Hi Tom,

As JacM said, the API mag can be good, but it will often be two or three months in arrears. Still, it can provide a “history” of a suburb if you are wanting to observe that suburb over time.

Another way to consider (especially if you are buying in your own area – but then, there is always the phone, eh?) and that is to talk to your friendly RE agents. Ask them how many properties they have on their rent roll, and how many they have vacant. This can lead to “spikes”, but their words can also give a feel for the vacancy rate – e.g. “We can’t get enough homes to rent!”).

If you talk with 3 or 4 RE agents, and they all have very few homes on a large rent roll, then this might be a more up-to-date answer anyway.

The calculation is simply “Homes available for rent, divided by total homes able to be rented” So, if an agent has 200 on rent roll, with just 4 available today, that is a 2% vacancy rate. (4/200 = 2%)

Benny

Hi GW,
Ah well, as I said, I don’t know your area. What value DID the valuer put on it?

Anyway, you are in the box seat, and it is yours to sell. I think someone is going to get a bargain at $1.5m – what do other Sydney-siders say?

Benny

Hi Gateway,

I have a 4,300mtr property in the Liverpool/Moorebank area. It is the last of the original subdivided blocks from the 1920′s so the valuer is not able to take more than an “educated guess” with the caveat that even that could be wrong as the place is the last uncut block, has 2 street fronts, zoned med density, not bad house etc etc etc. Basically no one has any real close estimate of the place’s worth.

I don’t know the area (I’m in Brisbane) but I would have to think you are sitting on a small goldmine. Just a quick “back of the envelope” calc should get you close. Again, since I don’t know your area (Council bylaws, zoning meanings, etc) I will just do a quick example that can point you in the right direction (perhaps).

For my example, and to make calcs easy, let’s say this can be subdivided to form 10 blocks for building – a size of 430m2 is pretty common today, and could even be less size with many Councils, perhaps allowing you to form 15 blocks. But stick with 10 x 430m2 blocks. And, let’s say a 400m2 block in that area fetches $200k. That means you would have the possibility of $2m or thereabouts.

Now set your own figures to that. Then you need to allow for subdivision costs, so the price would drop to allow for those. Maybe you can look at subdividing “a small part every two years”. Like, subdivide 4 blocks off one end and arrange to build 4 homes on them over a 2 – 3 year timeframe. Keep in mind access for those in the middle. Maybe you need to “give up” one or two blocks to satisfy the access problem.

By developing them yourself, you save around 20% of the cost, AND you already own the land (less the cost of subdivision). It strikes me that you could set yourself up pretty nicely over the next decade. Sell off a few to pay off the rest (maybe sell 3 or 4 to keep 5 or 6 without mortgage) and go play golf !!! With the land costing you little, and the wholesale building costs if you develop, these should be hugely cashflow positive.

I’d be interested to hear what others think too – especially those who might have done similar things. And I’d like to hear what you think. Can the above idea be massaged to “fit” your situation?

Benny

• This reply was modified 10 years, 8 months ago by  Benny.

Thanks LJ – very useful !! Cheers,

Benny

Hi Long John,

You should be a poly Benny. You’re talking a lot without really saying anything or committing to any position. That usually indicates one doesn’t understand the problem or have an inkling of which way things are going.

Well if you think that, you either didn’t comprehend my words, or you choose to continue to promote your personal bias and take a shot at anyone who puts an opposing view.

Anyway, for the sake of others who might have thought I “wasn’t taking a position”, let me share a very interesting link (showing “house cost vs Income ratios for 2014” – for the whole world !!!!) Let me preface it with this quote from my earlier post:-

If, as Glenn Stevens says, we are at “cost equals 4 times earnings” for the most part, where’s the bubble? I don’t know exactly what this figure is today, but it will rise and it will fall from time to time.

http://www.numbeo.com/property-investment/gmaps_rankings.jsp

Now, I know what that figure is – and Glenn Stevens wasn’t far off…

There is good ol’ Aussie, with ratios of 3 or 4 in most areas, but with capital cities a bit higher (Sydney and Melbourne in the 8’s – gee, it must be a bubble… :p) No, they have had a recent climb in values, so it will take a while to taper and/or allow wages to catch up. I guess they may never quite get down to 4 like less popular cities, as immigration and overseas investors will see to that.

If you want to see real pain, click on some of the Red paddles. Now THEY have a problem. Probably where it takes three generations to pay off a home?

And my position? I’m a “middle of the roader” – I’m not bullish on property at all times. I endeavour to take a balanced view, but to retain the ability be a “swinging voter” as times and circs dictate. Right now, warm on property.

Re the world situation, well hey, I am not in any position to be able to influence anyone except myself, so the best I can do is to do my best. If it all goes to hell in a handbasket, I guess I won’t be alone, and hopefully better prepared than many.

Since LJ put a burr under my saddle, I went looking for information to either back his POV, or mine. I found both types, but for ME, this one makes a whole lot of sense, and probably explains why LJ, Scamp, et al have been posting what they have :-

http://australianpropertyforum.com/blog/entry/3174279/8081

Seems like some “Demographia survey” has been widely quoted as saying Australia is unaffordable. Well boys, read THAT link, then see if you feel the same way. It sure put my mind at ease, ‘cos frankly, I just couldn’t see the doom and gloom that you were belting us with !! That link shines a very bright light on what may have been a massive chunk of mis-information.

Benny

• This reply was modified 10 years, 8 months ago by  Benny.

Well, I enjoyed reading that one. And yes, I enjoyed reading both sides of the debate.

In early 2008 we were “enjoying” the rise in Interest Rates that followed newly-elected PM KRudd famously saying “The inflation genie is out of the bottle”, prompting the RBA to start raising interest rates as the rest of the world were madly cutting theirs (think GFC) !!

Also in early 2008, I had the good fortune (?) to have some of my Fixed loans come out of 6.49% to be hit with 9% variable. A 2.5% increase? Nope, it was a 50+% increase. Things did get quite tight for me (and COULD have seen all of Australia become a buyers market quite quickly, except that the rates then got SMASHED later in the year when the RBA realised they had got it wrong).

So I do recall WHY some of the gloomers were saying what they were, with 50% drops in values, etc.

They also used the US as a mirror of what would happen to Australia. But the US uses mainly non-recourse loans – you can take the keys to a house to the bank and walk away from any mortgage. WE can’t do that here. Thus, our market would never be subjected to the wild swings tht their system makes possible (in my humble opinion).

And the comments made about “house costs equal to 9 times wages”? Yes, we do see spikes now and then (it was similar in late 80’s wasn’t it? I recall values doubling almost overnight) but a comment today from Steve included this :-

Of interest, RBA Governor Glenn Stevens recently made this comment about a possible Aussie property bubble:

“You can never be 100 per cent sure. But the price to income ratio has been around four times … for about 10 years, so a very long-running bubble, if it is a bubble. Most do not last that long.“

Steve’s article is now off the front page of the forum, but you can read it all here :-
https://www.propertyinvesting.com/heading-property-crash/

If the long-term cost is around “4 times earnings”, then a sudden doubling in price would quickly become “8 times earnings” – until wages caught up again.

I just wanted to bump that old thread. Times change, and it is always useful to keep a weather eye on developments in real estate, so I appreciate threads like this one. Certainly, along with the raw emotion, there were some very pertinent comments made therein.

Benny

Hi Steve,

Of course, things will change over time.

Aha, I see you have added a quote – these seemed to disappear during the forum changeover. Let’s see if my quote works too…

Woohoo – it did !!

Benny

• This reply was modified 10 years, 8 months ago by  Benny.

Hi Wilson,

   I see you have joined us quite recently – welcome.   I wish I was able to answer your questions, but I'm afraid they are out of my league. 

  I thought I would say Hi, and get this bumped into the "recent" pages of this site.   Hopefully, someone else from down your way – Victoria, maybe Melbourne (?) – will see it and respond with assistance.

Benny