澳洲Australia property First home owner boom suburb that went bu


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


Hi

Following on from my post yesterday about " What to expect from the Australian property market" a few readers have asked why I would be interested in monitoring affordability and mortgage stress?

This is a cautionary tale for first home buyers and suburbs that have experienced recent growth on the back of first home buyer and buyer activity.

Well I was a Buyers Agent in Perth in 2006-2007 and purchased property for investors and home owners. I purchased about 50 properties in 12 months and conducted a high level of research.

I observed the Perth Western Australia boom and in particular one area called Kwinana which predominantly had 3 bed, 1 bath B & T houses on 728sqm single residential lots. Property prices went up very fast. For example in one period of 6 months these basic houses went up by $7k to $8K per month. With no add value like renovation. It was pure demand and suburb location growth. see the Town of Kwinana http://www.kwinana.wa.gov.au/ to check out the location.

I had associates buy property in Kwinana and a suburb called Medina. The price surge was indeed unsustainable, it peaked then prices went bust. See the case study below which I wrote in August 2009. Prices have fallen and interest rates are now heading up.


Negative equity case study - first home owner purchase of house in Medina in Kwinana south of Perth

Initial purchase of 3 bed, 1 bath house on 728sqm lot for $275,000 e.g. Medina in Kwinana in Western Australia in Jan 2007 (peak of cycle) – see the Medina Median House Price Chart & hover your cursor over the 2007 date. http://reiwa.com.au/res/res-suburb-...SC51916&geogroup_id=1722&geogroup_parent_id=3


Check out the median price in 2005. It was $155,000 and then peaked at $275,000 in 2007. A $120,000 increase over 24 months. Off the base of $155,000 and increase of $120,000 that is a 77% increase over 2 years. Hello does that look sustainable?


For price growth rates and suburb profile see Real Estate Institute of WA (REIWA) Medina Median House Price Chart . Medina price growth over last 1 year is – 16.4% and comparable to the Perth Metro Region price growth over last year is – 6.5%. This is against the backdrop of record low interest rates. http://reiwa.com.au/res/res-suburb-...SC51916&geogroup_id=1722&geogroup_parent_id=3


In Feb 2010 Medina price growth over last 1 year is – 11.5% and comparable to the Perth Metro Region price growth over last year is 3.0%.

Loan to value ratio was 90% . The loan was $247,500 in Jan 2007.

In 2009 the price has dropped to $ 230,000 (18% drop from $275,000 ) see the Medina Median House Price Chart & hover your cursor over the 2009 date which indicates a median price of $230,000. http://reiwa.com.au/res/res-suburb-...SC51916&geogroup_id=1722&geogroup_parent_id=3

The home owner is now in a negative equity scenario of $17,500

(NB be aware that in July 2009 interest rates are on the rise and unemployment is on the rise. There is a risk that suburb mortgage stress will increase resulting in premature sales and forced sales. Beyond this risk property prices may remain flat or drop further.)


Option one for the home owner with negative equity


  • Continue to pay mortgage and service loan(s) – lender wins
  • Nil growth in equity – cannot borrow against the property or ? apply for unsecured loan.
  • Home owner will/may reduce fixed and variable costs – not spending as much on a retail level – Gov loses
  • Increased dependence on Gov welfare services – Gov and borrower lose
  • Increased dependence on Gov education services – Gov and borrower lose
  • Cannot move house – borrower loses
  • Not selling property – Gov and borrower lose
  • Not buying property – Gov and borrower lose
  • Overall decreased spending in the general economy – Gov lose
  • More disposable income spent on bank interest and bank fees. The lender has the borrower locked in and the lender has the advantage



Option two for the home owner with negative equity


  • Sell the property at market worth $230,000 ? or below market worth – with a realistic understanding it is a flat or falling market. Lender wins the borrower loses.
  • Sustain a loss with consideration of cost of sale eg 3% selling fee $8100, settlement costs etc
  • If sold below market worth a personal loan may be required to cover shortfall – lender wins
  • Equity loss for home owner – borrower risk
  • First home owners grant value is lost – Gov and borrower lose
  • Shared equity scheme value is lost – Gov and borrower lose
  • Stamp duty on property purchase value is lost by the home owner – borrower loss
  • Home owner then rent privately or apply for public housing – Gov and borrower lose
  • Increased dependence on Gov public housing services – Gov and borrower lose
  • Increased dependence on Gov welfare services – Gov and borrower lose
  • Increased dependence on Gov education services – Gov and borrower lose
  • Nil tax deductions for the home owner
  • Borrower then must rebuild equity and deposit for next purchase
  • Not buying property for 3 to 5 years – Gov and borrower lose
  • Overall decreased spending in the general economy – Gov loss
  • The borrower loses and the lender again wins


Risks for home owners with negative equity

  • Unexpected unemployment
  • Illness
  • Injury
  • Decreased hours (income) at work
  • Second job income decreased or disappears


Results in


  • Arrears, default, possession and fire sale.
  • Equity loss or personal loan debt for shortfall
  • Borrower rents privately, with homeswest, or stay with family or friends
  • Displacement of family
  • Remaining debt burden
  • Credit rating loss
  • Reliance on Gov services e.g. housing, health, education, legal and other
  • Reliance on unemployment benefits
  • Family instability and breakdown



Any buyer could easily review the 2006 ABS census data for Medina and quickly understand that housing loan affordability was low in Medina and the Kwinana area. That average family incomes could only sustain the purchase of property at just below $300,000.

Any higher than that property was highly unaffordable until wages increased enough and other wealth factors came into play.

see here ABC Census 2006 Medina Community Profile
http://www.censusdata.abs.gov.au/AB...ype=Community Profiles&&producttype=Community

And review
B26 Gross Family Income by Family Composition
B28 Gross Household Income by Household Composition
B22 Housing Loan Repayment by Dwelling Structure
or any other factor



It made sense that the market was going to peak just below $300,000 and it did peak at that level.

So the poor first home buyers and buyers who bought in at the peak of the market are locked in now. For how long?? who knows. So their personal financial circumstances might change like in the scenarios above.

Should the investing community care?
Not my problem?

Or is it in the best interest of the Government and the investing community to protect buyers from bank fire sales as property values can decline quickly.

Who wants their investment property market value stripped away by forced low price sales?



What do you think?  

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johntaps said: ↑
So the poor first home buyers and buyers who bought in at the peak of the market are locked in now. For how long??Click to expand...
If you watch RE cycles, as you no doubt have, then you'll know that RE is a long term investment of min 5-7 years and more like 10 years.

Yes people who purchased at the peak are locked in for a number of years as they may be sitting on negative equity. They can sit tight and ride it out or sell at a loss. This is not unique to Perth (Sydney had this for 6 years from 2003 - 2008). Neither is it unique to this cycle - it has happened in every other previous cycle too.

What is your point?:rolleyes:

johntaps said: ↑
Should the investing community care?Click to expand...
People care about other people and we've sorry for their situation. But people are responsible for their own investing decisions. No-one forced them to buy when they did or forced them to sign a mortgage document. If it all turns bad for them then there are safety nets, Centrelink etc.

johntaps said: ↑
Not my problem?Click to expand...
Worst case scenarios do turn out to be everyone's corporate problem. But our taxes provide for that problem on a personal level.

On the other issue - is it my problem that the market peaked and then fell? No that is not my problem. It is just the way it is. Learn from it so it does not affect you next time, is all I can say.

johntaps said: ↑
Or is it in the best interest of the Government and the investing community to protect buyers from bank fire sales as property values can decline quickly.Click to expand...
Oh gimme a break :rolleyes:

Do you want the goverment to step in when your shares fall in value too? Or limit sellers dumping shares onto the market and causing the price to fall?

johntaps said: ↑
Who wants their investment property market value stripped away by forced low price sales?Click to expand...
That is one of the risks of investing. If you have one IP in there and a few spread around - then you are fine surely? It is called "diversification" and helps to mitigate the risk.


johntaps said: ↑
What do you think?Click to expand...
What is your point? You seem to present these long diatribes on what can go wrong in investing and then point out the bleeding obvious on what you can do if sitting on negative equity. Most people on here would know these risks.

You don't go buying in Perth & surrounds, even if it is your home town, when the median price exceeds that of Sydney (as it did for the first time ever) and not expect some falls or at least some volatility.

Now if you have something to share on a personal level that could help people, I'd be happy to listen.;)  

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johntaps said: ↑
Hi

Following on from my post yesterday about " What to expect from the Australian property market" a few readers have asked why I would be interested in monitoring affordability and mortgage stress?

This is a cautionary tale for first home buyers and suburbs that have experienced recent growth on the back of first home buyer and buyer activity.

Well I was a Buyers Agent in Perth in 2006-2007 and purchased property for investors and home owners. I purchased about 50 properties in 12 months and conducted a high level of research.

I observed the Perth Western Australia boom and in particular one area called Kwinana which predominantly had 3 bed, 1 bath B & T houses on 728sqm single residential lots. Property prices went up very fast. For example in one period of 6 months these basic houses went up by $7k to $8K per month. With no add value like renovation. It was pure demand and suburb location growth. see the Town of Kwinana http://www.kwinana.wa.gov.au/ to check out the location.

I had associates buy property in Kwinana and a suburb called Medina. The price surge was indeed unsustainable, it peaked then prices went bust. See the case study below which I wrote in August 2009. Prices have fallen and interest rates are now heading up.


Negative equity case study - first home owner purchase of house in Medina in Kwinana south of Perth

Initial purchase of 3 bed, 1 bath house on 728sqm lot for $275,000 e.g. Medina in Kwinana in Western Australia in Jan 2007 (peak of cycle) – see the Medina Median House Price Chart & hover your cursor over the 2007 date. http://reiwa.com.au/res/res-suburb-...SC51916&geogroup_id=1722&geogroup_parent_id=3


Check out the median price in 2005. It was $155,000 and then peaked at $275,000 in 2007. A $120,000 increase over 24 months. Off the base of $155,000 and increase of $120,000 that is a 77% increase over 2 years. Hello does that look sustainable?


For price growth rates and suburb profile see Real Estate Institute of WA (REIWA) Medina Median House Price Chart . Medina price growth over last 1 year is – 16.4% and comparable to the Perth Metro Region price growth over last year is – 6.5%. This is against the backdrop of record low interest rates. http://reiwa.com.au/res/res-suburb-...SC51916&geogroup_id=1722&geogroup_parent_id=3


In Feb 2010 Medina price growth over last 1 year is – 11.5% and comparable to the Perth Metro Region price growth over last year is 3.0%.

Loan to value ratio was 90% . The loan was $247,500 in Jan 2007.

In 2009 the price has dropped to $ 230,000 (18% drop from $275,000 ) see the Medina Median House Price Chart & hover your cursor over the 2009 date which indicates a median price of $230,000. http://reiwa.com.au/res/res-suburb-...SC51916&geogroup_id=1722&geogroup_parent_id=3

The home owner is now in a negative equity scenario of $17,500

(NB be aware that in July 2009 interest rates are on the rise and unemployment is on the rise. There is a risk that suburb mortgage stress will increase resulting in premature sales and forced sales. Beyond this risk property prices may remain flat or drop further.)


Option one for the home owner with negative equity


  • Continue to pay mortgage and service loan(s) – lender wins
  • Nil growth in equity – cannot borrow against the property or ? apply for unsecured loan.
  • Home owner will/may reduce fixed and variable costs – not spending as much on a retail level – Gov loses
  • Increased dependence on Gov welfare services – Gov and borrower lose
  • Increased dependence on Gov education services – Gov and borrower lose
  • Cannot move house – borrower loses
  • Not selling property – Gov and borrower lose
  • Not buying property – Gov and borrower lose
  • Overall decreased spending in the general economy – Gov lose
  • More disposable income spent on bank interest and bank fees. The lender has the borrower locked in and the lender has the advantage



Option two for the home owner with negative equity


  • Sell the property at market worth $230,000 ? or below market worth – with a realistic understanding it is a flat or falling market. Lender wins the borrower loses.
  • Sustain a loss with consideration of cost of sale eg 3% selling fee $8100, settlement costs etc
  • If sold below market worth a personal loan may be required to cover shortfall – lender wins
  • Equity loss for home owner – borrower risk
  • First home owners grant value is lost – Gov and borrower lose
  • Shared equity scheme value is lost – Gov and borrower lose
  • Stamp duty on property purchase value is lost by the home owner – borrower loss
  • Home owner then rent privately or apply for public housing – Gov and borrower lose
  • Increased dependence on Gov public housing services – Gov and borrower lose
  • Increased dependence on Gov welfare services – Gov and borrower lose
  • Increased dependence on Gov education services – Gov and borrower lose
  • Nil tax deductions for the home owner
  • Borrower then must rebuild equity and deposit for next purchase
  • Not buying property for 3 to 5 years – Gov and borrower lose
  • Overall decreased spending in the general economy – Gov loss
  • The borrower loses and the lender again wins


Risks for home owners with negative equity

  • Unexpected unemployment
  • Illness
  • Injury
  • Decreased hours (income) at work
  • Second job income decreased or disappears


Results in


  • Arrears, default, possession and fire sale.
  • Equity loss or personal loan debt for shortfall
  • Borrower rents privately, with homeswest, or stay with family or friends
  • Displacement of family
  • Remaining debt burden
  • Credit rating loss
  • Reliance on Gov services e.g. housing, health, education, legal and other
  • Reliance on unemployment benefits
  • Family instability and breakdown



Any buyer could easily review the 2006 ABS census data for Medina and quickly understand that housing loan affordability was low in Medina and the Kwinana area. That average family incomes could only sustain the purchase of property at just below $300,000.

Any higher than that property was highly unaffordable until wages increased enough and other wealth factors came into play.

see here ABC Census 2006 Medina Community Profile
http://www.censusdata.abs.gov.au/AB...ype=Community Profiles&&producttype=Community

And review
B26 Gross Family Income by Family Composition
B28 Gross Household Income by Household Composition
B22 Housing Loan Repayment by Dwelling Structure
or any other factor



It made sense that the market was going to peak just below $300,000 and it did peak at that level.

So the poor first home buyers and buyers who bought in at the peak of the market are locked in now. For how long?? who knows. So their personal financial circumstances might change like in the scenarios above.

Should the investing community care?
Not my problem?

Or is it in the best interest of the Government and the investing community to protect buyers from bank fire sales as property values can decline quickly.

Who wants their investment property market value stripped away by forced low price sales?



What do you think?Click to expand...
I dont want to pick at your stats because it looks like you have things sorted in that area. Its just one thing i want to mention.

You stated that a Kawinana house peaked in 07 at $275,000 up from $155,000 just two years earlier.That in itself does seem unsustainable but i ask, what was the areas price movements the 5 or more years before that ?

My point being and i use my local area for an example.
We on the south coast of NSW expierienced a boom like many others in 2001. lucky me buying my home in jan 01. i expierienced a doubling of my house value in a few short years. Initial thoughts this seems unsustainable and it should soon return to pre boom values to sustain some sort of market normality.
What this does not illustrate is the house values in my area the 10 years before i purchased. my old man purchased in the same suburb in the early 1990 for $150,000 and he sold in 2000 for ................$165,000.

Thats right he sold for a $15,000 profit in a 10 year period. 10 years!!!!
The year after he sold that original property doubled in value. I would say bad timing but this allowed him to get into the sunshine coast before the boom also.
So my point being while it might look like a unsustainable spike up. in our area it was more of an unavoidable and highly likely catch up in values to where they should have been. Yes we have had a downward correction in the last few years but not to a great extent.But as in most cycles only the poor chaps that bought at the top and had to sell . only they have suffered. most who bought on the way up still have positive equity.
This is just a small point . No comment on the rest of you thread.

cheers  

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johntaps said: ↑
[*]Not selling property – Gov and borrower lose
[*]Not buying property – Gov and borrower loseClick to expand...
Most people buy a PPOR for the long term. It shouldn't really matter that house prices go up and down, eventually it will trend up as it always has.

Unless the owner loses his job and can't pay the mortgage, what does it really matter?

Yes, the govt and borrower loses if an owner sits on a property for a long time but that's what home ownership is all about. If a govt relied on house churning for income then we'd be in a sorry state.

Thanks for your post - most interesting.  

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johntaps said: ↑
Well I was a Buyers Agent in Perth in 2006-2007 and purchased property for investors and home owners. I purchased about 50 properties in 12 months and conducted a high level of research.Click to expand...
But in your post yesterday you told us you were a newbie :confused:

johntaps said: ↑
I had associates buy property in Kwinana and a suburb called Medina. The price surge was indeed unsustainable, it peaked then prices went bust.Click to expand...
Propertunity said: ↑
But people are responsible for their own investing decisions. No-one forced them to buy when they did or forced them to sign a mortgage document.Click to expand...
Agree that no-one forced them to buy....but it seems that 'experts' pointed them in that direction :rolleyes::eek:.

Some might see the unsustainable bubble as being caused by the BAs who influenced the purchase of so many properties in the area in such a short time.  

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Property is cyclical. Years of flat markets are nothing new: most of the 90s was like that. If you buy at the top, it'll be years before you see ANY profit, much less a decent return.

That's the risk you take as a buyer. The signs were there, though. The stupidly low yields, fast surge in prices, people thinking commodities were going to surge forever.  

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johntaps said: ↑
Hi

Following on from my post yesterday about " What to expect from the Australian property marke"Click to expand...
Just makes me think back about 20 years while sitting in a Fast Food Outlet,reading the stock market reports,and having the 4th cup
of coffee then back to work i use to do that every day,then out of nowhere a very old man sat down at the table with me and asked could he look at the business section in the paper i was reading,after i was finished,no problem just gave him the paper,then we started talking about shares -property-his time in a Jap POW camp,he owned about 50 resi properties at the time unecumbered,and he was picking up the rent,by himself,,what he told me in those 5 minutes has stayed with me all my life,PROPERTY INVESTING IS MARKETS WITHIN MARKETS,and then he said trust no-one in any Business dealings,and always leave something the in deal for the next one in line,and treat all RE'S as door-matts and walk right over them:) no inbetweens,you can have all the data you want it still comes back to those simple rules ,always has been like always ""will"" what happens in between has no importance at all,..
I think you have posted in this site before,..willair..  

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Those who purchased in the early stages of the Perth boom 2001 did very well. I believe it peaked late 2006. The signs for me were clear, the market was changing rapidly as the volumes were increasing.

Once the boom cycle was over no area was immune to property prices falling, not even tightly held blue chip areas.

As Alexee stated property is cyclical.

Cheers, MTR  

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The govt....get involved....mate they could not manage a r00t in the proverbial...lets keep them out! I have enought dealing with idiot/useless bureaucrats. Besides....I am more for free market forces...I make more money that way!;)

Lets face it the property market is cyclical....if you buy early in the cycle like where we are in Sydney you should be okay. Why people got burnt in Kwinana was due to people getting caught up in rush. Of course they were going to get burnt.

The otherside that people need to realise is that property is only a vehicle the main game is the finance side of it and risk management. Very few people get to this level of sophistification. Whilst everything is booming they do well....but when the market turns that is when they get caught and in their panick can make poor decisions.

Plenty of people here have been brave to convey their stories....I learnt a few things from these people. Invaluable in my eyes.....and allowed me to better manage risk.
johntaps said: ↑
Or is it in the best interest of the Government and the investing community to protect buyers from bank fire sales as property values can decline quickly.

Who wants their investment property market value stripped away by forced low price sales?



What do you think?Click to expand...
 

评论
keithj said: ↑
Agree that no-one forced them to buy....but it seems that 'experts' pointed them in that direction :rolleyes::eek:.

Some might see the unsustainable bubble as being caused by the BAs who influenced the purchase of so many properties in the area in such a short time.Click to expand...
Yes, both of these are issues that would concern me too. 50 properties in 12 months into one area like that as a BA - sounds more like a tool of a developer more than an independant BA.
(my apologies to the OP if this was not the case)  

评论
Look at it this way.

Most property owners AREN'T property investors. Most property owners intend on holding their property for at least 5yrs (or more, particularly if it's a PPOR). A large majority of property owners (mostly OOer's) don't even really care or understand, let alone know what their property is actually 'worth' - the only times these things are a concern to them is when they are actively buying or selling.

Truthfully The only reason I have an interest into wether the values of my property is rising or falling is because I want to access the equity to purchase more. I plan on holding all my properties indefinitely and am working the business of being a LL - Capital gains is not the be all and end all: so long as I can service my loans, then it isn't the end of the world for me if first home buyers cann't service theirs. Even if I fall into negative equity myself, it is unlikely that my property would ever be worth $0 (unlike shares), and it also means there are even more tenants to choose from to help sustain my income and pay my mortgages.  

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kudos and thanks for posting.

my friends bought in the exact same area for $325k and 5 months later valued at $285k.

FHOs.

although, it is a duplex block, but the front house is is the WORST spot to develop.

i told them the best thing they can do is hold. no point crystalising a loss at their age - if they get into trouble just rent it out.

so they stayed put. they renovated it heavily inside (new bath/kitchen/remove walls/ doors etc) and just had it revalued at 310k.

so they've done alright, the money they put in is holding up so they haven't taken a step backwards and now they can re-fi.

still - i think most of us here would have experiences a drop in values - but i woudl HOPE a lot of us weren't leveraged like most FHOs are.  

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My lvr is currently 30% and I am in the stage at looking to buy more...  

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Thanks Propertunity

Hi

In response

The NSW State Government has passed a bill to protect home owners. Please see other references to this new legislation here Ninemsn SMH

MORE than 50,000 struggling Sydney homeowners facing foreclosure will have their home prices guaranteed under new laws forcing heartless banks to get the best price possible.

The NSW Lands Minister Tony Kelly said it was “immoral” homeowners were exposed to the risk of unscrupulous lenders seeking to force a fire sale of their properties. “Properties are often sold for well below market value simply to recover the lender’s debt, leaving the homeowner with nothing,” he said.
Not only is the property owner at risk of losing all their equity, the values of property in that suburb drop significantly.

The NSW State Government has introduced a new Bill called the “Real Property and Conveyancing Legislation Amendment Bill 2009 “.

The Bill can be found at: http://www.parliament.nsw.gov.au/prod/parlment/nswbills.nsf/0/2D6CE9CCB4D3A56DCA2575830021A477  

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Quick reply

Hi

Yes agreed the property market is cyclical and buyer beware.  

评论
johntaps said: ↑
What do you think?Click to expand...
I think I'm entirely tired of hearing about what is happening in the USA & the UK. Can we give it a rest? :rolleyes:

johntaps said: ↑
What support does the First Home Owner or owner have to exit their mortgage (Exit Strategy) and protect their own interests, to protect built up equity and protect financial value?Click to expand...
Oh pleeeeeease. They have the same support to exit their mortgage as anyone else does under the Consumer Credit Code. They can put their property on the market and sell using the proceeds to pay out their mortgage. If they are in negative equity position, then that is a different matter - but again their are many safety nets:
1. Government handouts to make mortgage payments
2. Repayment holidays of up to 12 months
3. Early access to superannuation
If they have built up equity of course then none of the above is needed.


johntaps said: ↑
If the borrower is issued with a loan default notice, does not remedy or reply to the bank, the Lender finally has the legal right to take possession of the property and force a sale.Click to expand...
Yes - what else do you expect with a borrower who makes no repayments and will not communicate - der!:confused:

johntaps said: ↑
The Lender has the right to accept any market price they see fit.Click to expand...
Not entirely true. Most MIPs go to auction to get a transparent price on the open market to prevent the borrower having an action against a lender - which has happened in the past.

johntaps said: ↑
The first home owner property could be valued at $360,000 and sold for $305,000 by the bank to clear the mortgage and the bank costs of sale etc. It seems very unfair that the borrower equity is lost.Click to expand...
If the borrower has made no repayments, not communicated with the bank, not turned up to mediation, etc etc and mostly for a period of 12 months I might add, by the time it gets to repossession stage.............then I'm not going to lose sleep over it, no.

johntaps said: ↑
The current enforceable legislation is weighted towards the Lender and Lender interests.Click to expand...
An old Proverb says that "the borrower is servant to the lender"

johntaps said: ↑
Bank fire sales also can result in large drops in property values in suburbs and regions. Resulting in the reduction of home values and the reduction in community wealth.Click to expand...
As I said in an earlier post, this is ONE risk of buying / investing in property. It is a non-issue if you are holding with a 7-10 year horizon.  

评论
johntaps said: ↑
Bank fire sales also can result in large drops in property values in suburbs and regions. Resulting in the reduction of home values and the reduction in community wealth.Click to expand...
The borrower does have an obligation to make repayments to the lender though, no?

What is the percentage of repossessions across Australia?

What percentage of fire sales would it take to devalue suburbs and regions?

The only time I have heard anything like this happening was when a lender collapsed, like Pyramid Building society in the early nineties.  

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johntaps said: ↑
Hi

A quick reply

When I was a Buyers Agent and purchased 50 properties over 12 months it was across the Perth metro area and some in Kwinana

When we looked at Kwinana we only focussed on duplex lots or future subdivision (rezoning) potential

There are 4 major areas in Kwinana that will be rezoned and includes Medina, Orelia, Parmelia and Calista. We purchased some very good property where the buyer could retain the front house and subdivided the rear lot. So it was the add value criteria that was sought after.

Yes I am a newbie to your forum if that makes sense?

Yes agreed the property market is cyclical and buyer beware.

I have posted this item and have some other stuff to post. I thought this would be a stimulating subject and might offer a different perspective.

many thanks for all your comments.

cheers

JohnClick to expand...

Did clients who purchased properties to add value actually achieve this when the market changed from boom to bust?

I am from Perth and have been purchasing in Melb, Syd, Qld, if I get it wrong I will be wearing it. Unfortunately I don't believe my bank manager is going to let me off the hook.



Cheers, MTR  

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Quick reply

Hi

I should explain the case study and I apologise if it is a grammatical error.

The posting dated the 22 Feb 2010 states " I observed the Perth Western Australia boom and in particular one area called Kwinana " . I observed, watched, monitored this market Kwinana.

Added to this " I had associates buy property in Kwinana and a suburb called Medina " These are friends, people I know and not clients. So my concern was for my friend and mate who bought in Medina. He did his own thing and made his own decisions.

The case study does not relate to any past client. The case study is not an example of my friends purchase. It is an illustrative case study based on observations of buyers in the market place. I lost count how many home opens I attended and inspections with other buyers. So I observed other buyers in the market place making these decisions. It is a hypothetical case study based on these observations.

In response to buying property in Perth I have not mentioned how well below market price we purchased property and what conditions. That the buyers were holding for the medium to long term and not intending to sell.

Would it be fair to say that Buyers Agents in Sydney buy property well below market worth? Or say that Buyers Agents in other states buy well below market worth at any time during the real estate cycle?

Or that property investors also buy well below market worth?

The Perth WA market went up, went down and is now going up again. That is a typical real estate cycle. To be rational it looks like other states in Australia have faired the same. Do you want some objective statistics to illustrate this point?

Check out these statistics for each capital city

Canberra
Perth
Adelaide
Brisbane
Melbourne
Sydney

This is very interesting information. Look for the peaks and troughs. Has anybody bought in Canberra, Adelaide, Brisbane, Melbourne or Sydney recently? Looks like these markets have peaked?? or is that just a real estate cycle?

Like shares if you sell at a lower price you will lose money. If you do not sell you do not lose money. So no the buyers did not lose money as they did not sell.

As Propertunity stated if the owner holds for the medium to long term it is a non issue. Thank you Propertunity.


Regarding Battlers comment on repossessions see the Fujitsu research and papers on Mortgage Stress O Meter here https://www-s.fujitsu.com/au/whitepapers/january_2010_mortgage_stress_report.html and " Affordability however continues to deteriorate "


Hi MTR the buyers were in for the long term hold. Any add value subdivision potential would be realised after completion of land subdivision, development of the lot, building construction and whether the owners held the property or sold. Some held, some built and rental returns have been good with Perths high population growth. It all depends on the individual investors strategy and decision making. Does that make sense?

Looking at the statistics Sydney, NSW and Brisbane, QLD have been up, down and up again. So a typical real estate cycle. Certainly Sydney median property prices are higher than Perth. I might be wrong?

Also looks like Melbournes median price is starting to match Perths median.
see

Perth
Melbourne
Sydney

As for the other comments I hope the above response offers some assistance.  

评论
I love the term "mortgage stress"

The problem here is that the stats dont show how much of this mortgage stress is due to

1. Harvey Norman induced "post move in disorder"..................wow our new house is so empty, lets get some buy now pay later.

2. General Affluenza............focus on a newer or larger vehicle, a new tele


I suspect if we did the ground work, we would find that mortgage stress isnt caused primarily by the mortgage loan, but often by other addons that have sucke up any buffer the borrowers had.

yes, sure there are many issues of gen mortgage stress issues, but what are the REAL numbers

ta
rolf  

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