Overseas Investors Selling Up

A friend of mine went to a property Auction in Connolly  ( Perth Western Australia ) today.

25 Pine Valley Pass Connolly 

Great house 7 Full Size Bedrooms & 7 Bathrooms, backs on to 18th hole of one of Perth's best golf courses etc etc you get it nothing wrong with the house or its location.

Property is 660 m2 built in 2002 has been empty for 9 years. Owned by a overseas investor speculating in the Australian property market in 2002 when our AU Dollar was bouncing around 50 cents to 55 cents US.

{It has been vacant for 9 years never rented or lived in just a property speculation by a OS Investor}

Empty house for 9 years & we are supposed to be having a housing shortage?

Oh please there are thousands of houses just like these scattered around Australia that are about to come out of the woodwork.

This House has been on the market for over 12 months @ $2.3 mil without any offers.

Vendors have been dropping a few dollars every month till finally the owners have read the writing on the walls (Plunge in AU to US dollar values) & put up for auction to get rid of it.

Despite the agents claims of strong interest & fantasy buyers keen to make a offer after auction there were No bids other than Vendor Bids which started at $1.5 mil & dragged on & on  till it was passed in @ $1.7 mil with no bids other than vendor bids. (How embarrassing )

The agent hinted to everyone that a offer of $1.75 mil would get a look in. So effectively the price has dropped by $550K in 12 months & still no sale.

This house is worth no more than $1.2 million in TODAY"S market,

It would have cost the current owners no more than AU$685K {US$350K}to buy the land & build this type of house. {That was the true building & land costs in 2002 before our recent spate of property stupidity}

The important thing to keep in mind was that the AU Dollar in 2002 was around 50 cents to 55 cents so it cost the OS owners only US$350K now with the AU dollar at Par they can afford to sell @ AU$1.2 mil {US$1.3 Mil} & still make a buck.

Very unfortunate for other home owners in the street .
{There were 5 sales in the same street in the last 3 years @ over $1.6 million & all of them were for far lesser houses.}

This overseas owners know that his house might  be worth much less than $1 million in 2012. Then he runs the additional risk of the AU dollar plunging again against the US dollar again if Europe goes "TITS UP" & everyone turns to US dollars for safety.

EG: AU$1 mil @ $1.05 rate = US$1.05 mil....  V's...  AU$1mil @ 90cents rate =  US$900K so his AU$1.75Mil asking price @ a 90 cents exchange suddenly becomes a lot lot less.

These OS investors will be very very keen to sell driving values down for others who bought recently. That's the problem many Australian property owners will face. OS Owners that can still sell at drastic price reductions & still make money whilst they stay trapped having paid too much. OUCH!!

I doubt that even a large tin of this would help.