Looking at Steve McKnights’ December forecast the % changes for Aussie property values did not look dramatic in the most part when compared to the UK. We’ve lost around 15% in the last 6 months or so on average house prices – exactly that figure in my area. The original plan (me, my Australian wife, our two young children) was to sell up in the UK and migrate to Australia, which we are geared up to do, but the forecast for the pound is very bad now. I'm in the process of selling up in the UK what would, at absolute peak, have been a £270k home in London at a reduced price of £235k. If this goes through, my equity is about 50% but I think right now on balance I’d probably rather sell now than at the price in 6 months, which looks like around £200k on current predictions (another 10 to 15% fall predicted and unemployment predictions etc looking even grimmer than last week).I've already "lost" a paper £35k, I’d rather not lose another potential £35k to take me to £70k "loss" when I may be able to sell it right now. What's happening here in the UK, and I'm very interested to compare to Australia, is that if or when I get out of the property I lose my very good mortgage deal and to buy back in I’m looking at some very much worse mortgage deals and downright bloodthirsty set-up costs.My interest rate right now is just 2.75% (variable rate, 0.75% over Bank of England base rate). I don’t think it’s been that low in recorded history. This has halved my interest payments in 6 months from about £515 to £249 per month. Good job, as utilities have doubled or tripled.I was offered a fixed rate of 4%, which is still historically very good. If you’re re-mortgaging though I believe rates are around 7%, which would mean interest up in the £600 or £700 per month bracket! Add £1000 or more for set up fees, not to mention close-out fees, and getting into the housing market at all is expensive. No First Home Buyers Grant here either, just stamp duty! Not asking for an answer here, just outlining my position. My personal dilemma because of all this is:A) do I try to buy straight back into the UK market and all the costs and potential continuing equity falls?Or
just rent (£1100 per month) and see what happens in the coming year. My question is “Is the same true in Australia?” specifically Adelaide.Hi, wish there were easy answers. Noted in your other post, there are a couple of idiotic rantings of 30% falls. The fact is in Adelaide, prices have not fallen. Vendors are not lowering their asking price as yet. A property I sold in April with DA is now on the market @ $360-380000. When I did the sub-division, my end value for the new house was only $320000.
However, there's definitely a discount rate of at least 5-6% which means one can offer $350000 for the above house.
The other point to note is property is not selling. They sit around for many weeks. I have a house on the market @ $325000 and there was no interest at all.
So what do I do? I withdraw it from sale. It's renting for $280 per week & will probably go up to $290. The difference is that now I don't need to sell. I was on 10.69% interest & now only 6.19% The property has become cashflow +ve
My other properties [commercial] have all had rent increases of 5.1% last year's CPI and I'm paying more rent for my business premises.
Why not consider the rental prospect of your England house & rent when you arrive in Adelaide? Rental is still very low compared to house prices. You need to consider whether there might be any vacancy problems and factor that into your yield over in London. Here in Adelaide, you can rent @ around $350-400 pw the yield is around 4.7% so the house would cost around $400000 or so. Why the need to buy?
I'm giving you the facts in Adelaide now. Any decision you make is at your own risk. Many think house prices will fall. When and by how much, no one knows.
Good luck,
KY
Thanks for your comments KY, you've given me a couple of points to ponder.
Renting out the house in the UK doesn't really stack up unfortunately, the "buy to let" mortgage required would swallow my equity almost totally to get to a position where rental would more or less break even. Shame I can't "legally" keep the domestic mortgage for rental as the % rate would make it much more viable.If the UK sale goes through (long story but no guarantees in UK law – VERY bad system over here) we'll almost certainly leave the UK and rent in Adelaide until we've really settled on the area we want and I've hopefully nailed some way of getting a half acceptable exchange rate (terrible right now). The UK as a whole feels like it's just dying right now.
Yes, I've noticed rental does seem fairly reasonable in Adelaide, though I have to make a few mental conversions and assumptions from my UK perspective. $350 to $400 pw seems to rent a fairly nice house. Looking at it very, very simplistically I suspect adding a few zeros to the weekly rent cost gets you to something like the selling price of the property you're looking to rent. Still seems to be a shortage of rental properties in the areas I'm looking at though. Thought this would drive up prices more.
On your other point, quite a few properties I added to my shortlist on RealEstate.com weeks or even months ago appear to still be there unsold. Would have thought this lack of movement might force reductions, however small.
Again to throw the UK comparison in there, we are experiencing the lowest recorded number of completed sales they've ever recorded. Ouch.Hi. I have been reading with interest your posts. I am currently living in Adelaide and have lived and owned property in both Adelaide and the UK. We sold a flat in London in 2001 so I can sympathise with you on the terrible buying/selling system in the UK. In my experience, Adelaide prices do not fluctuate anywhere as much as they do in the UK. There is speculation that prices may drop. The "experts" tell us Adelaide should remain relatively stable, but who knows for sure. I guess at the end of the day you are making the move to Adelaide for lifestyle reasons. We did the same back in 2001. If we had hung on to the London flat for another 18 months we would have sold it for a lot more, but we didn't know that at the time and sometimes you just have to make a decision so you can move on with your life.
KY is right in saying that properties are not selling very quickly here at all. Bear in mind though, we have a much smaller population so things do not turnover at the same speed as what they do in the UK. Mortgage interest rates around 6-7% which is low. In 1989 I was paying 17% ! Our interest rates have always tended to be higher than the UK but then our houses are cheaper and you get more house and land for your money. We have a couple of investment properties that have done well over the past few years, but I think we will see a stagnating period for a while now. It is a good time to buy and those that are desperate to sell will accept lower offers. But I think with the lower interest rates, people are just deciding to hang on until the market picks up.Overall, my thoughts are: if you buy in Adelaide, be in it for the long term. I don't think you would see a huge fall in equity, but a more stagnating effect for a few years before another boom. That seems to have been the trend since I have been in the Adelaide property market. Of course, the future economy could make a complete liar out of me, but that has been my experience over the past 20 years. You can rent a nice house here for $350-$400 per week, but the rental market is tight and it can be hard to find somewhere.
Good luck with everything and I hope the sale of your house goes through smoothly.
Y
Y,
Well, you hit the nail on the head about the terrible buying system here in the UK, it is a major contributing factor to so many failed sales, gazumping and gazundering. We got gazundered a year ago and ditched the attempted sale, only for the market to drop massively, we saw £35k knocked off our selling price. This has severely damaged our position. Still, the only real selling price is the one that goes through. We are starting to have problems in the current sale – hopefully I can sort these out soon.I'm re-assured and made nervous in equal measure by your experience that house prices in Adelaide don't generally drop. Advertised prices certainly haven't dropped much if at all, but then advertised prices in the UK have not dropped as much as we believe the real selling prices have dropped.
Because of the bad exchange rate coupled with the price drop in the UK I was in one sense hoping that Adelaide prices would soften, at least within the wndow of our first year or so, hopefully giving us an opportunity to get our home. On the other hand it is re-assuring that we stand a better chance of not seeing the house we do buy devalue as they are now doing n the UK.$350 to $400 a week sounds like a lot to come out of a monthly budget, probably comparable I'm estimating to the UK. Seems over here a very rough rule of thumb is that you'd need 50% equity to break even on rental price of an investment property to break even. A small 2 or 3 bedroom terraced house in my area is £1000 to £1100 per month to rent, value of the house would be in very rough region of £250 to £300k
Does anyone have a link or list of typical monthly outgoings for a family to base what I need to earn therefore can afford to buy or rent? I have a very guesstimated idea, but no real evidence of utilities, childcare costs, insurances, car running costs etc that I need to work out "affordabilities".
These sort of expenses seem to be built into the mortgage calculators on lenders websites.Regards
Darwin
You must be logged in to reply to this topic. If you don't have an account, you can register here.
