Finance advice

Bank sales on the rise, prices discounted by more than 50%

By Jack Needham

The situation looks dire for this troubled region, but could the shocking figures be hiding a story of underlying recovery?

The troubled market of Karratha is showing signs of stability despite a huge number of mortgagee in possession sales hitting the market and prices being discounted by more than 50 per cent, according to real estate agent Alexander Waters. 

The situation in Karratha – a mining town in the Pilbara region of Western Australia – has been dire since the market peaked in 2011, and Mr Waters, director of Realmark Karratha, concedes that mortgagee in possession sales have increased in the past year.

“I would estimate, and this is a pure estimation only from what I’ve seen on the market, probably 10 to 15 per cent of property that is available for sale is bank sold by mortgagee in possession, potentially a little bit more. That’s obviously quite high for any area but to put that in perspective, we’re talking maybe 15-20 at any one time available out of 200 properties,” Mr Waters explained.

Last week, rival estate agent David Hipworth, principal of LJ Hooker Karratha, told the Australian Financial Review that he would get “two to three phone calls a week looking for us to value a property for mortgagee in possession”.

On top of that, the market has been grappling with the prospect of seeing 2011 prices – when the market was at its peak – reduced by 50 per cent or more.

“In some instances it’s more than 50 per cent, especially where we’ve got a case of the property being quite old, or maybe if it’s a highly desirable property but it’s sold for a higher price in the boom because of the value that it was achieving through the rent – as we know, back then, properties were basically commodities,” Mr Waters said.

“Those are the prices that we’ve seen discounted the most and in some cases even greater than 50 per cent – I’d say up to 60 per cent.”

But the dramatic price declines and increase in bank sales could be strengthening buyer confidence in the owner-occupier market, as vendors face up to realities of a dramatically different market, according to Mr Waters.

“I don’t think it’s really impacting confidence, I actually think it’s opening opportunities, we are seeing a lot more people actually having an interest in purchasing if it’s a mortgagee in possession property. Obviously, there’s that perception that they’re going to get a great deal which in some cases they are. So I wouldn’t necessarily say that it’s been a negative, at first, maybe 12 months ago when there were a few more bank sales popping up, definitely buyers were a bit more nervous about where the market was heading but prices were also a lot higher. Now with the bank sales, they know that the banks have to sell,” he explained.

“If you look at last year’s transactions, the number of transactions in the Karratha area for 2015 versus 2014 was up by about 43 per cent. So there were 43 per cent more transactions in 2015 than there were in 2014, so that tells me that things are improving transactionally.”

But investors looking to scoop up a bargain, be it through a mortgagee in possession sale or a highly discounted vendor sale, should still be realistic about the prospects of Australia’s mining towns, according to CoreLogic RP Data research analyst Cameron Kusher.

“I think we’re still a fair way off any sort of rises in most of these markets. The commodities price is still falling; there’s not the same level of investment in that sector at the moment; there’s not a growing need for workers in a lot of the mining areas, and that’s really what fuelled the strong growth in housing between 2005 and the last few years – the fact that there was not enough housing, there was a shortage and a huge amount of demand for it,” he explained.

Read more: 

'Stark' gap emerges between city markets 

Canberra records more auction sales than Sydney 

How a tradie bought 12 properties in under 4 years 

Mass campaign to beat sluggish market 

Investing in property in regional areas 

 

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  ["title"]=>
  string(72) "Mortgages in a tighter lending economy and why Brisbane is a good option"
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  ["introtext"]=>
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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
object(stdClass)#1213 (52) {
  ["id"]=>
  string(5) "18287"
  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
  ["alias"]=>
  string(74) "regional-victoria-showing-up-melbourne-in-price-performance-new-data-finds"
  ["introtext"]=>
  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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