Risky ride on the vendor-go-round

Posted to The Age (22/1/2012) on 24/1/2012 at 3:46 PM
Commenting on "Risky ride on the vendor-go-round"
http://theage.domain.com.au/real-estate-news/risky-ride-on-the-vendorgoround-20120121-1qbal.html

It is most unfortunate that many vendors and buyers do not take the trouble to learn more about sale / purchase of property and real estate agents' behaviour. Vendor selling a property is in fact conducting a small business, even though the business concern lasts hopefully within days or weeks. Some potential business operators attend related TAFE courses or seminars prior to sinking their hard earned money in for the venture, and yet many property vendors just blindly follow the instructions of the agents or agent representatives. The present property median price of $551,000 is worth more than a small grocery store or milk bar. In order to run a successful business, the operators do need to understand a bit of business plan, marketing, budgeting and decision making.

Analogous to a property buyer, we know that many people shop around for a thousand-dollar fridge and 20-30 thousand-dollar car for days and weeks. However, purchasing a property is very different from these items; there is no warranty period or refund policy. Once purchased, the buyer cannot return the property to the previous owner and ask for a refund if the buyer changes his/her mind. Property buyers must not think that they are expert in this field even if they have sold or purchased several properties before. A good agent or representative is required to sell a property a week or around 40 in a year. This is beyond the capacity of many property investors!

I have written a lot of blogs on this subject matter, and I must reiterate here that real estate agents piggy-back on vendors' advertisements to promote their profile, thus relying on the vendors' advertising expenses.

Where is the housing market headed? (Post 5 of 5)

Posted to The Age (13/12/2011) on 15/12/2011 at 11:44 AM
Commenting on "Where is the housing market headed?"
http://theage.domain.com.au/blogs/talking-property/where-is-the-housing-market-headed-20111213-1osf0.html

@tim, collecting, collating, analysing data and presenting them in readable form are laborious and expensive. You probably understand that there is no free lunch in this world. Did you pay for the data? If you did not, then the result published is done with the minimum time and effort. Even the new Australian Consumer Laws will not be on the users' side, because you get what you pay for.

If all the auction results are submitted and the clearance rate calculated to 4 decimal places, it still does not give a true picture of the real market trend. A lot of properties are sold by private sales, and there is no obligation for data to be released for public consumption. Then there is the problem of when properties should be considered sold - the day the sale document signed by vendor and buyer, immediately after cooling off or all special conditions are met. If any special condition, e.g. bank loan approval, architect’s and termite/pest inspection, FIRB approve, etc., is not met satisfactorily, the sale can be voided by the buyer.

One more thing to consider is how relevant is the statistics, either clearance rate or median price, to the location of the specific property where one is intended to invest in.

With the latest and most advanced technology available to date, original source data still depends on human to input to the system; and most people will manipulate the data to their benefit.

Besides money, investing in property requires time, effort and brain juice.

Where is the housing market headed? (Post 2 of 5)

Posted to The Age (13/12/2011) on 13/12/2011 at 11:51 PM
Commenting on "Where is the housing market headed?"
http://theage.domain.com.au/blogs/talking-property/where-is-the-housing-market-headed-20111213-1osf0.html

@Stuart-Rose & Jones Property, Loto numbers come out in random fashion, but real estate peak and trough can be predicted by analysing various factors. By that, I don't mean the shape of the coin that you toss, or how high you toss it. Although I wrote it cheekily, I do believe that March/April 2013 is the likely time for upswing.

The predictive model is complex, and some of the factors include: past cycle, demographic change, city expansion, local economy, global economy, government policy, etc. Prediction is based on objective as well as subjective assessment.

If you have been following my comments in response to many real estate articles, you would have learnt a thing or two. Back in early 2009, I alerted many friends that this fall could be as drastic as 40% for some overly heated areas, and 25% on the average. I also alerted some people who had intention to sell their high value properties to do so sooner and take the money to go on a world cruise. Upon return, they could lease a place of their choice, until they decided to buy at discounted price.

The biggest barrier is not affordability, but employment uncertainty. 5.3% of unemployment rate is too rubbery. By my calculation, the [latent] unemployment rate is 3 times as high.

My words of advice, "you eat everyday does not mean that you need to own a food store. Owning a home is not mandatory; there are other options of accommodation".

House values mostly flat or falling

Posted to The Age (15/10/2011) on 15/10/2011 at 11:35 AM
Commenting on “House values mostly flat or falling”
http://www.theage.com.au/victoria/house-values-mostly-flat-or-falling-20111014-1lpc9.html

A phrase in the lyrics of Sound of Silence says, "The words of the prophets are written on the subway walls". I am no prophet, but I have been writing on my blog walls, presenting very frank and critical analyses about the real estate market, and predicting the possible trend direction.

Last year, I wrote that the median house price would fall to $550,000 around June 2011 (off-target by about 3 months), stock market index would fall below 5000 points, etc. I wrote about real estate 12-year cycle and the continual decline until March/April 2013.

Back in early 2009, after the peak in December 2008, I was warning people that the some property prices could fall as much as 25% or more in the coming years. However, most people were in state of denial and not to take heed.

There is time to buy, and time to sell. It’s your blood, sweat and tears hard earned savings. Invest wisely and don’t be gungho in making that expensive decision!