Canberra real estate back on the boil?

Driving on the mean streets of Wanniassa this morning I noted almost every For Sale signboard had a sold sticker on it too. A far cry from a few months ago…

Interestingly – if not predictaably – while we’re talking about real estate, the CT is running this story http://www.canberratimes.com.au/act-news/allhomes-warned-on-agents-fees-20130303-2fewc.html on page 2 of the print edition (remember that?) which is critical of Allhomes.

The article does not mention that Fairfax, the CT’s owners, also own the Domain real estate site which is in competition with Allhomes (admittedly, “competition” may be flattering given Allhome’s domination of local listings from my observation).

LSWCHP said :

Zultan said :

LSWCHP said :

One person I know sold her very nice place at $100K below original asking price after nearly a year on the market. I believe the sale price was only marginally more than she’d paid for it about 6 years ago. Not a great investment considering the interest she’d paid on the mortgage in that time.

As opposed the the absolute 0% investment she would have made by renting and paying someone else’s mortgage for them…

I take your point, but after considering, inflation, interest rates, capital gains, rental rates vs mortgage payments, foregone investment returns and a heap of other stuff like that, I’d suggest that it’s not as simple as you make it out to be. Certainly, borrowing money to buy an “asset” that is stagnating or depreciating in value may not be the smartest move.

My view, and I don’t think I’m alone in this, is that house prices in Australia are greatly over inflated, and at some point the Ponzi scheme has to end. It’ll be interesting to see what happens then.

Property isnt really a short term investment and buying and selling frequently is counter intuitive given the cost.

Over the long term the only thing likely to increase your mortgage payments is an increase in interest. Inflation will reduce the cost in real terms.

LSWCHP said :

My view, and I don’t think I’m alone in this, is that house prices in Australia are greatly over inflated, and at some point the Ponzi scheme has to end. It’ll be interesting to see what happens then.

I disagree. High prices are a symptom of Australia’s wealth combined with a desire to live in good locations. If you want house prices to drop, first Australia must forgo much of its wealth.

My bet is on stagnation for a number of years while incomes and other costs catch up. Just like the 1990s.

Zultan said :

As opposed the the absolute 0% investment she would have made by renting and paying someone else’s mortgage for them…

Unless your rent payments are less than your mortgage payments (which they more than likely will be), and you invest the difference for the 6 years…

Zultan said :

LSWCHP said :

One person I know sold her very nice place at $100K below original asking price after nearly a year on the market. I believe the sale price was only marginally more than she’d paid for it about 6 years ago. Not a great investment considering the interest she’d paid on the mortgage in that time.

As opposed the the absolute 0% investment she would have made by renting and paying someone else’s mortgage for them…

I take your point, but after considering, inflation, interest rates, capital gains, rental rates vs mortgage payments, foregone investment returns and a heap of other stuff like that, I’d suggest that it’s not as simple as you make it out to be. Certainly, borrowing money to buy an “asset” that is stagnating or depreciating in value may not be the smartest move.

My view, and I don’t think I’m alone in this, is that house prices in Australia are greatly over inflated, and at some point the Ponzi scheme has to end. It’ll be interesting to see what happens then.

LSWCHP said :

But seriously folks, I know a number of people who’ve had a lot of trouble selling their houses over the last 6 months. One person I know sold her very nice place at $100K below original asking price after nearly a year on the market. I believe the sale price was only marginally more than she’d paid for it about 6 years ago. Not a great investment considering the interest she’d paid on the mortgage in that time.

Conversely I have a friend who bought/sold late last year. She managed to buy the new house for not much more than the previous owners bought it for 4-5 years earlier, but then sold her place at auction for a very good price, considering the market. Also she had heaps of interest throughout the auction campaign, well above normal expectations.

Both sales were $1m+ so perhaps the upper-ish end of the market can be a little shielded from doom and gloom, but the interest in her house also showed that buyers just over the $1m mark are perhaps more discerning prepared to concentrate on quality or that it may be a sweet spot pricewise at the moment?

I need to sell later this year and am hoping things go well for me.

Won’t all the public servants be relocated to western sydney…according to old media that’s the only place where votes matter.

House prices have been overinflated for years in Canberra. If people thought the overseas bust was going to affect Australia it certainly hasn’t. Although with an election and change of government pending this year we may yet see the economy go into recession and the building industry decline as mass Canberra public servants are sacked or relocated to Northern Queensland or is it Tasmania?

LSWCHP said :

One person I know sold her very nice place at $100K below original asking price after nearly a year on the market. I believe the sale price was only marginally more than she’d paid for it about 6 years ago.

This can’t be true, the real estate agent told me that prices double every 7 years and if I didn’t buy now I’d be living in a card board box for the rest of my life, and why would he mislead me?

Zultan said :

As opposed the the absolute 0% investment she would have made by renting and paying someone else’s mortgage for them…

It never ceases to amaze me how financially illiterate a large proportion of people are. We really should be hammering these skills in to people during high school.

chewy14 said :

Vindalu said :

If property is stagnant in Canberra there must be a prankster slapping “sold” stickers on all the real estate signs. Most properties seem to sell within a few weeks. The market is still ridiculously high and demand is strong.

I agree, property is going gangbusters and if you dont buy now then you’ll be priced out of the market forever.

To drive from my front door up to Southern Cross Drive in (old) Macgregor is less than 1km. Over the past few months, I’ve seen at least 10 For Sale signs along that drive. 9 of them have sold, the 10th only went on the market during the last week. I don’t think any of them have gone longer than a month before the ‘Sold’ sticker has gone up.

Things certainly seem to have taken off around here since Christmas.