Hi,
I have $260,000 comming to me at the end of the month from the sale of a property.
For my next project I was thinking about building a small house and selling it.
Ideally for a $50,000 profit this might take nine months.
I would need to select an area where it is cheaper to buy land and
build than it is to buy an existing house.Im concerned however that the market all over Australia is moving down.
If it remains flat and stagnant thats ok but if it really drops then I could get stuck with
the house which would not bring in a very high rent yeild.
(nothing is Australia does compared to the rest of the world).What are other peoples feelings on building this year ?
Mark.
It all depends where you build. If you are building in an area that has higher demand for housing than current supply then it could be a very good idea. If you build in an area that currently has too much housing for its population (eg. A declining rural town) then it may not be a good idea.
The general consensus that I have been hearing is that housing in Australia will stay pretty stagnant in 2011, going up just a little. But as always it is just a prediction and many people have different predictions.
Something to think about: Think about buying land and moving a house on to it. Something to look into as it can be cheaper than building from scratch.
Ryan McLean | On Property
http://onproperty.com.au
Email MeThere are plenty of markets where there will be substantial opportunities to benefit from either capital growth or refurbishment opportunities.
Unique Waken has commented on growth prospects recently in the Eureka Report.
I had a friend who built at the start of the downturn in property in 1989. He rode the rollercoaster down because he was out there seeking his pre crash dollar. Eventually the banks foreclosed and sold it out from under him.
Moral of the story is, if you are going to want to build on the land, get your plans and permits when we are heading for an upturn again. Riding the rollercoaster down on property is where u get the best sob storys from.
The instant flip deals for developers are now yesterdays news. In the current market properties take longer to sell to get their dollar. And with interest rates going up any day now its not going to get any easier. Best suggestion is, get a set of plans for the site drawn up with a good architect, have your plans ready, but unless you are planning to build immediately hold back on permits. Expired permits often need to be reviewed and submitted again.
Exposure to borrowings in a moving interest rate market is a recipe for trouble. This year is going to have at least two interest hikes, possibly more. Its a year for holding on tight and watching the budget, reducing your liabilities and exposure to credit risks and building up a treasure chest for going bargain hunting when the values change.
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