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Real estate predictions, anyone?

By crabb - 7 November 2008 34

We are in the position of having bought a new house before starting to sell our old one.

We were happy to do things this way – we waited a very long time before finding precisely the property we wanted, and did not want to take the chance of losing it while waiting for our house to sell.

Unfortunately, the market has dropped away under our feet in the meantime.

Four months of marketing the old place at what seemed a realistic price, which then reduced substantially twice, resulted in no offers.

An auction one month later resulted in one pathetic bid well under our (very reduced) reserve.

We are on the point of deciding whether to persevere with attempting to sell, or renting it out for a year.

I don’t want to bore you with details – suffice it to say that failing to sell will be horrendously expensive, while renting out will be only somewhat less so.

So – what do you crystal-ball-gazers, property developers (!), and would-be real estate moguls think the Canberra market will do in the next 12 months?

Uninformed opinions welcome too – this is RiotACT after all!

What’s Your opinion?

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34 Responses to
Real estate predictions, anyone?
Sleaz274 11:32 pm 07 Nov 08

Never ever sell then in a couple of years when this “crisis” has blown over like every other because people still eat, drink, work and sleep somewhere regardless if the banking institutions shot themselves in the foot, then leg, then lung by selling off and buying ever larger parcels of debt and miraculously creating “profit” from it then you will have 2 houses which have gone up 15 – 30% in value effectively doubling the “profit” you have made. Then borrow and buy 2 more smaller rental properties. Repeat rinse recycle, retire in QLD because Canberra will never be short of cashed up renters otherwise called public servants and rich asian uni students.

mariact 11:14 pm 07 Nov 08


I currently work as a property manager and we come across this issue every day. The rental market is still very strong in Canberra and there is really no shortage of good prospective tenants out there. Many renters are finding now that landlords are only in it for the short term tax deduction, and prefer to rent their properties out for 6 – 12 months so the turnover is constant. We get many referrals from our sales office as they are unable to sell properties at the moment and a lot of investors are going for these shorter term options to ride out the current crisis ( although the crisis in sales has been for a good 8 – 12 months now!). We are just coming into the busiest time of the year with people coming and going, so my advice would be to seriously consider renting it out, or at least have a couple of rental appraisals done with different agencies to get a true picture of what your place is worth. It is not impossible to sell it even with tenants in there..whilst you will have to sell to an investor if the tenants are made aware when signing the lease that this may be happening they usually don’t have an issue with it as long as they know their lease is still valid for the original term, and at least you have the $$’s coming in. Any rental property under about $700 per week should rent very quickly in the Canberra market as long as it is priced at market value and the ad’s are targeted to the best type of tenant for your particular property. Properties over $700 per week are more of a lottery at the moment but if they are good quality and sit well priced amongst similar properties there are people out there looking and should still rent. Best of luck!

shauno 10:36 pm 07 Nov 08

Prices are coming down big time on the Gold Coast. You can now get water front properties in Broadbeach waters in the high 600K’s that’s a big drop of at least 200k from 12 months ago. Likewise apartments that where in the 900k range dropping 150K to 200K. Not sure where they are getting these low 3% price drops from. I’m guessing the numbers that come up in 6 months time reflecting the more recent data will show drops in the double figures.

Its going to hurt but as it has always done in the past the price bubble which has burst will eventually work its way back to the long term average price. Which will either be a quick 30% to 40% drop or a long drawn out period of stagnation or very slow growth so that it comes back to the long term average in 10 years time.

I’ve got the cash to buy now but am definatly waiting until this time next year to get a much better idea of what the market is doing. We also have a house here in Canberra that’s just been renovated and ready to sell but unfortunately bad timimg so just going to keep it and rent it out.

MWF 10:02 pm 07 Nov 08

First rule of Real Estate – Never buy before you sell. That said, I can highly recommend reading Neil Jenman’s website. Do a search for “Top 10 mistakes sellers make Jenman”. Then get rid of your current agent and refuse to pay their fees. Psst who is your current agent? I’m guessing one of the big 3 here in Canberra 😉 Then give your property to a Jenman agent, I recommend the Real Estate Shop. Why do I make these reommendations? Having been in your situaion a few years ago, we sacked our agent and refused to pay their advertising fees due to their shoddy salesperson and ovehearing some of the lies they told to possible buyers. We got a lovely letter of apology and took our business to The Real Estate Shop (Jenman agents). We got our asking price to the last cent. No bull, no fluff, just genuine salespeople. And no, I don’t work for them just another humble PS here. They were fantastic to deal with.

Deano 10:02 pm 07 Nov 08

Prices probably won’t drop too far because people who have paid too much to buy in the boom can’t afford to take the loss. The biggest problem at the moment is a lack of buyers. Whether it is difficulties getting finance, uncertainty about the economy, or a reluctance to buy in a falling market, people are deciding to stay put for the time being.

Be prepared for a long wait. My neighbour has been trying to sell their house for the past twelve months despite dropping the price by $250,000!

regularbrowse 9:56 pm 07 Nov 08

If you do the maths and find renting the first property covers the costs, investment property taxes/rates and the bridging finance – then do it. Usually the figures are still ugly, so consider selling at a loss.

I remember houses being sold in 1997/98 at a loss on what people had paid for them 5 years before (just look up allhomes). It took at least 3 years for the housing market to recover after the Howard Government came to power and slashed the PS ranks. There’s likely to be a similar recovery for housing prices this time. And there was no ‘global financial crisis’ then. Can you afford to wait 3 years?

I agree with I-filed. You definately got poor advice from your agent about going to auction. Consider selling through someone else in future.

VYBerlinaV8_the_one_ 9:47 pm 07 Nov 08

It depends on the type of property you are trying to sell and location. Some properties will actually increase over the next 12 months, some will do nothing, some will drop in value. If you could give us a suburb and maybe number of bedrooms, and whether a house/unit/townhouse we could probably offer some good advice.

In the meantime, stay in the house you are currently in, and rent out the new place you bought. That way you can claim the stamp duty as a tax deduction, and can enjoy all the other tax perks of owning investment property.

If you can possibly hold both properties do so. In 10 years time you’ll be thanking yourself.

I-filed 9:37 pm 07 Nov 08

What real estate shonk told you to go to auction? Only highly prized houses that will attract bidders should be auctioned … get rid of that agent, and get one who will work for you – not rip you off by commanding an auction fee in a flattening market. Only the very most desirable houses warrant auction. Canberra has NEVER been an auction market other than in the inner south and the occasional rare house – like the gorgeous unique queenslander on the Chisholm St roundabout in Ainslie.

Spam Box 9:06 pm 07 Nov 08

Worth pointing out that the ACT has the highest rents in the country, if you cant get yourself through the next 12 months with that going for you…


luther_bendross 8:50 pm 07 Nov 08

Did it sell for around the $349,500 mark by any chance?

Spam Box 8:29 pm 07 Nov 08

Rent it. unless you have no choice but to sell… rent it. The market is filled with (I have no choice, I have to sell or the bank will take it anyway type people) those losers will get a shit prices… even if the actually sell!

There’s a small hiccup happening just now in the Global Financial Data, perhaps you didn’t get the memo

You have no pressing need, so rent it out

BTW, I don’t believe a word of what your saying. Nobody, with half a brain would ask such a question on a blog if they actually owned 2 houses

Felix the Cat 7:50 pm 07 Nov 08

Growling Ferret said :

I predict a complete lack of recruitment in the PS, which will lead to stagnation and deflation in the Canberra property market as people get out…

Maybe, but the new Defence joint at Bungendore will be open soon (if it isn’t already) and some of the workers there will commute from Canberra to Bungendore and therefore need somewhere to live so I see there still being a reasonable demand for rental properties. A guy at work lives in Bungendore and reckons it’s quicker to drive to work (Fyshwick) from Bungendore to than it was from his previous place at Gilmore.

random 7:32 pm 07 Nov 08

“I don’t want to bore you with details – suffice it to say that failing to sell will be horrendously expensive, while renting out will be only somewhat less so.”

Just do the math. Is it going to be more expensive to keep the house for a year or two than to reduce the price again and swallow the loss?

This recession is going to be long and deep. Don’t expect prices to rise in a hurry.

astrojax 6:46 pm 07 Nov 08

where’s dr who and his time machine when ya need him?

sorry to say it crabb, but it looks likely the prices will continue to fall in the coming months, at least – but with an under-supply of housing in australia, the rental market is likely to remain more buoyant…

Growling Ferret 6:06 pm 07 Nov 08

I predict a complete lack of recruitment in the PS, which will lead to stagnation and deflation in the Canberra property market as people get out…

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