AFF Member Real Estate Discussion

[cove]

I don’t disagree with you @drron.
In New Zealand prices are dropping now even though interest rates are being cut.
Perth real estate is being chased by eastern states buyers.
Riverfront properties are going to mainly Indian and Chinese buyers.
Bank of mum and dad must be getting stretched now.

 

[burmans]

I don’t disagree with you @drron.
In New Zealand prices are dropping now even though interest rates are being cut.
Perth real estate is being chased by eastern states buyers.
Riverfront properties are going to mainly Indian and Chinese buyers.
Bank of mum and dad must be getting stretched now.

NZ prices have already dropped significantly (over 20% in many case) mainly due to changes in tax laws (in the process of being reversed mainly). And surprise, surprise the market didn’t fall out of the rental market despite many predictions it would, in fact just recently read that landlords are currently unable to increase rents and renters seem to have regained some power in the market. Admittedly NZ is in recession!
Additionally while prices have yet to stabilise recent reports are that first home buyers are out looking again so probably not long until they will.

 

[serfty]

It’s funny (not) that there’s been a lot of coverage of rent increases post COVID but zero mention that’s off the back of massive rent reductions during COVID (Uni students, casual and professionals all went home).

It's recovered and gone beyond.

In Capital cities:

• In December 2019 the national median house rent was $446 per week, down 0.7% YoY
• In September 2024 the national median house rent was $650 per week, up 5.8% YoY

https://www.domain.com.au/research/rental-report/december-2019/

https://www.domain.com.au/research/rental-report/september-2024/

 

[cove]

Tonight we are housing around 160 folks in our social housing business. We had thought that we could get up to 400 but red tape and NIMBYs have slowed our progress. The change in values in WA has made acquisitions more difficult.
Separately we invested in Aspen Group who have had success in renovating a pile of Buckeridge flats that had drifted into disrepair following his death.
Mrscove is alarmed at the renovation fees and exit fees from land lease communities. Some of those contracted fees need to be reviewed and possible legislation is needed to prevent older folks from taking a hit from signing onerous contracts. I was thinking an exit fee of 15% would not cripple this industry. It would possibly make it fairer.

 

[lovestotravel]

We do not consider Victoria as being a State where we can consider buying more real estate. Land taxes are going to continue to rise to put a bandaid over the financial mess that continues to grow. We do have a 3,000 square metre office/warehouse and an apartment in Southbank but nothing more.

I was speaking to my commercial agent this week and he is even saying commercial real estate is now going down the same as residential here in VIC.

 

[cove]

I have a family member based in Melbourne and between him and Macro Business reports on Victoria the downside may run for some years.
He has invested in Perth after selling some places in Melbourne.
The whole Australian housing market is now overpriced but that doesn’t mean that there will be a big pull back nationally.
It would take a full blown recession to trigger a reset of Australian house prices.

 

[serfty]

The whole Australian housing market is now overpriced but that doesn’t mean that there will be a big pull back nationally.
It would take a full blown recession to trigger a reset of Australian house prices.

There's a built in safety catch - most mortgage holders will starve before they sell their property for less than what they owe.

 

[cove]

Yes @serfty that is a difference between Australia and the US. We bought a “short sale” over in the US during their last recession and the property seller was not required to pay the shortfall on the mortgage. He just moved out quickly and never bothered to pay the HOA dues but popped up on Facebook seemingly leading an upmarket life.
In Australia you get chased for a mortgage shortfall.

 

[Happy Dude]

Tonight we are housing around 160 folks in our social housing business. We had thought that we could get up to 400 but red tape and NIMBYs have slowed our progress. The change in values in WA has made acquisitions more difficult.
Separately we invested in Aspen Group who have had success in renovating a pile of Buckeridge flats that had drifted into disrepair following his death.
Mrscove is alarmed at the renovation fees and exit fees from land lease communities. Some of those contracted fees need to be reviewed and possible legislation is needed to prevent older folks from taking a hit from signing onerous contracts. I was thinking an exit fee of 15% would not cripple this industry. It would possibly make it fairer.

This topic has been covered in depth by Four Corners recently. Check it out on iView. Incredibly onerous and one-sided contracts that many signed without advice or understanding.

 

[cove]

Yes @Happy Dude many have now watched that Four Corners episode. We now need government intervention as some signed exit fees at 35% after a renovation that the occupant pays to bring the property back to its original condition.

 

[prozac]

People are ignoring the fact that our 5 major housing markets are in the seriously unaffordable range in World rankings with Sydney number 2, Melbourne 9th. Adelaide 14th, Brisbane 15th and Perth 50th.

https://www.canstar.com.au/home-loans/expensive-cities-buy-property/

So for Australian prices to keep rising you will need the average punter to be able to keep their income rising at the same rate. I doubt that will happen. There will come a time when the bank of mum and dad will not be able to keep up with the rising subsidy needed. Then there will be a bust. The only problem is no one can forecast when that will happen.

But in 1990/91 house prices in Melbourne dropped 18%. They then had to rise 20% to get back to sqare 1.

I can still remember the mortgagee in possession wording on for sale signs on Sydney's Northern Beaches around this time.

 

[cove]

Mrscove likes to hide the mail when it is land tax time. Land tax is a big annual charge in Australia. You don’t have this with shares and all you pay is GST on the brokerage.
In the US we pay 1% of value for our property in Marina del Rey which is in LA County. If we had bought in Las Vegas which is in Nevada that would be zero.

 

[Happy Dude]

Mrscove likes to hide the mail when it is land tax time. Land tax is a big annual charge in Australia. You don’t have this with shares and all you pay is GST on the brokerage.
In the US we pay 1% of value for our property in Marina del Rey which is in LA County. If we had bought in Las Vegas which is in Nevada that would be zero.

Any issue with the valuation system there?

Our IP in Rosanna is a bedroom, a bathroom and a lockup garage lighter than most others in the suburb but Vic SRO says its value is equal to them. As a result of that, and the great covid cash clawback, our land tax bill has doubled since 2022 and is now our biggest annual cost (excluding my golf club). Prior to that, it doubled from 2018 to 2019 too.

I've queried the SRO valuation, providing numerous examples of houses for sale that clearly demonstrate their over-evaluation, but they batted that away. Judge, jury and executioner. Seriously thinking of joining the investor exodus from VIC but probably not a lot better elsewhere.

 

[cove]

We have a colleague who has a beach holiday weekender out of Melbourne and his latest land tax was a bit over $30,000. Victoria also aggregates holdings so you cannot get away with splitting up holdings.
The exodus from Victoria must be running hot for those who can afford to leave.

 

[Freq Flier 2013]

We have a colleague who has a beach holiday weekender out of Melbourne and his latest land tax was a bit over $30,000. Victoria also aggregates holdings so you cannot get away with splitting up holdings.
The exodus from Victoria must be running hot for those who can afford to leave.

The property is probably worth 2.5 million.

 

[Quickstatus]

Regional Australia is the only place in Australia I would consider buying Residential.

 

[prozac]

We have a colleague who has a beach holiday weekender out of Melbourne and his latest land tax was a bit over $30,000. Victoria also aggregates holdings so you cannot get away with splitting up holdings.
The exodus from Victoria must be running hot for those who can afford to leave.

They need to divorce then each has a principal place of residence and no land tax.