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Hi guys! How are we all going?
Been a full on week so far – spent the last couple of days out with some clients in the Greater Western Sydney areas.
They were showing me their development and residential building sites all across the Western corridor.
Currently there’s nothing there except barren land, as far as the eye can see – but one day in the medium term, it’ll come good.
They were incredibly bullish on the prospects of their sites, ranging from a few acres to dozens of hectares – but hey, that’s property developers right!
So bullish in fact, they were projecting 20%+ development margins, which for the size and scale of their projects, is pretty darn good!
We’ll see if those margins do eventuate, however if the latest CoreLogic (RP Data) report is anything to go by – it might be a bit of a stretch.
What report you mean?
Have a look at this:
Pretty cool duncha think?
Basically it runs through the growth of capital city regions across Australia and gives a breakdown of the combined dwelling values (detached houses and units) in the last quarter.
As you can see, the falls currently outweigh the gains – with major areas of Sydney, Melbourne and Perth in a down trend.
Unsurprising given all the media attention and negativity in the press.
These numbers does suggest that its justified though – most capital city markets have moved past their growth cycles, and in the case of Perth, very much in the pits.
So what should we do?
To be honest with you, I’m like you – a bit undecided at the moment.
A part of me says to keep going, to keep on acquiring properties until there are none left to acquire. I’ve got the funds and borrowing capacity for it, certainly.
Although another part of me yields more caution, a little voice that whispers vigilance – to continue to build the war-chest.
Fair enough on being more prudent I think, especially in today’s climate.
I have to admit, this year I’ve been pretty diligent with my property filters and do have a gander on the real estate portals practically every day.
Methinks that compared to last year, there’s not that much value in the markets even if prices have come down (unless you’re buying a place to live in – in which case, it’s a whole different kettle of fish).
In saying so I’ve made about half a dozen serious offers year to date – all rejected for either being too low (I love low-balling), too late (sigh) or the conditions too restrictive for the vendor (why can’t sellers just sell!)
The moral here is really to know your valuations, to be well researched and prepared so when the “right” one pops up – BOOM.
Or you could be prudent, and play the wait and see card – after all, the housing market is like a huge ocean tanker, it takes a looooong time to get going in any direction, there’s really no rush.
In fact, now that I think about it…
…Maybe a third option is to play the contrarian and have a look in those areas which have been hit the hardest in the RP Data report.
Yeah! Watch out! Melbourne Inner East here I come!
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Great post 😁
The Frugal Samurai
Thanks for reading!