Properties that have dropped 20-50% over the years

P

Property Meister

a lot of people say, in property, its how long you are in the market, not when you buy OR if you buy well, it doesnt matter when you buy

ignoring, mining towns dependant on the only miner in town or overpriced $15m penthouse apartments, OTP and assuming residential property for hold and buy

Hindsight is a wonderful thing! but

for anyone who bought or knows someone who bought a property that has dropped signficantly over say a 2-5 year period,

did the numbers stack up at this point?? or were yields very good/poor at this point?? did you buy because it was a bargain at the time, eg market value $500k, got it for $450k?
or was it the best deal at the time, eg market yields were 3%, while you picked one up at 4%????

or would smart investors identified that poor yields = poor investment, and not purchased which pretty much eliminates the 'time in RE" and 'buy well anytime' sayings!

Im looking at a few areas that have dropped up to 40% in the past 4-6 years, the fundamentals stack up really well, yields are good now, so was wondering whether people who pruchased at +40% prices were just idiots or the figures did stack up at the time?
 
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Hi,

I would say new H&L packages which were bought by FHB in 2010-2011, might have dropped a bit (say 5-10%). But assumption is it would be mainly for living in purposes, so not sure whether they would be selling it ASAP (conditions: they have a stable job and can service the repayments with negative equity)
 
Bought one in Western Sydney in 2006 for $495K. It is now valued at 600K.
Bought one in Newcastle in 2008 for $355K. It is now valued at 410K.

Numbers may not stack up but I don't think it is huge price drop.
 
Property Meister said:
a lot of people say, in property, its how long you are in the market, not when you buy OR if you buy well, it doesnt matter when you buy

ignoring, mining towns dependant on the only miner in town or overpriced $15m penthouse apartments, OTP and assuming residential property for hold and buy

Hindsight is a wonderful thing! but

for anyone who bought or knows someone who bought a property that has dropped signficantly over say a 2-5 year period,

did the numbers stack up at this point?? or were yields very good/poor at this point?? did you buy because it was a bargain at the time, eg market value $500k, got it for $450k?
or was it the best deal at the time, eg market yields were 3%, while you picked one up at 4%????

or would smart investors identified that poor yields = poor investment, and not purchased which pretty much eliminates the 'time in RE" and 'buy well anytime' sayings!

Im looking at a few areas that have dropped up to 40% in the past 4-6 years, the fundamentals stack up really well, yields are good now, so was wondering whether people who pruchased at +40% prices were just idiots or the figures did stack up at the time?
Click to expand...

I've seen (as recently as yesterday) examples of properties selling at a 40% discount to their 2006 purchase price.

What do they have in common? The vast majority were investment properties and at yields that only made sense based on significant future capital gain. Not sensible, obviously.

So avoid that sort of thing and...oh, hang on.....
 
I bought my PPOR on the Central coast, nsw in 2010 for 750k. Now it is probably worth 680k, a 10% drop. At the time, I bought it at auction and there were other bidders. At the time, I thought it reflected fair market value and it suited my needs. It is a very low maintenance house with tiny lawns and not a single tree. Now I have no option but to sit and hold. Sometimes, I feel like I want to upgrade my PPOR but am worried about the drop in value. However, I understand that as other houses have also dropped in value, I should still look at upgrading now before price rises.
 
Property Meister said:
a lot of people say, in property, its how long you are in the market, not when you buy OR if you buy well, it doesnt matter when you buy
...
Im looking at a few areas that have dropped up to 40% in the past 4-6 years
Click to expand...

I would say timing the market is more important than time in the market.

What area can i find properties which have crashed 40% in the past 4-6 yrs? Not saying it hasn't happened (like Steve Keen predicted) but i'd genuinely like to know where they're located.
 
You can also look at it another way.

Find an area which hasn't done much the last few years but has good fundamentals - and buy it at a 40% discount.

Answering your other questions - I believe idiot 'investors' would be happy to jump in at the historically low yielding and high prices as they are like sheep - but savvy ones would hold back having seen the big run up in prices and then stabalisation before.

Even if its a relative bargain but still a bad investment based on the area's historical yield - savvy investors wouldn't jump in still unless they were flipping because it wouldn't be a good investment.
 
i think dalkeith has fallen by at least that amount if not more, i know someone who bought a fully renovated really nice4x2 single storey home on one of those 700 odd sqm blocks just off adelma for $2m recently, land value alone would have been $2.6-$2.8m at peak let alone with a home like this one where there is absolutely nothing to spend.

more of a downsizers type home for the area
 
sanj said:
i think dalkeith has fallen by at least that amount if not more, i know someone who bought a fully renovated really nice4x2 single storey home on one of those 700 odd sqm blocks just off adelma for $2m recently, land value alone would have been $2.6-$2.8m at peak let alone with a home like this one where there is absolutely nothing to spend.

more of a downsizers type home for the area
Click to expand...

what is the yield like? :)
 
Property Meister said:
a lot of people say, in property, its how long you are in the market, not when you buy OR if you buy well, it doesnt matter when you buy

ignoring, mining towns dependant on the only miner in town or overpriced $15m penthouse apartments, OTP and assuming residential property for hold and buy

Hindsight is a wonderful thing! but

for anyone who bought or knows someone who bought a property that has dropped signficantly over say a 2-5 year period,

did the numbers stack up at this point?? or were yields very good/poor at this point?? did you buy because it was a bargain at the time, eg market value $500k, got it for $450k?
or was it the best deal at the time, eg market yields were 3%, while you picked one up at 4%????

or would smart investors identified that poor yields = poor investment, and not purchased which pretty much eliminates the 'time in RE" and 'buy well anytime' sayings!

Im looking at a few areas that have dropped up to 40% in the past 4-6 years, the fundamentals stack up really well, yields are good now, so was wondering whether people who pruchased at +40% prices were just idiots or the figures did stack up at the time?
Click to expand...

No-one deliberately buys at a +40% price.

They may pay full asking price at the time, which might be fair and reasonable - every Vendor wants their full asking price of course, and occasionally someone accommodates them.

Yield on the other hand is a different thing. I have seen many times people ponying up for sub-5% yields (god knows why - maybe they thought they just had to buy in a "postcode" suburb for the growth). In their mind it was ok to do that, ad often higher earners will do this - possibly justifying it with the fact that their holding costs will be reduced through a healthy tax return.

Im looking at a few areas that have dropped up to 40% in the past 4-6 years, the fundamentals stack up really well, yields are good now
Click to expand...
I hope this statement soon changes from "I'm looking" to "I've bought", otherwise when will you ever buy?
 
Property is purchased for numerous reasons, one if which is investment, hence yields would be a consideration.

For PPOR, the purchase us based on lifestyle rather than investment.

Also investments are based around a multitude of factors, again yieldbeing one.

All these property doom and gloom threads, is that signaling time to buy?
 
House near me sold for $2m in 2003 during the sydney boom. Silly times in Sydney then. The average price in the suburb would have been under $700K.

Property then sold for $1.26m in 2006 a fall of around 37%.

I would say it's worth $1.6m+ today.
 
BayView said:
No-one deliberately buys at a +40% price.

They may pay full asking price at the time, which might be fair and reasonable - every Vendor wants their full asking price of course, and occasionally someone accommodates them.

Yield on the other hand is a different thing. I have seen many times people ponying up for sub-5% yields (god knows why - maybe they thought they just had to buy in a "postcode" suburb for the growth). In their mind it was ok to do that, ad often higher earners will do this - possibly justifying it with the fact that their holding costs will be reduced through a healthy tax return.


I hope this statement soon changes from "I'm looking" to "I've bought", otherwise when will you ever buy?
Click to expand...
yep agree, hindsight is a wonderful thing, 'could have' 'should have' etc. etc.

Obviously buying a PPOR or buying for **** factor is completely different

from an investment perspective, an area that falls 20-40% odd, were the yields sub 3% at the time?? or is it one of the s*it happens situations.

a suburb I have purchased in, recently has been mentioned in top 10 hotspots in the state and top 25 of the country by more then one property gurus,
Purchase 1: Jan 2012, 3bdr unrenovated, corner block, good condition, market price in Jan was $250-$260k, picked it up at $233k 5.8% yield, cheapest 3bdr at the time was a run down bombsite for $205k

5 months later, I am spoilt for choice, for sale and unsold as of today is
- 4 bdr almost completely rennovated $200k,
- 3bdr unrenovated, very similar and close to my purchase1, asking $200k, now dropped to $190k
- 2bdr+granny flat, interior original, but very neat, $200k
- 3bdr + granny flat out the black, interior original but very neat, $190k, will accept $180k

thats a 25% drop in 5 months!!! feel very sorry for the guy who paid $270k for an unrenovated dump in Dec 2011, that I bid $250k for!
 
Remember too that this isn't a permanent drop could be just temp glut

As long as u buy well in first place u r ahead
 
The Woy Woy peninsula (Woy Woy, Umina Beach, Ettalong Beach) has dropped in the vicinity of 20% in the past 4 -5 years. Some lower priced properties even more. Prices are below peak 2003 levels.
 
Up here in Port Stephens north of Newcastle, the upper end of the holiday market has tumbled 20-40%. It's not hard to find $1m to $2.5m places selling for up to 40% less than they were bought for in 2003-2007.
Some people aren't prepared to drop their prices so some places are sitting on the market for years.
Cheers, Ali
 
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