A quick intro
If you want to see the dangers of overpaying for real estate, you've come to the right place and you've definitely come to the right place if you're a Tasmanian.
You're in the market for a house, but you're looking to set yourself apart. You can taste the newly acquired status, showing off to friends, proudly telling co-workers where you've just bought. It's a seductive mix, but stop and think when that real estate agent whispers in your ear, trying to press your real estate arousal buttons:
- open plan, alfresco dining;
- can't go wrong with property;
- granite counter tops;
- get in now before you miss out forever;
- property only goes up
*Cough* what?
Sure, thanks to a massive credit expansion over the last 10 years there's been some amazing gains in property, but how long can that continue? Because those who bought in the past two years - the last ones to the party - have really gotten ahead of themselves - that 500k house on the North-West coast makes good sense, because property always goes up, right? And if you've gotta get moving, or interest rates go up, you can list and some fool will pay more than you did.
Unless you are that fool.
Right now we're seeing the problems of over-capitalisation and paying over the odds in regional Tasmania. Some people are seeing their dream slowly turn to a nightmare, if only they'd questioned the dogma - if only they'd had an alternative view to listen to.
You can't go wrong with real estate? Well take a look at the coastal town of Wynyard.
Wynyard is a nice enough place - it's flat and has an airport escape route, even more appropriately in the spirit of bubbles - it has a tulip festival, but exactly how many 400k plus houses does a population of 5000 need?
$445,500 is current asking price for this 4x2. So let's see what the agent has to say:
That $460,000 listing is a significant figure in this case. Psychologically it's the belief the owners can get back more than they paid, at least on the purchase and the sale. When you factor in closing costs, that purchase was closer to $470,000, but to maintain the veneer of not losing money, you can always forget stamp duty.
If this house does sell at $445k (and believe me it won't), throw in agent fees and the seller isn't just taking a haircut, they're taking a buzz cut.
It gives me no pleasure to report this sad tale, but it illustrates the danger of paying big money for an illiquid asset, especially in a regional market. At this point I'll highlight that Wynyard currently has 41 properties for sale over $400,000.
They ain't changing hands any time soon. Now god forbid the real estate agent be the one to break the news, no one is stepping to the crease at those prices any more.
You're in the market for a house, but you're looking to set yourself apart. You can taste the newly acquired status, showing off to friends, proudly telling co-workers where you've just bought. It's a seductive mix, but stop and think when that real estate agent whispers in your ear, trying to press your real estate arousal buttons:
- open plan, alfresco dining;
- can't go wrong with property;
- granite counter tops;
- get in now before you miss out forever;
- property only goes up
*Cough* what?
Sure, thanks to a massive credit expansion over the last 10 years there's been some amazing gains in property, but how long can that continue? Because those who bought in the past two years - the last ones to the party - have really gotten ahead of themselves - that 500k house on the North-West coast makes good sense, because property always goes up, right? And if you've gotta get moving, or interest rates go up, you can list and some fool will pay more than you did.
Unless you are that fool.
Right now we're seeing the problems of over-capitalisation and paying over the odds in regional Tasmania. Some people are seeing their dream slowly turn to a nightmare, if only they'd questioned the dogma - if only they'd had an alternative view to listen to.
You can't go wrong with real estate? Well take a look at the coastal town of Wynyard.
Wynyard is a nice enough place - it's flat and has an airport escape route, even more appropriately in the spirit of bubbles - it has a tulip festival, but exactly how many 400k plus houses does a population of 5000 need?
$445,500 is current asking price for this 4x2. So let's see what the agent has to say:
This generous serving of quality is found in a quiet cul-de-sac in Wynyard and is just a short walk to town and beautiful walking tracks of the Inglis River.Well not quite true, you could have taken a shot at this property when it was on the market in 2008. And the going price? Someone slapped down an eye-watering $450,000. Two years on and this anchor has weighed down the owners for over six months as it failed to attract a bite, even with a discount from the initial $460,000 listing price.
There is room for the whole family with 3 bedrooms and spacious living downstairs plus parents retreat (or 2nd living) & master bedroom upstairs.
The exceptional kitchen boasts fabulous granite bench tops & the dining area leads out to the private 1512m2 double block.
Properties like this rarely become available, so be quick!
That $460,000 listing is a significant figure in this case. Psychologically it's the belief the owners can get back more than they paid, at least on the purchase and the sale. When you factor in closing costs, that purchase was closer to $470,000, but to maintain the veneer of not losing money, you can always forget stamp duty.
If this house does sell at $445k (and believe me it won't), throw in agent fees and the seller isn't just taking a haircut, they're taking a buzz cut.
It gives me no pleasure to report this sad tale, but it illustrates the danger of paying big money for an illiquid asset, especially in a regional market. At this point I'll highlight that Wynyard currently has 41 properties for sale over $400,000.
They ain't changing hands any time soon. Now god forbid the real estate agent be the one to break the news, no one is stepping to the crease at those prices any more.
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