VIC The Market has certainly changed direction - Melbourne

house and land properties will be the weakest on the rebound to, IMO

 

Getting mine valued at the moment, I`ll let you know. I would say they are tracking well (if you bought well). A lot of FHB overcapitalised (big land / big house).

 

The one couple I know who just flipped one did really well. I can't speak for others but they profited around 100k. Id love to replicate but too much risk for my appetite!

 

Yes too much risk now, considering takes st least 12 months to build, another layer of risk

 

I would do it if they would offer 3 years to titles, that would give me enough confidence to wait fr the market to bounce back. It is alluring though only having to put such a small deposit down. Some land offices are taking 10k deposits at the moment. If H&L packages were offering a deal like that I would seriously consider it.

 

Too much risk, absolutely no way of knowing it will bounce bank in 3 years. Too many unknowns....the big one is when will credit squeeze ease? Bust cycles last longer tgan boom cycles

 

I think it will be like the GFC, back then there were no doc loans, literally just signed a statement confirming income. That didn't come back but Lo Doc did a few years ago. I would think that the GFC would have scared the banks more than the current APRA conditions, especially now that the RBA are asking the banks not to be too tight. I think once the lenders relax again things will bounce back. Im expecting on a 10 year flat cycle after the drop we are having now but I wouldnt be surprised if things started rising again around 2022/2023

 

Sold at the weekend for $1,203,000

 

So

1) agents still lying / nfi about price ranges
2) ~8% loss.. to be honest, that's not that bad, given that was probably peak of the market. Somebody is always going to overpay at the peak of the market (unless prices continue to rise). Selling 14 month into ownership indicates some sort of unusual behaviour; divorce, business losses, needs the funds desperately for something else, they were just a gambler in the first place.

I only think things would be concerning if houses were selling 20-30% "across the board" in 2-3 years time. A way to go yet, if it ever comes to that.

 

If you dig a bit deeper , this kind of losses is rife.
Look at this one
Property Report for 14 Fortescue Grove, Vermont South VIC 3133
Sold feb 2019 $1.12m aug2015 $1.28m

How about this one?
Property Report for 9 Castle Close, Glen Waverley VIC 3150
Sold feb 2019 $1m May 2015 $1.1m

My advice is Get Out before everything COLLAPSES

 

I think with the ones selling at a loss is more due to personal circumstances. I had a friend buy at peak in sth eastern outer suburbs melb in 2012, paid 580+Stamps etc. bought a 4x2 large house in a nice estate- they definitely got carried away with the purchase as at the time it didn’t represent value at all- you could still buy similar for around 520k if they looked properly and didn’t buy the first thing they saw.
At the time they purchased the market had just hit peak. At the time I couldn’t believe how much they paid considering 3 years prior people had built the same type of house and land packages in this estate for 380-400k, and as little as 6 months prior to their purchase the same thing was being had for 470k.
They seemed to have FOMO as the market was having a mini boom.
My friend’s husband was from overseas and after living in his whole adult life here he was offered a job in his home country and they jumped at the chance as they were both on low-medium incomes and struggling to keep up with the massive mortgage they’d taken on. They always had no money and we’re constantly complaining of money so I think the excitement of moving countries and getting out of the mess they got into was their “out”.
They put the house on the market about a year after settling on it, market had gone cold and they didn’t get an offer at all for 3 months. They paid for staging and everything and couldn’t sell it. They ended up selling at 30k less than they purchased for, so they would have been a good 50/60k down after stamps/selling/legals. We lost contact but in all honesty I wouldn’t be surprised at all if they left the country with the debt owing and never paid it back considering they had no plans to ever return. They never ended up buying in their new country and I think they’ll be renting forever.
My point is that the losses you see would only be those forced to sell due to personal circumstances (marriage breakdown/business/family issues and illness etc, not so much that they can’t afford to hold, as most people will find a way to keep the family home if they want to

 

So are you saying there is an increase on "those forced to sell due to personal circumstances (marriage breakdown/business/family issues and illness etc" at the moment which is correcting the market? I assume to generate a -10% on Melbourne median there is something happening I never heard before e.g everyone divorcing & dying etc. in 2018?

 

People sell for all sorts of reasons. "Because I can get a high price" is low down the list IMO because unless your moving to the moon, your going to pay a high price for the house you move to.

If you are downsizing, upsizing, moving to a diff suburb. That house you move to is going to be cheaper so your losses are likely offset.

Divorce, debt, or death sales are likely to be must sell situations and there's plenty of all. Then there's people who bought a long time ago and maybe want to cash their chips move away from the city and their horizon is less than 10 years. They probably doubled or tripled their money, 10-15% is not a big deal at that point, to hedge against potentially not having time to ride out the cycle.

There will always be sellers. Right now there are less for obvious reasons, but a large portion are not meeting market so inventory is swelling. Some are meeting market and that is setting the price.

I don't think there is any panic selling, but if current rate of decline (4.5% per quart) continues for a while and or unemployment rises, we could see some.

 

Back onto my favorite topic of Berwick. What would one assume when a 200sqm block of land in the new "Berwick Waters" or the upcoming soldiers rd farm paddock estate are selling for 300k+?

I'd assume a 1000sqm block actually in would be worth 3-4 as much or at least double. 550k for a house in Pakenham or 850k for a house on a 1000sqm block in Edrington, Olde Berwick or Kramer drive estates. Big anomaly there.

These homes have hardly grown. Clearly nobody with money wants to live here! Unless it's in the Cranbourne parts below the freeway.

 

My impression is some overseas investors who were speculating on land / possible future development properties in 2015-17 and expected instant big immediate capital returns in these areas are indeed selling up and not caring if they make a loss.

 

Spot on, look at places like Preston and montmorency, still going along nicely since people buy properties as ppor there
12 McFarlane Street Montmorency Vic 3094 12 McFarlane Street, Montmorency, Vic 3094
Was advertised for 1.08 to 1.18

 

Montmorency still selling well, and surrounding suburbs also doing well...

 

Particular race involved there in those areas I have a feeling.. Thing is those sorts of "investors" were probably just gamblers anyway, who never intended to own long-term. And maybe to them those sort of losses aren't that significant, it just allows them to keep their cash for something else.

 

No, Im not saying that at all, the same amount as any other year, however previous years they didn't need to slash the selling price as the market was on fire and there were not enough houses to keep up with demand. They need to discount now if they need to get out right now.