The future of Australian property prices

[Aussiejeff]

The melbourne market has fallen over the last 6 months.
The auction clearance rates are shaky at best.

Such a high profile show, could be a tipping point (unlikely, but such a fragile setup, with such devastating results)

If I were a mega rich RE group, I would be teaming up with other groups and offering at least $100k over reserve for the final 2 houses and make a big hooplah over it all.

Polly & Waz's house was purchased by "buyer's advocate" Frank Velentic "on behalf of an investor".

Hmmm. That mystery "investor" wouldn't have been an insider acting on behalf of CH9 now, would it? (imagine the fallout if NO houses had sold!)... tch. How could I even imagine a "rigged" result would be even remotely possible in this age of honesty and full disclosure by the media? I must be mad....

Footnote:

Nine has emerged a massive winner anyway with The Block averaging 1.336 million viewers a night for the past nine weeks.

The finale is likely to have come close to doubling that figure – not a bad result in a market like this one.

Read more: http://www.smh.com.au/entertainment...s-the-block-20110821-1j4tb.html#ixzz1VnPOMJCC

 

[DocK]

I'm not sure using the purchase price of the homes as a true value is realistic - I'm sure I read somewhere that 9 paid way over market value in order to get 4 side-by-side houses and could well afford to take a loss on the final sale as they make their money from the advertising, sponsorships etc. As long as the show rated well 9 was on a winner. My understanding was that the reserves were arrived at by a valuer or team of valuers who supposedly worked out a realistic value for the starting dump, land area etc and just added the 100k spent on renovations to that figure to arrive at a reserve - meaning that the team that had put their 100k to the best use would supposedly win. Having watched most of the shows I'd be surprised if the lack of bids wasn't influenced a fair bit by the shoddy finish of a lot of the reno work - they were put under such ridiculous time pressure in order to produce "entertaining reality tv" that there's no way imo that a proper job could have been done - especially on the exteriors.

Turning the auction itself into a media circus wouldn't help either I'd expect - would any serious prospective bidder really want to play their hand on national telly?

 

[againsthegrain]

would any serious prospective bidder really want to play their hand on national telly?

The angry Indian lady tried but was upset when her bid of 700 didn't win

 

[greebly24]

The Block 2011 - gotta love train wreck television.

Channel 9 paid $3.6 million for the four properties, plus $200k stamp duty, plus $400k on renoes (not including the free labour) for a grand total of $4.2M or $1,050,000 each.

Two have now sold, for $860k and $855k. So they only made a 18% loss on each so far.

Loved one of the chick's comments afterwards: "Well that was a waste of time."

But looking at the bright side, they got a clearance rate of 50%. One sold at auction and two go unreported.

There is still great money to be made in RE though. Just ask the bloke who sold these properties to Channel 9 how he did it? In fact he could now buy back the four renovated properties (inc stamp duty) for what he sold them for. The guy is a genius.

 

[Tysonboss1]

So they only made a 18% loss on each so far.

Is that Including the hundreds of thousands of dollars in advertising revenue and product placements.

As previously pointed out, channel nine is in the businesses of television, not real estate.

Offcourse the over paid for the properties so as to secure the 4 similar properties all in a row, so as to keep with the theme.

 

[KurwaJegoMac]

For all those that have been keen on posting the auction results of The Block - all 4 houses are now sold:

Property 1: $72,000 above reserve
Property 2: $50,000 above reserve
Property 3: $15,000 above reserve
Property 4: At reserve

http://www.theage.com.au/entertainm...-out-20110824-1j9g1.html?comments=49#comments

Shame that the contestants for property 1 didn't sell on the day! They would have walked away with an extra $100k in prize money. Still, a good result for all.

 

[greebly24]

Still, a good result for all.

WTF?

Oh, I get it now. Buy & reno a place for $1.05M, set a reserve at $850k, get $50k over that and call it a good result for all (ignore the $100k+ loss).

Using the same logic you could also say the auction clearance rate was 100% (1 sold, 3 unreported). Think I'm starting to get the hang of RE spin.

The production company made money, Channel 9 made money (despite the RE loss), one of the couples won some money, the other couples wasted their time, the advertisers got to prove their home-improvement products don't increase a home's re-sale value and the everyone who watched the train wreck of an auction got to see how depressed the OZ RE market really is.

Still, a good result for all.

 

[KurwaJegoMac]

WTF?

Oh, I get it now. Buy & reno a place for $1.05M, set a reserve at $850k, get $50k over that and call it a good result for all (ignore the $100k+ loss).

Using the same logic you could also say the auction clearance rate was 100% (1 sold, 3 unreported). Think I'm starting to get the hang of RE spin.

The production company made money, Channel 9 made money (despite the RE loss), one of the couples won some money, the other couples wasted their time, the advertisers got to prove their home-improvement products don't increase a home's re-sale value and the everyone who watched the train wreck of an auction got to see how depressed the OZ RE market really is.

Once again you choose to skim over the fact that the producers paid a premium to get 4 similar homes right next to each other. All couples won money (they kept proceeds from the price above reserve) and each contestant received $700 per person per week. So nobody 'wasted their time'.

The fact that four, shoddy hack job renovated places could get that much money in such a poor street in a poor area of that suburb was a resounding success. Never mind the millions that ch9 made. Those renos were rushed, and poor quality. If anything, given the renos and street profile the bidders overpaid.

Also you choose to ignore that they were sold within a few days of the auction. So your references to clearance rate are not indicative of anything and just clutching at straws. Bear in mind these prices were set by independant property valuers and the properties sold ABOVE those prices.

 

[medicowallet]

For all those that have been keen on posting the auction results of The Block - all 4 houses are now sold:

Property 1: $72,000 above reserve
Property 2: $50,000 above reserve
Property 3: $15,000 above reserve
Property 4: At reserve

http://www.theage.com.au/entertainm...-out-20110824-1j9g1.html?comments=49#comments

Shame that the contestants for property 1 didn't sell on the day! They would have walked away with an extra $100k in prize money. Still, a good result for all.

I went into woolies today, there were some bananas that were there from yesterday, they had a bit of brown on them, I would have paid $7 per kg yesterday, but they wanted $10 per kg

Today I went in there and they were still for sale for $10 per kg, so I offered them $12 per kg.

Gee I am smart......

I smell something I posted I would be doing if I was a player in the industry. Either the show or RE interests intentionally did this to either protect next years show or the market.

But then again in KJM, I would not expect you to believe that this could happen, I know your love of the market, and how it blinds you to the real world.


Edit: also add stamp duty, advertising fees, real estate fees and legals, and it is an extreme loss of $$$$..

 

[maffu]

I saw the article today about selling 72k over reserve and it confused me straight away.

If the buyers knew the advertised reserve, and they didn't sell at auction, why would you offer 72k more than that? Why not just offer the reserve?

Seems very strange, but I don't really understand the real estate market too well.

 

[KurwaJegoMac]

Likewise medicowallet i know how your fear, pessimism and confirmation bias leads you to be blind. But thats ok you're only human.

But of course all the bears are allowed to post up an article about the failed auction on the block and they're cheered for being so smart and in the know. Then a 'spruiker' comes along and provides an article showing the sales were quite successful and theyre met with cries of 'conspiracy' and 'blindness'.

Tinhat much?

 

[KurwaJegoMac]

I saw the article today about selling 72k over reserve and it confused me straight away.

If the buyers knew the advertised reserve, and they didn't sell at auction, why would you offer 72k more than that? Why not just offer the reserve?

Seems very strange, but I don't really understand the real estate market too well.

They had an auction on tuesday night with several bidders. The beauty of an auction is that you can easily work out the seller's minimum price (i.e. The reserve) and you can then try and get it through private sale. Thats why auctions are a bit of a gamble, dont always get the maximum a bidder would pay

 

[medicowallet]

Likewise medicowallet i know how your fear, pessimism and confirmation bias leads you to be blind. But thats ok you're only human.

But of course all the bears are allowed to post up an article about the failed auction on the block and they're cheered for being so smart and in the know. Then a 'spruiker' comes along and provides an article showing the sales were quite successful and theyre met with cries of 'conspiracy' and 'blindness'.

Tinhat much?

sure

Oh, btw, how are you managing your losses atm?

 

[KurwaJegoMac]

sure

Oh, btw, how are you managing your losses atm?

It's really hard at the moment. The accountant calculated my yearly loss (excl. CG) at just under $2703. Life's really becoming a struggle you know? Gonna have to move to homebrand food and pick up a second job.

Compounding my misery is that my property has appreciated in value by only $4850 in the past 2 months.

How will i ever survive? Thank you for your interest in my affairs. It's comforting to know that others care.

Can anyone spare me some change to call the salvos?

 

[medicowallet]

It's really hard at the moment. The accountant calculated my yearly loss (excl. CG) at just under $2703. Life's really becoming a struggle you know? Gonna have to move to homebrand food and pick up a second job.

Compounding my misery is that my property has appreciated in value by only $4850 in the past 2 months.

How will i ever survive? Thank you for your interest in my affairs. It's comforting to know that others care.

Can anyone spare me some change to call the salvos?

How do you know that it has risen in value? Oh I see, you are in denial

MW.

PS being a realist and a man of integrity, I admit that my real estate portfolio is being hit hard, but, then again, I am not in denial of the real world.

 

[KurwaJegoMac]

How do you know that it has risen in value? Oh I see, you are in denial

MW.

PS being a realist and a man of integrity, I admit that my real estate portfolio is being hit hard, but, then again, I am not in denial of the real world.

I think it is you who is in denial - bitter perhaps that your investments aren't performing well? In denial about the fact that maybe not every single house in Australia is going to perform the same as the ones you own? That maybe, just maybe, there are properties and suburbs out there that are still performing well?

Being a 'realist' and a 'man of integrity' you should be able to admit that you can't take one set of results (such as your portfolio) and extrapolate them across the whole of the RE market.

Unless you've put up your properties for sale (which you say you refuse to do despite feeling so strongly about a downturn), then I assume you're pricing your portfolio in the same way as I am mine - by looking at properties with similar characteristics within the same suburb and looking at the prices for which they sold. I acknowledge however that the true value cannot possibly be known until the point of sale, but in the absence of actually putting it up for sale that is the closest valuation possible.

 

[medicowallet]

I think it is you who is in denial - bitter perhaps that your investments aren't performing well? In denial about the fact that maybe not every single house in Australia is going to perform the same as the ones you own? That maybe, just maybe, there are properties and suburbs out there that are still performing well?

Being a 'realist' and a 'man of integrity' you should be able to admit that you can't take one set of results (such as your portfolio) and extrapolate them across the whole of the RE market.

Unless you've put up your properties for sale (which you say you refuse to do despite feeling so strongly about a downturn), then I assume you're pricing your portfolio in the same way as I am mine - by looking at properties with similar characteristics within the same suburb and looking at the prices for which they sold. I acknowledge however that the true value cannot possibly be known until the point of sale, but in the absence of actually putting it up for sale that is the closest valuation possible.

IMO, the strongest point of RE investment is the denial that mum and dad investors exhibit.

You, have a very strong investment strategy to look forward to.

Good luck

MW

 

[KurwaJegoMac]

For example, you can see some top performing suburbs here:

http://www.investsmart.com.au/property/search.asp?Suburb=&VIC=1&Houses=1&OrderBy=1

Of course these results won't continue on forever, but they do demonstrate that not all property in Victoria is getting hammered and extrapolating a sole individual's experience is baseless.

In the same vein, I wouldn't say that because my property is holding up well that the state of the market is healthy. It certainly isn't. Credit growth has slowed dramatically, people are saving more and more, RE supply is building up and vendors are discounting stock. The sentiment has changed drastically and the housing gains we enjoyed in the past will not be around in the near term. I acknowledge all this, but i'm not so arrogant as to say that my performance is indicative of the market as a whole. In fact im surprised it's holding up as well as it is, was expecting it to be less. Location, location, location perhaps?

 

[KurwaJegoMac]

IMO, the strongest point of RE investment is the denial that mum and dad investors exhibit.

You, have a very strong investment strategy to look forward to.

Good luck

MW

As per usual, no meaningful rebuttal or presentation of facts. Just the usual presumptuous one-liners, all meaningless and baseless. In fact, quite a surprise to see a few more words than the usual "sure" and "whatever".

 

[medicowallet]

As per usual, no meaningful rebuttal or presentation of facts. Just the usual presumptuous one-liners, all meaningless and baseless. In fact, quite a surprise to see a few more words than the usual "sure" and "whatever".

Well forgive me for discounting your statments of returns as meaningless and baseless.

No doubt you are not including stamp duty etc into your calculation, as it is a recent purchase etc.

Or perhaps you believe everything you read on a forum..

If you are so transparent, do you expect me to request you to pm me all your transaction details regarding this property????? Of course not... so much for presumptions, one lines anre baseless statement, looks like you invented it all.

I was not born yesterday, and I am not naive.