Saturday, July 9, 2011

Woodvale Fire Sale

1 Penny Lane, Woodvale, WA 6026

#1 Penny Lane 

For Sale : $499,000

First Listed 15th April 2011 for Mid $500,000
( Realtor's Code for $550K Plus)

Discounted 17th May 2011 to $530K & again 16th June 2011 $515K - $530K
Taken off the market for 2 weeks & re-listed with a NEW AGENT  @ $499,000

So what is the sad pricing history of this house?
Bought March 2006 by the current owners at the peak of the Perth property cycle for $425,000 .

However it had sold just 12 months earlier in March 2005 for just $320,000!! 
So the current owners were happy to pay 33% more after just 12 months? 
What were they thinking? 
Why pay $100,000K more in just 12 months.

Oh that's right in 2006 like today there was a mining boom. 
So it did not matter what you paid because a "Greater Fool" on a big mining pay packet 
will happily pay you whatever you need them to pay you so that you can to make a tidy profit.

So what should you pay for this property? 
In my opinion this property was only ever worth $245K in 2005 
So the price of $320K  paid then was just STUPID.

I looked at this house in 2005 as a investment & thought the asking price 
was over the top it should have been $245K max

  But for the sake of this exercise lets just accept that in 2005 the $320K price was the correct price. 

Well the RBA says that since 2005 the CPI has gone up 18.9% & wages went up 19.5% (Roughly 3% PA) so this $320K house  should be worth no more than $384K in 2011. 

But if you accept my assessment that in 2005 this property was worth no more than $245K 
then the 2011 price  should be $294K

So either $294K or $384K But definitely NOT $499,000 

The other interesting thing is, that if this property was to sell in the next 2 weeks @ the $499K price REIWA  stats would show it is selling in 14 Days with a Zero discount of asking price. 
But the reality will be that it took 125 days &had to be discounted by 10% (Thats if it sells!!)


  1. Good stuff - I really enjoy reading your perspective on Perth property.

    The hurt is coming...

  2. I love your blog... pity not more people know about this blog and can avoid these costly mistakes

  3. Let's be honest though a property is worth what the market is willing to pay at any given time. As an investor predominantly within the northern suburbs I do have some history with the suburb Considering the size of this block and two street frontages I believe it to be well priced particularly with the potential of future rezoning. Vacant blocks significantly smaller in size to this one were selling for $450k + just over 12 months ago, so with that in mind it is potentially a bargain.
    It may well be your opinion, based on statistics, that a house is worth a certain amount however the market is what it is. We all don't like paying too much for gas & electricity either but at the end of the day if you want it you pay market price.
    Based on other properties in the area this is well within market price.

  4. @ PT Yes it did sell 26th July 2011 for $515,000