.....?
Also, did you have CapGains to pay and did you make enough after buying and selling costs over both transactions...?
Just curious to know how your strategy works, afterall you may help me out here....
There's an interesting article up on the GMO site analysing the China Bubble. It can be downloaded from here. (Free registration required.)
(I've attached a copy to this post. I'm not sure of the copyright issues, so if the mods don't like it then please remove it.)
And it's summarised here.
The short summary is that China is in a big bubble, house prices are extremely high (Beijing is above Tokyo in 1990 by some measures), and the lending policies are lax, with the base bank rate being far too low.
In short, it's not going to end well.
Do you now have a better feel for places that are clearly going above your price range? You probably need to assume that any place you like is too expensive.
The current Melbourne real estate market has gone crazy. The frenzied buying and ridiculously high prices we are seeing are no longer based on fundamentals and are the result of an importation of a speculative credit fuelled bubble in real estate from Mainland China. The 50-60% price rises we have seen here in the past 12 months essentially mirrors what is going on in China. With the relaxation of FIRB rules in early last year, Australian property has essentially become a proxy of the real estate market in China. No one knows when and how this is going to end (perhaps when local Australian citizens realize most of their houses are being sold to overseas investors/speculators and they are priced out of the market resulting in a civil uprising), but when it does it is not going to pretty that's for sure. You would have to be a brave soul to be investing in the market at this point in time. There is significant potential for MASSIVE losses if and when the China bubble bursts. Don't forget apart from China, the rest of the world is in the deepest recession since the great depression!
Hi everyone i am new to this forum, but i had to respond to this comment which i totally agree with. I think everyone here should also be aware that one of the main reasons, middle class Chinese, not to mention the wealthy Chinese community can afford and are encouraged to purchase here is becouse the Chinese government is providing interest free loans to its citizens as a form of encouragement for its citizens to pretty much "buy the world". How can most Australian compete with that? I think, one day we will wake up and find that Australia is not owned by Australians any more, and future generations will be renting and their landloards will be all foreign investors. I think many countries make it very difficult for foreign ownership. Why is that not the case here? why are we not protected???