Perth Apartment Fire Sale Starts

Why would anyone buy a Perth Residential Apartment in today's market when you have these market conditions like this.  

"Receivers Appointed to Equus Apartments Complex" 

 ( page 51 of The West Australian  (21-12-11) 

Prime Apartment complex right in the centre of Perth CBD. Opposite the Perth Town Hall with views across the Town Hall & Supreme Court Gardens to the Swan River that can never be built out. So the location just does not get any better than this.

Luxury Apartment with quality fittings, ample sizes & many with 2 car bays included.  In 2008 these apartments were flogged off the plans to overseas "Investors" {Speculators} when the AU dollar was low. If you were a "Overseas Speculator" & you bought one of these Apts in Jan 2009 for $1million AU you would only have to actually pay $600K in US Dollars & a $60K US deposit. 

Fast Forward 3 years & its time to settle & make final payment. Guess what the Au dollar has gone through the roof & that US$600K apart you were going to buy in the heart of Perth is now going to cost you US$1,050,000 or 75% more. 

In 2008 these speculators might have thought it was pretty good value at US$600K but @ US$1.05 mil in 2011 when the time had come to settle on completion of the project it was quite simply not worth it. Besides many may have had $600K US to invest or the ability to borrow that much, but most could not get access to the $1 million plus they would need to go through with the deal even if they wanted to.

Now these overseas speculators paying with US Dollars have only put a US$60,000 deposit, so thats all they really have at stake, so they have simply walked away & forfeited their deposits rather than pay 75% more for a apartment that since also fallen in value from when they first signed up in 2008. Not really a hard choice for them to make pay US$1 mil for a Apartment in 2011, that will be worth US$500K or less in 2012 or forfeit your $60K deposit & walk away. It is a no brainer!

But all is not lost for some overseas speculators. Had they paid cash up front say US$600K in 2008  for their AU$1 million Dollar Apartments & these apartments have now dropped to say AU$650K they can still sell at this price & with the higher rate of exchange still walk away with US$600K. But the  "MUM & DAD" Aussie property speculator buying & selling in AU Dollars don't get this "Get Out Of Jail" one off escape.

(Remember that this applies also to the tens of thousands of overseas investors who bought property right around Australia in the last few years if AU property implodes they can sell at 40% or 50% discounts & still make money but Aussie cannot they are trapped with the losses)

Anyway back to EQUUS Apartments

Now 2 months have passed since the receivers were called in & they have now started advertising these apartments in a "Low Key" manner with no reference to it being a disposal or fire sale. 

A friend of mine spotted this advert in today's West Australian & rang their number to find out a bit more info on prices. He was given the usual spiel that there was huge interest with many sales & offers streaming through the door so better hurry or miss out etc etc etc ...{Yeah right} 

See examples below of some of the before & after prices provided to him on the phone. Discounts on offer typically 30% -50% off original off the plan prices that people had signed up to just 3 years earlier. 

Apartments that were $715K (US$429K) now $599K 

( Overseas owners can Still dump at this price & make a profit but the Aussie buyer is trapped )

Levels 18 – 25 2 bedroom + study, 2 bathroom 106m2 living, 72m2 balcony, 11m2 storage and 2 car bays

Panoramic views to the North and over the Perth Skyline

Were $1.6 million (US$960K) now from $950K  ( OS owners can sell & Still dump & break even)

 Apartment on floors #20 & #25 that were $2,200,000 now slashed to $1,175,000 (That's a $1m discount)

Apartments on other floors that were sold or selling for $1.2 million to $2.0 mill are now being offered at prices from $750K to $1.3 mil.

Now remember the receivers are "Duty Bound" to try & get the best price they can for the banks etc that have been left holding this steaming pile of debt, so they are going to market with these prices to test the water & may find no buyer or little interest, they would then adjust prices down further to meet the market.

Perth is awash with failed "Luxury" apartments that have not sold (Oceanique 40% discounts, One Brighton 35% discounts, Mirvac Leighton Beach 30% discounts, Multiplex Living Leighton 40%, North Bank 45% , etc etc etc)

But if you have middle level or priced apartments in the Perth CBD either completed recently or about to be completed shortly I would not be feeling too Smug, these EQUUS Apartments that were priced at the luxury end of the price scale have now dropped in price to the middle level scale causing apartments at this level to look overpriced.

My banking contacts have reported 30 apartments in the middle price range (Under $500K) in the Perth CBD that have come up for settlement  in January that have failed to meet Bank Valuations by 25% !!! In other words an apartment which sold in 2010 off the plans for $500K that may have been approved for finance up to $400K is now lucky to get bank approval for $300K in 2012 when the construction has been completed & settlement needs to go through.

A big gap to be made up by potential buyers & that's just the finance, the property's overall value has actually  dropped by 25% or $100,000 so many are simply throwing their hands up in the air & looking for clauses or excuses to walk away from their obligations. Few will get away with the "Bank Won't Give Finance" excuse because they were not astute enough to put a "Subject to Bank Valuation at Settlement" clause in the contract  they signed up to a few years earlier, why would they? "Property Only ever Goes Up" so the need for this was deemed unnecessary!!

If your about to sign up for a "Off the plan" contract in today's property market test your developers (or better still their Bankers) confidence in the value & stability of their project & insist on this safety clause being a part of your new contract.  "Subject to Bank Valuation at Settlement"

But I ask this question again. What is happening in Perth we are supposed to be in a "Mining Boom" & these apartments were all being built on "SPEC" that hordes of "Rich" "Cashed Up" miners would descend in droves snapping up all these apartments at any price?

Just think if this is happening in the so called "Boom State" what hope for the rest of Australia.

Perth Property Princess Ends Up Losing $1,200,000 Speculating

Self proclaimed "Perth Property Princess" Sasha DeBretton has finally managed to sell her own "Million Dollar" makeover in Sorrento.

This house was bought by Sasha on the 11th September 2007 for $2,175,000 & with Stamp Duty of $105,000, $250,000 Renovation Costs & $75,000 selling costs Sasha needed to sell this house for at least $2,600,000 just to break even.Then there is the interest she had to pay to hang on to this speculative property play.

First advertised for sale July 2008 for $3,100,000 plus Sashas speculative play in the Perth property market finally come to a end when she is forced to sell on the 23rd December 2011 for  

        $1,900,000  a loss of over $1,200,000

Yet Sasha have the front to claim on her Website:

"As long as you've got the right strategy you will always make money through renovation."

Sasha needs to wake up & smell the Coffee if she could not do it for your own property why should people trust her skills to do it for them?

Anyway look below to see the full story that I posted last year, just thought anyone following the adventures of Sasha would like to know the outcome. 

Million Dollar Makeover or Million Dollar Mistake

Beware of False Prophets

Remember when reading the following to keep in the back of your mind the fact that Sasha had complete control of the project. It was not a property she had to work with. But it was a property that she went out & bought specifically to do up for a profit. It was her own money & choices. All her skills & judgement were at work here selecting the right property & paying the right price knowing the cost of renovations etc so we can now judge just how good Sasha's talent to turn a buck really are. Now remember if she can get it so so wrong with her own money & she had complete control, what faith can you have that you wont suffer the same outcome as Sasha in this market?

 

Back in April 2011 I put up a article about failing Professional Property Flipper Sasha DeBretton 

CEO of home renovating company 

"Million Dollar Makeovers"

Sasha DeBretton - Sunk In Sorrento 

(Below is a update that's rather interesting)

Sasha is a great proponent of "Self Promotion" & makes some outlandish claims about her ability to renovate your property in a couple of weeks & add hundreds of thousands of dollars to it's value (If not millions?) But lets just look & see if the claims she makes are all they are cracked up to be. 

Sasha appeared in the following article in this weeks Sunday Times "Home" liftout (27th Nov 2011) 

On her Website Sasha has a link to "Case Studies" of projects she has renovated in the past & she shows how much was spent on renovations & then how much profit was made in the end. Most of her claims of extraordinary profits are difficult to substantiate because there are no names or exact addresses that can be checked & verified. Those that can have not come onto the property market "For Sale" to have their price verified by the buying public. It is very simple to get a Real Estate agent to give a arbitrary price or opinion of what a house might sell for or how much value a makeover may or may not have added, it is a completely different matter actually getting that price in this market.

 

Fortunately one of Sasha's "Million Dollar Makeovers" has come on the market 

#37 Seaward Loop Sorrento

Link to For Sale Listing for : #37 Seaward Loop Sorrento

And as luck would have it it is Sasha's very own house. So we couldn't hope for a better example to test Sasha's claims of being able to add Millions of Dollars value to a property even in these "Difficult Economic Times" in fact Sasha goes so far as to claim it is a "Sure Fire" thing.

So lets see how the CEO of "Million Dollar Makovers" went renovating her own home for a "PROFIT"?

# 37 Seaward Loop

Sorrento 

This house was bought by Sasha on the 11th September 2007 

for $2,175,000 now with Stamp Duty of $105,000, $250,000 Renovation Costs & $75,000 selling costs Sasha needs to sell this house for at least $2,600,000 just to break even. So let's see how she went in the real world shall we?

Original owner First Advertised this house for sale 23-05-2007 for $2,500,000.

Property is then Bought by Sasha (Current owner) 
11th September 2007 for $2,175,000

(Talk about timing right at the peak of the Perth property cycle but that's OK because prices only ever go up don't they?)

Sasha First lists this house for sale 20-07-2008  as "EOI"
{ Very Smart Girl waiting 1 year to avoid capital gains taxes but by doing so missed timed the market. House is listed 3 months trying to get $3.5mil price. Clearly nobody willing to pay her target price of $3.5 mil Plus?} 

 

Actual Price wanted finally advertised 18-10-2008 $3,000,000

{Interest rates in 2008 were 9.5% & the GFC has just hit so price reduced to shift the house fast }

Price further reduced to attract buyers 10-01-2009 $2,990,000  

(Another 3 months pass lets reduce it $10K that will pull in the buyers?)

Further Price reduction 28-03-2009 $2.59 mil to $2.89 mil 

(Still No Takers)

20-02-2010 Advertised as "EOI"

(Fishing for buyers but No takers so property rested for a few months.)

Back on the market 6-03-2011 $2,680,000

(Still no takers after 3 months property taken off the market & rested)

Now November 2011 Sasha is coming to her senses & has reduced the price to $1,990,000

Sasha has been holding $2.5 mil debt on this property for close to 4 years. 

However if her strategy  worked all she intended to do was flip it in under 12 months!! 

So now  the interest on this has cost her $700K Plus!! 

Yes she has had a house to live in but she could have rented a house just like this in Sorrento for under $150K for the same period.

So her actual holding / speculation cost has been over $500,000 This is why she needs $2.68mil to try and break even. 
On top of the interest bill she has had to fork out for advertising etc for 3 years of marketing the property.

So what do I think Sasha's property is worth in this market?

Sorry but I would not pay more than $1,500,000 not in today's market!!

Why? 

Well look at this substantially better house listed in Sorrento for 

$1.53 Million: 

http://reiwa.com.au/Buy/Pages/More-info.aspx?SearchType=RESSALE&prop_no=1&listingid=10116000&listingno=3116665&puid=0 

A far Far better home that needs no more than 21 days & $1,000 worth of paint from Bunning's.

I like to call this a $1,000 Makover.

Below are Images of Saha's Million Dollar Mistake

Before

 

AFTER

 

 

Posted by Not The Greater Fool at 1:02 AM

Australian Banks Pulling The Plug on Valuations

 See article below that was in the "Weekend Financial Rewiew" Property Liftout page #6 Jan 14th 2012

Read it for yourself but the highlights are:

• Housing markets on the outskirts of Australian Cities are showing signs of stress & Banks are concerned refusing to accept "Sale Price Valuations"  in a housing market that is falling.
• Banks are forcing Buyers to tip in 15% more money to cover the shortfall between developers  "Sales Valuations" & Their  "Bank Valuations" or forfeit the sale.
• Major Melbourne Developers reporting a "Large Increase" in buyers cancelling sales after coming up short of "Bank Valuations"
• Cancellation rates that were only at 10% 12 months ago are now running at 25% with many buyers walking away from House & Land contracts.
•  Major Developer Mirvac reporting a "Sharp Rise" in contract "Cancellations" right across Australia because of "Bank Valuations" coming up short.
•  Property "Experts" are warning of a "Bleak Outlook" for new estates on the outskirts of Australian Cities with further "Price Falls" expected despite RBA cuts in interest rates.
• New Housing Estates were the "Greatest Risk" in today's property market & were now at the "Margins"
• Developers were now offering buyers "Extended" settlement periods so that Buyers could save up discrepancy between "Bank Valuations" & "Sales Valuations" to appease the banks.
•  Builders & Developers offering "Artificial Rebates & Bonuses" to maintain a high "Face Valuation"  to banks so that Buyers can borrow enough to procede with contracts.
• Example given of a ING Bank Valuation that came in recently at $174,000 against a Binding contract a buyer had signed 12 months earlier for $200,000

 Is it any wonder Perth land Sales dropped by 70% in Aug 2011 & Developers are slashing prices by $30-$50-$190,000 to shift land to also appease their banks:
(See Post I put up previously on the topic below)

have a look at the charts for housing Finance & notice how low activity really is despite recent interest rate cuts: (Thanks to  "Unconventional Economist in Australian Housing" http://www.macrobusiness.com.au/2012/01/nsw-fhbs-drive-housing-finance/ ) 

Thursday, January 5, 2012

Perth Land Sales fall 70% ... (Prices slashed $50,000 or 20%)

2012 has arrived with a big thud & Perth Land Developers have started a mad dash to the exits to dump stocks before;

A) Prices fall further

B) To also appease their Banks who are getting alarmed at the low numbers of sales in the Perth  land market & are now questioning the value of the security they are holding against loans.

Land developers rarely use their own money, the majority borrow from Banks to acquire the land & then borrow from Banks again to develop the land. 

These borrowings are backed by the value of the land they have in their holdings & with land values plunging developers hands are being forced by their Bankers who naturally reassess the value of securities used to support a loan {Every 3 Months if not Monthly}. 

Banks are asking developers to top up the discrepancy in valuations made in today's market.

Land Valuations have never been a problem for developers when prices were rising, however in today's market the only choice Developers have is to dump land quickly at reduced prices & get the cash to appease the banks or tip in their own cash which they don't want to do in this market.

By Mid 2011 all Major Land Developers in Perth were coming under pressure from their banks, they  have tried to shift stocks that were not moving with discounts that were hidden as "Bonuses" $20,000 Harvey Norman "Home Starter Cards" , $15,000 Fencing & Landscaping Packages, Stamp Duty Paid, Builder Bonuses etc etc .... none of these worked

It was important that Land Developers only reduced the price of their "Overpriced & Overvalued Land" by way of "Bonuses" because these so called "Bonuses" could be classified or explained to the bank as a "Marketing Expense" or "Promotional  Expense" & not really "Fall In Land Values" 

Banks also prefered to have it this  way so that they did not have to show their "True" exposure to risk on their balance sheet.

Remember if Developers simply reduced the price by the same value of these bonuses being offered it would have lowered the "VALUE" of the land triggering the banks to call in more equity from the developers to bring their loans back to agreed conditions or terms of the loans. 

Unfortunately for Developers these little "Marketing Stunts" & "Tricks"  did nothing to shift stocks as consumers are not really that stupid, they know the land is still overpriced despite the bonuses being dangled in front of them.

Good luck trying to pull the wool over today's consumers eyes they are just too well informed or cautious & suspicious. 

As you can see from the WA Gov't Landgate chart below sales for Perth Land in August 2011 were down to 324 lots a fall of 70% against the last 10 year monthly Average Sales for August of 1105 lots.

Just pause for a moment & think about it. What is wrong with this picture, a City of close to 2 million people & there were only 324 blocks of land sold in a month? 

Banks are accountable for their balance sheets to their shareholders & they know that if land sales have imploded by 70% despite efforts from developers to shift stock it has to be because the Land is "Overpriced"

Developers might try & blow smoke up a Retail Consumers Arse  but try taking a puff & blowing it up a Bank Managers Arse & see how far you get. Banks are no longer buying the valuations put on Perth land.

 

The Big four banks are concerned about their exposure to Perth property & are putting pressure on developers to stump up more cash or else. No more time for games my Banking sources tell me Developers have till March to get their "Shit Together" or else.

Have a look at the adverts & promotions below from some of the Major Perth Land Developers & you might better understand why a land developer would slash $20K - $50K of blocks of land (typically around a 20% discount.) 

But whilst you look at the Adverts from the big boys with deep pockets think  about the smaller ones that are about to go to the wall bringing the whole house of cards down with them.

$60,000 Range Rover + $50,000 cash  off Land valued at $550,000 = 20% DISCOUNT!!
The only thing Peet & Co are not offering is a "Happy Ending" 

. . follow the link to Peet Site & see for yourself: http://www.peet.com.au/landsale/ 

Just have a look at some of the discounts being offered:

Avon Ridge down to $375K after $50K discount, 
Burns Beach down to $399K after $30K discount (Last year same blocks were $465K!!) 
Lakelands down to $139K after $36K discount (Thats a 20% Discount of a $175K Block) 
The Sanctury from $135K after $20K discount, 
Shorehaven down to $190K after $50K discount (That's also a 20% discount) 
Wellard down to $172K after $30K discounts. 
Notice something? The size of the discounts on "Budget" priced blocks are enormous, 

Now just imagine what these 2012 discounts will do to the value of the "House & Land Packages" people signed up to in 2011 believing the crap served up to them by PROPERTY Spruikers in 2011. 

The paint will hardly be dry on their 2011 House & Land Packages & they have already lost $30,000 - $50,000 in equity on a $300k - $350K house & land Deal signed up to less than 12 months earlier. 

Remember this is just the start of discounting & it's only January come March it hits the fan!!

Perth Land Sales fall 70% ... (Prices slashed $50,000 or 20%)

2012 has arrived with a big thud & Perth Land Developers have started a mad dash to the exits to dump stocks before;

A) Prices fall further

B) To also appease their Banks who are getting alarmed at the low numbers of sales in the Perth  land market & are now questioning the value of the security they are holding against loans.

Land developers rarely use their own money, the majority borrow from Banks to acquire the land & then borrow from Banks again to develop the land. 

These borrowings are backed by the value of the land they have in their holdings & with land values plunging developers hands are being forced by their Bankers who naturally reassess the value of securities used to support a loan {Every 3 Months if not Monthly}. 

Banks are asking developers to top up the discrepancy in valuations made in today's market.

Land Valuations have never been a problem for developers when prices were rising, however in today's market the only choice Developers have is to dump land quickly at reduced prices & get the cash to appease the banks or tip in their own cash which they don't want to do in this market.

By Mid 2011 all Major Land Developers in Perth were coming under pressure from their banks, they  have tried to shift stocks that were not moving with discounts that were hidden as "Bonuses" $20,000 Harvey Norman "Home Starter Cards" , $15,000 Fencing & Landscaping Packages, Stamp Duty Paid, Builder Bonuses etc etc .... none of these worked

It was important that Land Developers only reduced the price of their "Overpriced & Overvalued Land" by way of "Bonuses" because these so called "Bonuses" could be classified or explained to the bank as a "Marketing Expense" or "Promotional  Expense" & not really "Fall In Land Values" 

Banks also prefered to have it this  way so that they did not have to show their "True" exposure to risk on their balance sheet.

Remember if Developers simply reduced the price by the same value of these bonuses being offered it would have lowered the "VALUE" of the land triggering the banks to call in more equity from the developers to bring their loans back to agreed conditions or terms of the loans. 

Unfortunately for Developers these little "Marketing Stunts" & "Tricks"  did nothing to shift stocks as consumers are not really that stupid, they know the land is still overpriced despite the bonuses being dangled in front of them.

Good luck trying to pull the wool over today's consumers eyes they are just too well informed or cautious & suspicious. 

As you can see from the WA Gov't Landgate chart below sales for Perth Land in August 2011 were down to 324 lots a fall of 70% against the last 10 year monthly Average Sales for August of 1105 lots.

Just pause for a moment & think about it. What is wrong with this picture, a City of close to 2 million people & there were only 324 blocks of land sold in a month? 

Banks are accountable for their balance sheets to their shareholders & they know that if land sales have imploded by 70% despite efforts from developers to shift stock it has to be because the Land is "Overpriced"

Developers might try & blow smoke up a Retail Consumers Arse  but try taking a puff & blowing it up a Bank Managers Arse & see how far you get. Banks are no longer buying the valuations put on Perth land.

 

The Big four banks are concerned about their exposure to Perth property & are putting pressure on developers to stump up more cash or else. No more time for games my Banking sources tell me Developers have till March to get their "Shit Together" or else.

Have a look at the adverts & promotions below from some of the Major Perth Land Developers & you might better understand why a land developer would slash $20K - $50K of blocks of land (typically around a 20% discount.) 

But whilst you look at the Adverts from the big boys with deep pockets think  about the smaller ones that are about to go to the wall bringing the whole house of cards down with them.

$60,000 Range Rover + $50,000 cash  off Land valued at $550,000 = 20% DISCOUNT!!
The only thing Peet & Co are not offering is a "Happy Ending" 

. . follow the link to Peet Site & see for yourself: http://www.peet.com.au/landsale/ 

Just have a look at some of the discounts being offered:

Avon Ridge down to $375K after $50K discount, 
Burns Beach down to $399K after $30K discount (Last year same blocks were $465K!!) 
Lakelands down to $139K after $36K discount (Thats a 20% Discount of a $175K Block) 
The Sanctury from $135K after $20K discount, 
Shorehaven down to $190K after $50K discount (That's also a 20% discount) 
Wellard down to $172K after $30K discounts. 
Notice something? The size of the discounts on "Budget" priced blocks are enormous, 

Now just imagine what these 2012 discounts will do to the value of the "House & Land Packages" people signed up to in 2011 believing the crap served up to them by PROPERTY Spruikers in 2011. 

The paint will hardly be dry on their 2011 House & Land Packages & they have already lost $30,000 - $50,000 in equity on a $300k - $350K house & land Deal signed up to less than 12 months earlier. 

Remember this is just the start of discounting & it's only January come March it hits the fan!!

REIWA - Mouthpiece Confirms Perth House Prices falling at $2300 Per week.

As most readers would know I often comment on Perth Now property page. Recently I said the following:

(See link Comment # 11: http://www.perthnow.com.au/business/buyers-saving-pennies-hurting-property/comments-e6frg2ru-1226227616062 )

I assert the following in the above posting on Perth Now:

1)That REIWA Says Perth Prices are falling at $2.300 per week

2) That REIWA Says prices will keep falling till the middle of 2012.

REIWA "Communications Director"  (Just a Glorified Mouthpiece)

took exception to what I had to say & posted the following in comment #42

REIWA assert the following in the above Posting on Perth Now 

1) That REIWA does "not" say house  prices are falling at $2,300 per week.& That it simply isn't true.

2) That Indications are that the median has bottomed.

3) That REIWA anticipates a flat 2012.

So I guess the ball is now in my court to prove my credibility so here we go:

Are prices falling at $2300 per week & did REIWA say this. 

Yes to both look at the extract below from a REIWA publication 

 {http://reiwa.com.au/adm/Reiwa%20Magazine%20Panel/MarketUpdateNovember2011.pdf}

It clearly states that June 2011 Qtr Median house Price was $480K & the Sept 2011 Median Price was $450K a drop of $30K divided by 13 weeks in the Sept 2011 Qtr gives you prices falling at $2,307.69 per week. Sept Qtr is the latest official data published by REIWA.

This data says that what I say is 100% accurate Perth house prices are falling at $2,307.69 per week & it is REIWA's own data so in fact REIWA are saying it with their own data.

 

REIWA then makes the assertion that indications are that the Median has Bottomed:

The extract below from Landgate (22-12-1011) currently shows that Median prices fell further in October 2011 contradicting REIWA's assertion that prices have "BOTTOMED"  in fact Median prices fell further. So I put this up as proof REIWA are wrong when they say "Prices Have Bottomed" they clearly have not since putting out their Sept Otr 2011prices fell a 5% in JUST ONE MONTH!! it fell 6.3% in Sept Qtr thats 3 months & indicative data from Landgate says it fell a FURTHER 5% in ONE MONTH!!! how do you get "BOTTOMED" from that?

(Important to note LANDGATE data for Oct is indicative it may show greater falls or perhaps a recovery in prices. Although by now 6 weeks out this number is expected to remain at this rate. The November data is really raw showing a increase in Median which I expect to fall? Time will tell. I will update this chart in a few weeks shown outcomes) 

 Their "Communications Mouthpiece" then goes on to say that "REIWA Anticipates a FLAT 2012"

The problem is the President of REIWA is on record saying  prices will continue to fall for 6 months before recovering mid year. That is not indicative of a "Flat 2012" but a "FALLING 2012" Also have a look at the comment by ANZ Property forecaster in the same article he expects Perth prices to drop to $420,000. He is not that far out because if you look at the previous LANDGATE Data above for Oct 2011 it is already at $425,000. 

As always there is a link for you to check for yourself: http://www.housesmart.com.au/blog/post/Perth-will-begin-to-Rebound-Next-year.aspx 

 So there you go REIWA are wrong 

A) Prices are falling at $2300 per week, 

B) It is True no lies they RIEWA did say what I claimed they said it is there in Black & white in their own data.

C) There are no indications prices have bottomed in fact the opposite is the case with LANDGATE showing further falls.

D) REIWA don't anticipate a "FLAT 2102" their own President is on record saying prices will fall for the first 6 months of 2012 at the very least. ( HELLO 6 months is half of 2012 how can you possibly get "FLAT 2012 from that)

REIWA Communications Manager - Mr Brian Greig or "Director of Communications" as he like like to call himself  might like to grab a BIG BOX of These & he is going to need a lot of the stuff to get through 2012.

 

Remember you can Put Lipstick on a Pig but it's still a Pig!

 

 See Chart below of US House Prices & their rate of decline. US House prices peaked Early 2005 & their house prices started to decline from rates of growth around 17% PA By 2006 their rate of growth had declined to 15% when prices started to fall in earnest. It took almost 2 years for price falls to reach a rate of decline around 10% PA. 

So US house prices reach a peak around 2005 had a period of flat prices then reached price falls of 10% 3 years later. Perth House prices reached their peaks in March 2010 According to REIWA & it has taken just 18 months to reach a rate of decline approaching 10%.

If you look at the US Housing chart below it took 2 years for them to reach a 10% rate of decline. Perth has done it in 18 months we are falling at a faster rate than the US did.

Note: The GFC did not cause US prices to decline they were falling for 2-3 years prior to the GFC. Pretty much the same as here in Australia. We are not in a recession far from it here in WA yet our housing markets are imploding. 

Anyone like to have some fun with REIWA?

Go to their FACEBOOK page & comment on this post & put a link to it as well & watch in 3 minutes it will be removed.

Special Thanks & Hat Tip to Dave my Facebook Legend posting a link on REIWA's Face Book site

Lets make this REIWA Mouthpiece spend his Xmass break 24/7 looking for the "Dave's" of this world on his Facebook page. Together we can make it a Very Merry Merry Christmas!!

 

Well done Dave  next time your in Perth I owe you a Lap Dance ':-)

Million Dollar Makeover or Million Dollar Mistake

Beware of False Prophets

Remember when reading the following to keep in the back of your mind the fact that Sasha had complete control of the project. It was not a property she had to work with. But it was a property that she went out & bought specifically to do up for a profit. It was her own money & choices. All her skills & judgement were at work here selecting the right property & paying the right price knowing the cost of renovations etc so we can now judge just how good Sasha's talent to turn a buck really are. Now remember if she can get it so so wrong with her own money & she had complete control, what faith can you have that you wont suffer the same outcome as Sasha in this market?

 

Back in April 2011 I put up a article about failing Professional Property Flipper Sasha DeBretton 

CEO of home renovating company 

"Million Dollar Makeovers"

Sasha DeBretton - Sunk In Sorrento 

(Below is a update that's rather interesting)

Sasha is a great proponent of "Self Promotion" & makes some outlandish claims about her ability to renovate your property in a couple of weeks & add hundreds of thousands of dollars to it's value (If not millions?) But lets just look & see if the claims she makes are all they are cracked up to be. 

Sasha appeared in the following article in this weeks Sunday Times "Home" liftout (27th Nov 2011) 

On her Website Sasha has a link to "Case Studies" of projects she has renovated in the past & she shows how much was spent on renovations & then how much profit was made in the end. Most of her claims of extraordinary profits are difficult to substantiate because there are no names or exact addresses that can be checked & verified. Those that can have not come onto the property market "For Sale" to have their price verified by the buying public. It is very simple to get a Real Estate agent to give a arbitrary price or opinion of what a house might sell for or how much value a makeover may or may not have added, it is a completely different matter actually getting that price in this market.

 

Fortunately one of Sasha's "Million Dollar Makeovers" has come on the market 

#37 Seaward Loop Sorrento

Link to For Sale Listing for : #37 Seaward Loop Sorrento

And as luck would have it it is Sasha's very own house. So we couldn't hope for a better example to test Sasha's claims of being able to add Millions of Dollars value to a property even in these "Difficult Economic Times" in fact Sasha goes so far as to claim it is a "Sure Fire" thing.

So lets see how the CEO of "Million Dollar Makovers" went renovating her own home for a "PROFIT"?

# 37 Seaward Loop

Sorrento 

This house was bought by Sasha on the 11th September 2007 

for $2,175,000 now with Stamp Duty of $105,000, $250,000 Renovation Costs & $75,000 selling costs Sasha needs to sell this house for at least $2,600,000 just to break even. So let's see how she went in the real world shall we?

Original owner First Advertised this house for sale 23-05-2007 for $2,500,000.

Property is then Bought by Sasha (Current owner) 
11th September 2007 for $2,175,000

(Talk about timing right at the peak of the Perth property cycle but that's OK because prices only ever go up don't they?)

Sasha First lists this house for sale 20-07-2008  as "EOI"
{ Very Smart Girl waiting 1 year to avoid capital gains taxes but by doing so missed timed the market. House is listed 3 months trying to get $3.5mil price. Clearly nobody willing to pay her target price of $3.5 mil Plus?} 

 

Actual Price wanted finally advertised 18-10-2008 $3,000,000

{Interest rates in 2008 were 9.5% & the GFC has just hit so price reduced to shift the house fast }

Price further reduced to attract buyers 10-01-2009 $2,990,000  

(Another 3 months pass lets reduce it $10K that will pull in the buyers?)

Further Price reduction 28-03-2009 $2.59 mil to $2.89 mil 

(Still No Takers)

20-02-2010 Advertised as "EOI"

(Fishing for buyers but No takers so property rested for a few months.)

Back on the market 6-03-2011 $2,680,000

(Still no takers after 3 months property taken off the market & rested)

Now November 2011 Sasha is coming to her senses & has reduced the price to $1,990,000

Sasha has been holding $2.5 mil debt on this property for close to 4 years. 

However if her strategy  worked all she intended to do was flip it in under 12 months!! 

So now  the interest on this has cost her $700K Plus!! 

Yes she has had a house to live in but she could have rented a house just like this in Sorrento for under $150K for the same period.

So her actual holding / speculation cost has been over $500,000 This is why she needs $2.68mil to try and break even. 
On top of the interest bill she has had to fork out for advertising etc for 3 years of marketing the property.

So what do I think Sasha's property is worth in this market?

Sorry but I would not pay more than $1,500,000 not in today's market!!

Why? 

Well look at this substantially better house listed in Sorrento for 

$1.53 Million: 

http://reiwa.com.au/Buy/Pages/More-info.aspx?SearchType=RESSALE&prop_no=1&listingid=10116000&listingno=3116665&puid=0 

A far Far better home that needs no more than 21 days & $1,000 worth of paint from Bunning's.

I like to call this a $1,000 Makover.

Below are Images of Saha's Million Dollar Mistake

Before

 

AFTER