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Subdividing vs Renovating – Which Is More Profitable?

March 19, 2013

homes Mark Armstrong busts a real estate myth while reporting for Property Observer. In his article, he discusses how Subdividing may not be the most profitable way to go. Property owners hold two opposite ideas equally dear when they are looking to sell their properties. One such idea is Home Staging wherein they revamp their existing homes, upscale it a little, give a few finishing touches and seek better prices for their appraised properties.

Property owners sometimes take a diametrically opposite route and demolish their properties to create two separate units on the site. If you stick to traditional notions, you may feel that two units can be sold for a higher price than one- right? So is there a catch? Well! Plenty to be precise!

To begin, there is a cost involved in demolishing the existing home and leveling the site. There is a price tag attached to council permits. Add to this the fee of the architect or the draftsman who prepares the blueprint for the new units. You cannot overlook the cost of labor and raw materials (it may include an exigency or a sudden surcharge). One has to duly consider the amount of interest on loan (required for reconstruction) and rental fee (for the time you do not have a place to live in).

Next in line is the cost involved in marketing your property, appraisal fee, agent’s cut and the capital gains tax. If you now look at it, subdividing might not seem to be a viable option anymore. Well! It still can be but it is your duty to make an informed decision.

Which one between the two would you typically choose? I invite your opinion.

Australian housing nowhere close to a bust

March 18, 2013

Sydney Property - Buyers Agent Sydney The Australian housing bubble is not bursting anytime soon. The prices may be high but they are so only because the cost of living is high says Gary Thomas, President of US National Realtors association. Larry Schlesinger while reporting for the Property Observer writes an interesting article that sheds light on how the US real Estate is looking to come through after the Sub Prime crisis years. Property legend like Gary Thomas feels that the difference in pricing is only because of differences in average income, liquidity and subsequent purchasing power.

Gary Thomas does not speak through his hat. With over 35 years of experience in US Realty and managing a pan-Southern California firm called Evergreen Realty; he certainly knows a thing or two about the statements he makes. The prices of homes in US (inclusive of Foreclosure and Short Sales) have come up by 9.7% in the last one year. There are clear indications of property resurgence in California, Florida and Arizona. In fact, the states that had suffered most are coming up most strongly (says something about the US resilience- is it not their style since Lincoln’s time?)

While prices are increasing steadily, they are not exactly skyrocketing- this is especially because mortgage loans are not too easily available (Sub Prime days have resulted in extremely strict lending policies). Gary Thomas uses a beautiful satire when he says that lenders in US sometimes treat borrowers as those under trial for ‘inquisition”. All said, there is enough reason feels Thomas for Australia to take a keen interest in its near-boom property days without fearing a bust.

Does the Australian housing market remind you of days that led to the US mortgage crisis?

Mortgage commitments for first home buyers at a nine-year low

March 17, 2013

Buyers Advocate - Sydney Federation House Mortgage commitments made by first home buyers are not sending too many happy signals. Larry Schlesinger confirms in his article how owner occupied financial commitments have fallen by about 1.5% in January 2013. Over this same period, first home seekers stood at 14.9% of the total number of people seeking home loans. ABS puts it in close proximity to March 2004, the month which had recorded lowest first home buyer count.

First home buyers are showing some improvement when it comes to the average size of the loan. Between December 2012 and January 2013, size of their home loans has increased by $2800. Buyers on the whole have stunted their budgets by $1200 between Dec ‘12’ and Jan ‘13’. After having risen 1.6% in the month of December, mortgage commitments for home constructions have come down by 0.2% in January. This figure is a little difficult to chew for the construction sector. Having said this, sale of already established houses remained flat (point to note: it did not go down) for most of January.

Commitments towards purchase of new homes have increased in the month of December. The percentage of hike is similar to that in December (2.3%). This is definitely a trend that will pick momentum in coming days.

Metamorphosed Butterfly House at Dover Heights on market again

March 15, 2013

The Butterfly House on Dover heights is a sculptural masterpiece. To rest the argument, one only needs to see the house- it is without any straight lines or corners and uses curved glasses all along. Jonathan Chancellor in an article on Property Observer reports that the masterpiece (Australia’s rarest and most emphatic piece of architecture) is up for sale. Daniel Baran had sold it for $5.05 million in the year 2000 while the construction was only midway through. Its present owner has put it up for $6.5 million.

The house is constructed over six split levels and looks at the Bridge, Opera House, ocean and the harbor. Light flows unhindered from the north and is well supplemented by powerful natural ventilation. Its architect Mr Ed Lippmann himself feels that such fluid design broke all traditions at the time the house was built. To this day, the design remains avant garde.

Coming on the heels of the high auction clearance in Sydney, this is another good piece of news for the Australian Prestige Market.

Do you think $6.5 million is the right price for an architectural masterpiece like the Butterfly House?

Bellevue Hill put on sale for $7.7 million

March 14, 2013

bellevue hill home The much-acclaimed Bellevue Hill property is up for grabs for $7.7 million. In the latest mid-week auction, it has fetched its highest sales price for the last eight months. An article by Jonathan Chancellor informs that the property has traded twice in its 21-year existence. In March 2003, it was sold for $3.95 million. Eight years hence in March 2011, it was sold for $5.71 million. In a short span of two years from then (Coincidentally once more in March), it is up for sale again at a $2 million hike over its last sale price. It is worth noting that the deal could be closed for $6.4 million in 2010 but the Australian law was not too keen on foreign investors back then.

This has changed a lot today and in fact, those with $5 million of property investments in Australia are gaining access to its shores pretty quickly (is that not a complete U-turn in government policy). This six bedroom- six bathroom Victoria road property has a seven meter high ceiling apart from a double-height stained glass window and a stairwell. In recent memory, the sale price is only topped by the Copernoll Residence at Kambala Road, which sold for $9.8 million in May 2012. Things then are beginning to hot up for the Prestige Market in Australia.

Darlinghurst is the best performing Sydney suburb for 2012

March 12, 2013

Darlinghurst, the cosmopolitan enclave in Inner Sydney, is the top performer amongst Sydney suburbs for 2012. For 53 properties sold in the year gone by, Darlinghurst picked up a median price of $1.057 million. This complimented with a 21.2% increase in the house prices, is certainly a news to cheer, says Glenn Dwyer in an article written for the Property Observer.

This is actually a super performance considering that the Inner city Sydney market has not shown any growth in 2012. A few sales worth noting:

A four-bedroom terrace on Surrey Street sold for $1.59 million
A five-bedroom Darlinghurst terrace on Liverpool sold for $2.275 million
A four-bedroom house on Palmer Street sold for $1.275 million

Situated only 3.2 kilometers away from the CBD, it allows residents to experiment with a café lifestyle. This along with the powerful culture of the place is the major reason why Darlinghurst is doing so well.

On the heels of Darlinghurst comes Woodcroft and West Pennant Hill. In terms of percentage increase in prices, North Curl Curl is at number seven. However, it has done better than Darlinghurst in terms of median Price (and has produced 17 sales more than Darlinghurst)

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