For years Real Estate agents have been saying you can’t lose with property. Despite this reassurance, Residex research shows 24% of Sydneysiders who have brought and sold property in the past five years have lost. The average shortfall has been more than $54,000 or in many cases, the value of two years rent.
Residex CEO John Edwards says as many as a third of homeowners who bought their properties in the past five years would realise a loss if they sold today, yet few were aware of their mistake.
The problem comes from over valuation of property. In a slow market, the problem is likely to get worse, and as Australia’s property bubble nears the top the risks of paying too much will greatly increase. Buyers may also overbid with farce competition with cashed up Chinese buyers now that FIRB legislation has been relaxed.
In Melbourne over the same period, 15% of properties were sold at a loss. In Brisbane this decreased to 5.6% and Adelaide recorded 5%.
» Our real estate losers – a quarter of Sydney homeowners have lost money The Sunday Telegraph, 28th February 2010.
» Buy, sell and lose – the property trap – Adelaide Now, 28th February 2010.
Ssssssssshh!!!!
Don’t educate these suckers…prices might collapse…..
and as Australian’s we cant have that now can we????
What is the average agents commission?
I presume that selling commissions are an expense that offsets the capital gains of an investment property when sold?
If only stamp duty and agents commissions were not able to be factored in as an expense to the “Capital Gains” calculation, then investors would not need properties to rise $100k just to make a profit on the sale of a property.
Lets face it – Any investor coming into the market at these inflated prices is not doing so for the rental yield, but for the prospect of turning around the property for a profit in 3-5 or even 10 years time.
Most middle-aged investors I know are investing in property now at around age 40-45 with the idea to sell around age 55-60 to fund a comfortable retirement. All this is built on the fact that property prices ‘double’ every 7 years, so if you purchase an investment property now for $400,000 it will be worth $1.6 million by the time they are ready to retire in 15 years time.
You probably think I’m taking the mickey above – but I’ve heard the $400k to $1.6mil story for retirement from 3 people in my extended family in the age 40-45 bracket. Forget Chinese Investors – it is the mum and dad investors that think they have all the property knowledge in the world thinking that scraping together now for an investment property will lead to a comfortable retirement where they can live like millionaires..
Yeah, my friends in their late 30’s to 50’s here in Aus are buying in to property as property doubles every 10 years or so. One of them flipped a house at each end of the FHBG and made a profit of over $50,000.00 . Houses are the ticket to millions of dollars.