Hi everyone,
I've been house hunting for the last 8 months and i am exhausted.
The whole process of going to inspections every weekend, covering only a very small area, trying to put a bid in, gets outbidded last minute, repeat next week.. it's so frustratingly inefficient..
What techniques / strategies do you employ when you were buying your house / unit to make the process better?
Thanks in advance all!
Think the crash is going to happen anytime soon? I've been waiting quite some time before biting the bullet
it's now generally accepted that interest rates will rise next year….. I seriously hope there is some carnage that dumps the stuck-up investors back to the real world
spoken like a true (short sighted) toll poppy syndrome-r
Carnage = Impact on the entire economy, including YOU. It's not about just picking up bargains.
A crash whilst VERY painful in the short to medium term could be more beneficial in the long term assuming it is backed up by policies that deter the kind of speculation we have seen the past 15 years or so (CGT concessions being the biggest one). I don't have the detail but it would be interesting to see how it has panned out in America now close to a decade on from the GFC.
I don't believe it's as much tall poppy syndrome as it is a line in the sand of inter-generational wealth. If you happened to be born the right side of 1980 your probably ok, if not you are at a massive comparable disadvantage. Something has gone seriously wrong to have 50 or so years of stable price to income ratios blown out of the water in the past 15 years.
Average Joe wont be able to afford a mortgage if price growth continually outstrips wage growth so it wont matter if banks wont lend in a falling market. What it would do is reward people who actually save money. To date there is a panic to get in to the market because price growth outstrips the average Joe's ability to save so you are effectively going backwards.
A better indicator is to look globally, apparently we now have the third most expensive housing IN THE WORLD coupled with some of the most generous tax concessions on housing investment.
A simple move would be to align policy to bring housing investment in line with other investments thus dampening the incentive to invest in housing. No doubt it would be grandfathered so those fortunate enough to be able to take advantage of it would be protected.
That will destroy your super pretty effectively. It's obvious that you are desperate to be a stuck-up investor too.
@Gershom: you think i envy the disgusting rent-sucking monster bleeding the life out of the young-couple at auctions, Hardly!
Just wait for the next gen to reach voting age. They are going to look at your "tax investments" as the reasons why they are renting and will flip your super on it's arse!
I think you've missed my point. If there was a crash, everyone would be impacted not just 'childless investors'.
Ironically the real top end of the food chain would feel the least pain.
Mmm roberbruce, you're hoping for 'carnage' when interest rates start going up? You do realise that a mass default event for home owners and investors would impact the entire economy, right? You would likely lose your job too.
I do know one property investor and he wouldn't sell no matter what. He's got the money to ride out any collapse in the housing market. Any crash would impact the poorer end of our society, the mums and dads just trying to provide a home for their kids and make ends meet. But who cares about them eh?
It is not generally accepted at all. Creditable sources?
@robertbruce: Your lack of understanding of the system is truly astounding. Remember, there are borrowers and there are lenders. When you are young you are a borrower. If successful, when old you are a lender. When interest rates go up it is bad for the borrower, you, and good for the lender, me. As it happens I'm not invested in real estate other than my residence and holiday home, I'll be cashing in on high interest rates when it happens. And so will your super fund, so one day you can be a lender too. See?
@gimme: I didn't miss your point, the bottom end won't feel it and there's not much left in the middle…
You are seriously misinformed mate - The bottom end (as you call it) or the middle (statistically) will be the most impacted by a crash/carnage or whatever you choose to call it.
The 'middle' is the largest segment in Australia (look beyond the catchy headlines and vague definitions of what middle means) and it's the largest tax contributor (hence propping up the social security in this country).
Anyway I'm out - These 'A Current Affair' type discussions go nowhere really.
@Cluster: there would never be a mass event in Australia, we are too small. Just enough carnage to tear up the shorts is what we need. Something like a reduction in NG would be enough. A decrease would not hurt whom NG was originally installed for becuase they are already in the real world.
@robertbruce: Why thank you! I'm actually not an aspirer, I'm an early retirer. I made enough money that I don't need to work anymore. BTW, if not for negative gearing a lot of poor renters like you wouldn't have a place to rent, or wouldn't be able to afford it. Once you learn to think things through and see the big picture you too might start to become succesful. Good luck.
@gimme: gimme, your deluded… You don't think we learnt from the 18% interest rates in the 80;s or the double rent tap in the 00's… there won't be a sub-prime collapse here but there will be a reckoning or a rationalisation if you prefer….and it will not affect the medium,,,, This time around it's been so well designed, itt'l just be a simple tweak, very well aimed and there won't be much collateral.
@Gershom: bwwaaaahahahahaha, i am seriousl ROFLing. You suggest renters residence and place of reside is dependent on negative gearing, SPARRREEE mEEE!! that is sooo funnny… See how stuck up you are…. BTW congrats on your early retirement, I was totally correct if maybe a typo…
@robertbruce: Er, what do you think people do with negatively geared properties? They rent them out. There are over 1.2 million negatively geared properties, being paid for by investors. What do you suppose would be happening in the rental market if there were 1.2 million less properties available? Your class warfare attitude is blinding you to reality.
@Gershom: there might be less rentals available (the data says otherwise), but the purchase price would drop too, hence many renters could now afford to be owners…
Many other countries don't allow -ve gearing the way we do, and guess what, they still have places to rent!
Happen in Townsville
Just out of interest - what it your definition of bottom end? what sort of income/asset bracket do you consider bottom end?
"The crash is coming any day now" - forum posts from 2006 when I was looking to buy. If I took that advice, I'd still be waiting.
Yeah market timing, always a winning strategy!
Those hoping for interest rate rises to do the trick are dreaming. The economy is still fragile and wage growth very low. People are carrying lots of debt due to high house prices. Only a small rise in rates would have a much bigger effect on slowing the economy than in previous times.
The RBA is likely to be very careful with this as consumer spending could easily plummet with people abandoning leisure activity and trimming costs in favour of retaining their homes.
Two things need to happen for a crash to occur. One is a sharp increase in unemployment. Doesn't look likely anytime soon. The other is a significant increase in interest rates. As mentioned above rate rises are a blunt tool and the public are more exposed than ever so I don't expect rates rise decisions will be taken lightly. There's also the problem of the still stubbornly high Australian dollar counting against rate increases that would inflate it even more.
Unless you are trying to get in and out of the market quickly then buy what you can afford and don't try and outsmart a market where demand shows no sign of slowing. Whatever happens in between prices will almost certainly be higher in ten years than they are today.
they have been talking about the crash since the price hike in 2014, its not happening anytime soon because the population just keeps growing, the so called crash will not lower the prices but will hault the increase of prices. yes you can expect that crash soon like we experienced in 2015. but it will start climbing again a year or 2 later, just like it is now
They have been talking about the crash since the Early 2000's. While some adjustment is definitely needed, unless their is a really sharp increase in interest rates you are more likely to get some stagnation or relatively minor decline, a large interest rate rise though could certainly bring about a crash.
The country's economy is so heavily intertwined with the housing market now, that a crash would most probably only occur in line with an economic crash, i.e. a recession brought on by the failure of the big banks to prevent the mass exodus of both international and local investors in the property market.
Alas, the Big Banks + Reserve Bank + regulators, State + Federal Governments, Real Estate and Private Equity Firms have actively built in mechanisms (e.g. record-low interest rates, tax-incentives to investors, opening markets to international investors, de-zoning low-intensity suburbs, driving up demand by masking supply, etc.) to ensure that a crash does not happen on their watch.
Look at it this way - even if somehow the bubble bursts tomorrow despite all measures - house prices will indeed fall, yes - however your dollar is worth less, your pay will be less, and all those wealthy investors who've just lost a ton of money - they wont just disappear into the woods - they'll be looking to buy up every lot they can get to re-coup their losses and start anew, especially now that international investors have all but scattered and suprise-surprise, the interest rate has sky-rocketed back up again.
It's never a good time to be a first-home buyer, you pick the lesser of two evils and I actually think now is the right time.
Everyone seems to say "wait for the crash" like it will be the savior for all the struggling young people. The reality going by previous crashes around the world would result in a correction of at most ~20%. House prices in Australia have increased by a much higher rate than that in the last decade. Prices would never drop to 2005 levels - and if they did, the entire economy would collapse and we would all be (profanity). Paying $1 million as oppose to $1.2 million for a house is still going to be just as unaffordable for young people.
Besides, in Australia we have massive/record immigration numbers year on year, a population that refuses to move to regional cities or change their lifestyle/desire for a house with land, relatively stable interest rates and a government too scared to implement any policy that will truly impact housing speculation/prices.
Australian house prices will continue to rise or stabilize over the next decade. There will be no crash - at least for 3+ bedroom homes. If any thing, we may see a correction in 1-2 bedroom apartment prices in Sydney/Melbourne due to over supply.
The population doesn't "refuse" to "move to regional cities". There are no jobs there for many/most professions. Who is going to support them? And the jobs that are there are usually not very well paid. And that's before you start looking at education and healthcare opportunities. Unfortunately it's a vicious cycle. No jobs, education, health care means less desirable to live there means less people live there means less jobs, education, health care services.
As for your prediction of no crash, I'm really not into fortune telling. Anythign could happen.
Invest in regional didn't govt support this not long ago with incentives to move out?
I think investing outside is great idea, but living in CBDs for work can make money.
e.g. I can take hard earned money here and spend cheaply overseas. (not good for our economy but hey, labour is too much here)
Incentives are there but not huge. Especially not for family. If there is no where for your child to get a qualification they have to go live in the city anyway, which negates any incentive.
About the only groups you could entice to move to regional areas are retirees and long term welfare recipients who aren't looking for work, but they prefer to remain in the cities rather than free up housing for people who work there.
I cannot predict the future ( unfortunately ), and was like everyone else stunned by the price of the houses. I went to open for inspection and some auctions, but the prices was always far more then I was willing to pay. I was happy to be a renter.
Out neighbours decided to downsize, and asked us for an offer on their house. At that time my Share portfolio, combined with exchange rate was well below what it was, and if we wanted the house, my wife would have to start to work, and our daughter start to go to pre school.
We bit the bullet, my wife found a job, I sold everything ( EVERYTHING ), and we bought the house.
Since 5 years we are living in our own house, and there's simply no price to that ( we can somehow comfortably pay the mortgage repayments)
It's not just about should I BUY now or later, but also if you WANT TO LIVE in your own house. You need to factor that into the price too.
That would have been an amazingly difficult decision. You outlined the rational and emotional aspects perfectly.
NOnsense. Have a look at the extent of the Japanese crash in the late 80s. The US 2007 crash exceeded 50% in a number of areas. Even London in the early 90s was significantly higher than 20%. Admittedly the market conditions here will not be the same - employment remaining stable - but the interest rate increase will have greater impact due to low base and leverage levels. The only other factor constraining Australian falls compared to say US is the default responsibility in Australia (what you thought mortgage insurance meant YOU were insured?) as against the US situation which ended up with jingle mail defaults.
But don't say it couldn't unwind beyond 20% or that that is the norm.
Lots of crashes in markets within Australia already
Slightly more than 2 out of 3 own outright or have a mortgage in property.. the volume of she'll (always) be right mindset doesn't surprise me..
Just because we are in the longest growth cycle to date, doesn't mean it won't end
Also the point about rates being low, govt has made it clear next direction is up (without this, next global shock we may not be able to absorb at all)
Another interesting stat is when rates go up 0.5% we're talking about a 33% increase in the cost of debt.. "when the tide goes out, that's when we'll see who's been swimming naked"
A soft landing is the best outcome for all, I think we could just pull it off, but IMHO if you're buying now don't expect the same mid term growth as recent times.. (talking about the hot east coast markets)
Edit: in terms of OP, buy what you can afford to service based on longer interest rate norms.. please do the calculations, you may be surprised how cheap debt is right now.. debt comes from the international markets, not completely in control by the RBA.. cost of debt goes up, your repayment goes up
20% ?
Nah!
Ireland, Iceland, Portugal, Spain, Italy, Greece.
I know plenty of people who are waiting for the market to crash (or at least correct) before entering the market - but the mere existence of these individuals willing to pounce on a falling market is what is likely to keep it up or maybe from falling very far.
They'll probably get cold feet in a cooling market and won't jump in.
Another option is keep trying.
Don't go to auctions.
Many times I see when there's only one bidder, the auctioneers refused to sell because it's under the market value.
Happened to me yesterday.Only me and someone else put in a bid.Everyone else was just watching.The second bidders budget was more than mine but Vendor wanted a lot more so got passed in.
Fed up of the whole process.I hate auctions .Better if it was upfront discussions with vendor and then decide.
Under current market situation, I think it's better to rent until next property market cycle down again
and when is that going to be?
@enzioFirenze: Wait, I left my crystal ball at home. But joking aside, that is going to be when the prices are down. Wait for the signs.
I've seen a few too many people get undone by this kind of thinking. Friends who have said "let's just wait until the market cools", and since then its gone up 30-40-50%. Not much a strategy
That being said, right NOW i would be cautious. Best you can do is try to protect yourself from it, i.e don't go buying brand new, full priced apartments in and around Melb/Sydney, and don't go overextending yourself for when the rates go up a bit in the next year
Why not buy a cheap unit and pay interest only while you wait for next cycle? It will be cheaper than paying rent. Paying rent you get nothing but helping the landlord to fulfill their investment goal.
Sometimes there is a court order that the property has to sell that day by auction so I have come across a couple of clients who both sold at auction to a single bid and a few clients who bought on a single bid.
now how do i find a list of such property ? :)
Do tell us, Mr Prepper. How does one go about finding a list of such property?
I had client recently that was helping his mum to paint her investment unit on a Saturday morning and noticed that there was a unit up for auction in the building. He registered and then was the only bidder on a single bid. His mum told him that the owners who she knew from the Owners corp meetings ,had just divorced and had consent orders made to sell by auction by date X and they just wanted to flog the place off after barely being able to cooperate to get to that point. This was after the client almost gave up after 10 months of house hunting.I think you just have to be ready to go know your limits and whether the place is a bargain. He knew the place was a bargain based on the rent his mum was getting and his mum always checking out similar prices in the area.
Auctions are the main way the Court flogs properties off in family law and bankruptcy matters. If you are looking at an area where there are only a small number of units listed for sale by auction the units listed for auction are probably court ordered. Sometimes the court makes an order for a sale by auction months earlier ,at a time when it is an auction market but the auction date is set many months later when the market is not suited to an auction. By that stage the vendors are so out of steam that they just let it go. Then the vultures circle overhead.
That should be illegal. They can set high open price if they want to, but any bid above that should translate to a deal. Just like ebay way.
Sorry, but with no laws regulating that, the auctioneers can do whatever they want
Very unfair. Its call bait and switch.
They purposely attract people with low opening price but then refuse to sell.
They do it all the time even with houses that aren't going to auction. They'll say the price range is between $400k - $450k then if you put in an offer of $400k you will be guaranteed to be knocked back and told the owner wants (or already has) offers at the high end of the range. The real estate industry as a whole are a bunch of wnakers.
@onetwothree: agree again. Most people (buyers) don't know the agent is actually their wolf in sheep skins with big smile and dark soul.
You can even do that with a car, or anything on gumtree.
Nobody is going to force you to part with your money or your goods.
Both agree, money and goods change hands.
@onetwothree: But everybody knows that. So if the price is advertised at 500K, and you hope to snatch the house for 520K, and you don't, don't blame the vendor or the auctioneer. Blame it on you, you know the game.
If you have budgeted 500K, got to auctions where expected price is 400K, and play the game.
If you don't get what you're looking for at 400K, that's another issue.
So if the price is advertised at 500K, and you hope to snatch the house for 520K, and you don't, don't blame the vendor or the auctioneer. Blame it on you, you know the game."
You can still know and play the game whilst thinking the vendor is an (profanity) for operating like that.
A few places have been fined recently for massivly under valuing the place of a property.
They can and do sometimes get punished for misleading potential buyers.
@onetwothree: the whole things are rotten already, filled by greedy developers and agencies. whenever government give supports (rebate, help, rebate, etc), those goes mostly to their pockets not the real citizens (by increasing sale prices for example)
Couldn't agree any more with what you said.
It's unfair and waste everyone time to advertise a lower price when you already have a reserve in mind.
yeah why cant house be put on ebay. wouldnt that be easier.
Excuse me while I go away and setup a website.
Seller has withdrawn item, because it has broken, or does no longer have it.
I mean, seriously ?
Can you imagine the 10% eBay fee + Paypal fees hahah
Absolutely hilarious. Not selling because its not market value - at an auction where the sole purpose is to decide the true market value.
So the owner has a price floor that doesn't want to be breach, that means the real estate agents are on the hook for falsely initiating the auction under false pretense and wasting everyone's time.
There should really be a law to stop these crooks. And the amount of commissions they earn for such a small amount of work is ridiculous.
The other scams are property inspection by surveyors/etc…
It should only be done once, by the council, just like cars need a rego, homes should need one too. To 100%
validate its saftey/build quality.
@RalX: This is how it works in the ACT. As part of the sale process, the vendor pays for a building and condition report, and then as a buyer, I can request that from the agent, rather than everyone needing to do it separately.
The eventual purchaser then pays for that report as part of settlement.
Given I've only ever bought my own house in Canberra, I looked into moving interstate at one point, and had a look at some houses, and asked for the building report from an agent, and received a strange look, and was told to organise it myself if I was interested. Talk about inefficient!
But this is the nature of auction. I want to sell a house at 1 Mio, but anything above that is welcome. So instead of putting an ad out for 1 Mio, I sell at auction. 800K starting price.
You can set to whatever price you want, but if the market says your house is worth only $700k, you're damn sure you can't push it out at 1mil. The real estate agents should know better and advise you on a more realistic price setting
@johndoe789: I think you missed my point. If my house is worth 700K, and I want minimum 700K, then the real estate agent will tell customers that the house will be around 600K. That will attract a lot of "fools" hoping to buy the house at 600K.
Then the bidding starts, and now the real estate agents are working on both sides: On the buyer side, to get the price up to 700K, and if this is not feasable, they work the seller side, to lower expectations "We have willing buyers out there ( yes, because the seller told them 600K ), but 'it seems' that 700K is too high"
And that is the fundamental problem with auctions, it offers the seller too much protection by giving them the ability to play the market whilst also having the security of a reserve price well above the starting price. Sellers should be forced into the position of deciding before the auction what they are actually willing to sell the house for, the auction should then be started at that price. If they want to play games and gamble that a lower price will produce a bidding war that will result in a price above the price they're willing to sell for for they need to be prepared to sell the house for less than their ideal price if that bidding war doesn't eventuate.
@donkcat: What about ( ridiculous ) vendor bid !?!?! I was at an auction, where the Reserve was reached, when the auctioneer put in a Vendor Offer, about 100K above the current ( on market ) price.
Yeah I have wasted a lot of money on building and pest inspections, only to be outbid by cashed up Sydney bogans (in QLD).
Truly exhausting, and every dam house is open between 10 and 12.
I turned up to a house once and there was50 people there, I just turned around
When I bought a place in 2003, it was the opposite. The agent drove me around to 6 or so places and asked which ones I wanted. I would like that day again
What is the interest rate back then?
6-7%, was good, no one was looking, less demand more supply, i do think that may happen in 2 years here, but it's a ball ache waiting
3%-4% in 2 years? No way. Impossible. We are too far into borrowing hell land.
@cameldownunder:i didnt mean actually to 6-7% i meant the supl / demand thing.
interest rates may go up next couple of years and i'd imagine a lot of people will be screwed
prices have double since 2003 ( in many perth suburbs )
It's been 14 years since, which means it's been around a 5% p.a. capital growth, which is nothing to write home about, especially after the holding costs.
are you suggesting we are nowhere near peaking out at the moment ?
If you don't have the dosh, then lower your expectation.
Put simply, you're looking at the house you like but out of your league.
Options continuing from here,
1) Lower your expectation to the level of your budget. Be realistic.
2) Continue lowball / ozbargain until you picked a bargain. (Could take ages, or could be tomorrow)
3) Wait for the crash, sit & wait for the dust to settle. Choose from mass carnage on the streets and pick a bargain as you like. (Could take ages, or could be in months time)