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A $80 million AUD luxury development in Point Piper, Sydney, has been handed over to the banks after two of the companies for which property tycoon Michael Bezzina was associated, Caprice Pty Ltd and Pyoanee Pty Ltd, were place in receivership.

Located in Point Piper, Mr Bezzine was expecting to achieve $14 million AUD for the penthouse-style apartments, however, three of the apartments have allegedly exchanged for $10 million AUD each.

The development comprises waterfront apartments, each occupying an entire floor with balconies looking out to the Harbour Bridge and Opera House. They have four bedrooms, four bathrooms and a guestroom, as well as a jetty.

In September, one of Michael Bezzina’s company’s that developed the $100 million AUD Jade complex in Surfers Paradise, was put into liquidation. The company reportedly paid $17 million for the site six years ago, of which six out of the nine apartments have sold, one of which sold for almost $20 million, while the penthouse at the complex remains on the market for $22 million.

It is worth noting that the quality of Bezzina’s developments is outstanding, and his financial troubles should not be allowed to cloud the stunning properties that he has been involved in creating.

Simon Turner

FYI: Read related articles on Sydney Property; or Luxury Homes; or Sydney Harbour

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This is a question on many people’s lips and our colleague in San Fransisco, Jim Walberg, has some great points worthy of noting.

THE key to our economic recovery is real estate values and consumer confidence. Real estate is the oil that fuels our economic engine. Generally, real estate is having a similar feel that we are seeing in the stock market today. Volatility!

  • New home building starts are down to a trickle
  • Interest rates are GREAT and will get even better in the coming weeks.
  • Rentals are now commanding premium prices.

At some point, consumers will be the driving force that stabilises the real estate market, which will in turn send the message to the markets that the bottom of the market has been found.

In fact, Warren Buffet made a comment recently that when people bail out of the markets because of FEAR, he gets greedy. There are companies valued at 50% of their true value today. Warren Buffet is buying up these values with BILLIONS of dollars today.

Again, we will know the roller coaster ride of the markets is over when real estate hits the bottom and starts to the bounce back up. Pay attention to that event and you may well have timed the market perfectly to participate in some of the best values we will see for years to come.” Wise words indeed. Simon Turner

FYI: Read more articles on Real Estate, Stock Markets, Warren Buffet, and Luxury Homes

Figures released from the UK show repossessions of British homes jumped by a staggering 71% in the second quarter of 2008. The Financial Services Authority states that the number of homes repossessed was up to 11,054, an increase from 6,476 a year earlier as the increase in borrowing costs put greater pressure on borrowers’ ability to pay their mortgages.  

  Simon Turner

Here’s some quick statistics on the current state of the US housing market:

  • Foreclosure-related sales now account for up to 40% of all sales of existing US homes
  • The median sale price for a new home has fallen from $US220,400 to $US218,400
  • Home sales are down 33.1% in the past year

                 Simon Turner

FYI: Use the currency conversion facility

After the comments both Simon Turner and myself made earlier in the week both predicting and welcoming the Reserve Bank of Australia’s cut to interest rates by 25 basis points, I have received many thoughts from vendors, buyers, agents and other consumers all agreeing that such respite is indeed welcoming.

One response, however, stuck out. A suburban agent who shall remain nameless, in an exceptionally long email to me stated that the cut would make “no difference” to any Australian.

I do not wish to get into a pointless to-and-fro match with someone with whom I will not add credibility to his opinion which was clearly just a cheap attempt at scoring a few visits to his blog, and is ultimately not in touch with reality, but I do wish to reaffirm the positive effects that the RBA’s decision will bring and make clear that negative naysaying is lazy, un-inspiring, and of no help to Australian’s that simply are looking to get-ahead and make ends meet.

The facts are clear – a cut to the interest rate of a home loan of course makes a difference. The major banks had already passed on a quarter of a per cent to fixed rate home loans in the last fortnight, and indeed equaled the RBA’s cut this week, with St George cutting theirs by 30 base points.

Based on a 25-year loan on a new rate of 8.65 per cent, mortgage holders will make the following savings:

Loan Amount Monthly Saving

$200,000 $33.99

$300,000 $50.00

$400,000 $67.99

$500,000 $84.99

$600,000 $101.99

$700,000 $118.99

$800,000 $135.99

A saving is a saving, and more will be welcomed to relieve mortgage stress.  I’m sure an increase by 25 basis points rather than a cut would have made a huge difference to many hip-pockets.  Enough said!

From a global perspective, Australia is looking in pretty good shape. Australian households have cut their spending for the first time since the country was last in recession, whilst business investment has continued. Furthermore, all Australian State and Territory economies have grown, with the added exception of New South Wales (which probably says about as much as the state of Morris Iemma’s hapless government).

We’re not out of the woods yet, but Spring is here and it’s a breath of fresh air!

Michael Marquette

The Reserve Bank of Australia will hold what could be a historic meeting tomorrow, Tuesday 2 September 2008. Should they decide to lower interest rates, it will be the first time in seven years that the cash rate has fallen after 12 successive rate rises.

Most economists are suggesting there will be a cut by 25 basis points, however, the most bullish are even suggesting 50 basis points for the current cash rate of 7.25%.

This will come as a welcome sigh of relief, and indeed follows the trend of Australia’s mortgage lenders who have in the last few weeks been cutting their fixed rate loans.

The Convenient Truth

So why is this? Without getting too analytical, there are many factors that are leading to such a situation:

Global conditions have snuck up upon the Australian economy probably a little more readily than the RBA expected, which will allow it to loosen its grip on monetary policy somewhat: cutting interest rates therefore mitigates the impact of a deteriorating global economy.

Simon Turner

Home owners and investors have welcomed suggestions that the Reserve Bank of Australia will cut interest rates this year, but will the Banks pass the rate cuts onto borrowers?

Prime Minister Kevin Rudd has told Australians to change banks if they fail to pass on rate reductions. The banks have had no problem increasing rates to levels higher than official rate increases and have even increased rates despite the Reserve Bank keeping them on hold.

In an interview with The Australian Financial Review last week I was asked what it would take to restore confidence in the market. I expect buyers to remain cautious until the banks show that any rate reductions will be passed on. I believe a rate cut of around one per cent is needed to restore buyer confidence as I’m hearing increasingly that buyers and vendors are skeptical that banks will pass on the rate cuts. A reduction of 100 basis points will result in the market reacting in a positive way, even half a per cent will be looked cautiously.

So the question is buy now or wait? The answer is simple. There are some fantastic buys in the market at the moment and this will continue for the foreseeable future. As the stock market wobbles, dividends decrease and share prices drop bricks and mortar will become a major focus for many investors.

If you find the right property at the right price and choose the right lender your decision is an easy one to make. My only advice is to ensure sure that you keep your lender honest, and if “changing banks” as PM Rudd suggests, make sure you are aware of all fees and costs that may apply.

Michael Marquette

A symptom of “financial stress” is the inability to raise a moderate sum of money to deal with an emergency of the kind created by the need to pay an unexpected bill.   The actual emotional turmoil in reality is often far less clear cut.

Over the past decade we have been encouraged to spend rather than save, enticed with low interest (for a few months!) credit cards in an era when cash is uncool. Wealth not leading to happiness is generally acknowledged by all but has been paid lip service to by many.

Now things feel less certain, our spending has caught up with us, and the real perils of exuberant credit are becoming all too clear. Maybe the price we paid for assets was way beyond their current value in the face of the basic costs of living that are unnervingly rising.

The Downward Spiral?

Financial stress is common during tough times, and isn’t simply reserved for those forced into frugality because of a lost job, divorce, death, or being over your head in debt, etc. The pressure of financial stress can lead to feelings of insecurity, fear, anxiety, anger, and of course, depression.

These feelings can inevitably have the knock-on effect of encouraging poorer money management decisions. These poor decisions simply add to the downward spiral whereby one takes on even greater debt, and start a vicious cycle of fear, anxiety, and panic that never seems to end.

Reality Check

If you recognize any of the above traits in yourself, you are not alone and there’s no time like the present to get help.

 

Speak with a friend, your doctor, a colleague, a debt counselor, or anyone whose opinion you trust and advise you value. The most important thing of course is that doing something is a sure fire better thing than doing nothing. When you have problems, be they financial, family, legal, whatever, it usually doesn’t take very long for you to realise who really cares about you.

These people will be the ones who support you in your time of need, offer encouragement, and lend an ear so you can just talk.

And on the flip side, if you believe someone close to you is exhibiting any of the signs just mentioned, reach your hand out for them.

 

The Good News

Quite simply, the good news is that there is some good news: you do not have to wait until hopelessness and helplessness are overwhelming.

If you can spare a moment to sit down, face some hard truths with the perspective they deserve, you are halfway there already: evidence clearly shows that those who document their situation, examine their true lifestyle requirements and establish where they want to head in the future, will ultimately act and begin to move in a positive direction by making informed choices.

With just a little guidance, perseverance and commitment, regardless of how long the haul and the nasty little surprises that will inevitably pop up, don’t lose the assurance that you are certainly on the right road.

 

Quite simply, believe in yourself: you can do what needs to be done and come out of what may initially appear as dire circumstances with a new outlook, new skills, and best of all, a new feeling of self-esteem.

First Thing’s First: Set Priorities

The health of you and your loved ones is always the number one priority. Don’t lose sight of this. And, simply by looking after yourself, you are taking care of a job that otherwise would inevitably fall on your loved ones. By taking this approach, everyone is focused and you set an amazing example to everyone around you. It is surprising how comforting this basic knowledge is.

The Next Steps

 

Now, prepare yourself: think of circumstances you have faced in the past, and potential future ones that could pop up.

Make the decision now to learn how to cope, to make the changes you can and must, to stay focused and goal-oriented, and to let anxiety and financial stress fade away as they are ultimately emotions that, whilst understandable, only complicate the actual situation.

 

Put simply, “shoulda, coulda, woulda’s” add no value to your situation. As the saying goes “accept the things you cannot change, recognise the things that you can change, and embrace the wisdom to know the difference.”

 

Balance and Perspective

The Marquette Turner team and indeed myself are certainly not financial or emotional counsellors, but we know one or two things about the issues I’ve just spoken about.

Depression is a medical condition and is something that is treatable and is slowly losing the unwarranted stigma thanks to work by Australian organisations such as Beyond Blue. Have a quick look at their website: it may prove to be an extremely rewarding first step.

Good luck, and remember that you’re not alone and there’s plenty of help, hope and opportunity.

Simon Turner

Surely everyone has come to terms with the fact that the heady days of the real estate boom are well behind us. Quite simply, lamenting “those days” is like the dull sound of a sinking bell.

On the polar side to that period, however, is witnessing the interesting positions people are taking. Right now: some are trying to be released from property’s grip , others are playing a waiting game, planning for real estate prices to cool further and being rewarded with a better “bargain”, whilst the third group of people are holding steady.

RELEASE: with a cooling global economy, warming local inflation and interest rates, and red hot concern over whether Australia’s mining boom will erupt, spilling lava over a nervous population, there are many people feeling the push out of property.

CATCH: secondly, there are those people waiting to be rewarded for their patience by waiting for a bargain to drop from the sky. Of course, the danger here is not having an interest rate crystal ball – what may be a bargain now may not be in the future if interest rates should rise and negate any immediate gain: it’s a fragile balancing-act-like strategy that is either one of exceptional foresight or balls of steel.

Similarly, many are waiting for enough people to jump in before they do – the “lemming” approach is not one that Marquette Turner would recommend, now or at anytime.

HOLD: finally, those able to hold and are able to factor in rising rates are experiencing rising yields, with rents finally favouring the landlord after many years in the doldrums. There are many encouraging signs that rental returns are improving. Recently released data shows that there are now 60 suburbs within their respective capital city’s metropolitan area, throughout the Australian mainland that are experiencing a gross return of six percent minimum

At present, the cost of living and affordability are factors being felt by most Australian’s and whilst getting used to it maybe a bitter and painful pill to digest, there may be some good lessons and ever better decisions made.

You may have noticed Marquette Turner’s motto, “be a property intellectual“, and this should resonate now more loudly than ever.

Look at it this way, if it encourages real estate buyers to take more measured and counseled choices and decisions than once they may have, then the future of Australian real estate is solid, positive, and an excellent investment strategy. Remember these words: once a good buy, always a good buy!

Simon Turner

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It may seem obvious that what goes up must come down, but there are some property owners out there that are learning this the hard way. Quite simply, the appreciation of real estate is not a guaranteed birthright, nor a foregone conclusion.

In boom times, many of your friends and acquaintances may be sharing with confidence and bravado their two cents worth of real estate insight over the dinner table. You may hear such claims that “real estate prices only go up,” “everyone has got to live somewhere,” “the population will never go down” or, and this is the time your alarm bells should be ringing, “trust me!”.

As we are experiencing now, when economies and markets come under pressure, together with buying too high and borrowing too much, there is almost an inevitable period when property prices will head southwards.

Over-eager buying and over-zealous lending has meant that in lots of cases real estate prices in the short-term have had nowhere to go but down. Buying or selling is a stressful enough period in one’s life without facing additional pressures.

Figuratively Speaking

The costs involved with selling real estate can be around five per cent of the total sale price when you factor in sales fees, legals, taxes, moving costs and other selling expenses.

That means that a property must therefore appreciate by the same amount for you to break even on your initial investment.

Go one step further and if you’ve paid perhaps ten per cent too much for the property, you must somehow recoup 15 per cent just to return to “Go”: there’s no advancing and you can’t even collect $200, to use Monopoly language.

Making money can be a challenge at the best of times, but finding an extra 15 per cent just to forego it is an awful lot of extra padding and cushioning to build in to an initial purchase price.

On the plus side, and there is still plenty of positive news, those that can weather a less than booming economy, who bought well, borrowed sensibly and paid off plenty will be rewarded, as over the longer term real estate prices have traditionally shown excellent appreciation and will no doubt do so in the future.


If you can buy AND sell at a time of YOUR choosing, not your banks, your accountants, your employers or anyone else’s time you will be handsomely rewarded.

Constantly educate and re-evaluate yourself, your wants and your needs. This will ensure that you have a full appreciation of your financial position and make well informed choices if, when, and why ever you need to make them.

“Be a property intellectual” by frequently visiting our blog and the many other resources on the internet: they will stand you in great stead for the future.

Simon Turner

Figures suggest that borrowers are shying away from fixed-rate home loans, a sign of growing belief that the economy is slowing enough to ward off interest rate rises.

Traders in financial markets are, however, betting on quite the opposite. Yesterday, they lifted their bets that the Reserve Bank of Australia will raise rates more than once by the end of the year. Michael Marquette of Marquette Turner continues to believe that we are likely to see at least two more rises by the end of the year.

By March, almost one in four borrowers chose to lock in their home loan rate to avoid being caught out by more increases. The demand for fixing loans waned, however, in April, and fixed-rate loans dropped back to 17.5 per cent of the total market.

This could perhaps suggest that borrowers are becoming more pessimistic about the state of the economy and therefore confident that inflation and rates could fall.

The unsteadiness of the market comes amid more evidence of a dramatic fall in confidence among prospective home buyers. Housing finance figures released by the Australian Bureau of Statistics showed the value of new housing loans dropped 3 per cent in April – the third month in a row of solid falls.

Christine Watson

A recent survey has found 47% of property investors and one third of homeowners could be forced to sell up if interest rates increase by 1%.

This is certainly worrying news for many Australians, at a time when ANZ have predicted interest rates will rise by 0.5% before the end of 2008, with the bank tipping that a 0.25% rise will happen as early as August.

If ANZ is right and the banks continue to raise rates beyond the RBA’s official cash rate increases, the doomsday scenario of rates climbing by a further 1% could eventuate late this year or early next.

The survey of 2331 people by research firm Coredata also found that 76% of respondents are finding mortgage repayments more difficult after seven official interest rate rises in two years, and around 20% of borrowers are using more than half of their total household income on home loan repayments.

One in five respondents say they were running into debt to run their households and 67% claimed their financial situation is worse now than 12 months ago – an increase of 21% from November 2007.

Future interest rate rises may prove controversial. Former Reserve Bank of Australia governor Bernie Fraser says there may be a need to re-think the way the central bank attacks inflation, if rises in food and fuel prices persist.

Lachlan Semple of PSK Financial Services told Marquette Turner that “interest rate increases will further entrench a two-speed economy – slowing household discretionary expenditure while the resources boom continues, driven by insatiable Asian demand. Households, not businesses will feel the pain of recent and future increases, with mortgage servicing costs already up 40% in 12 months. It will feel like a recession in Western Sydney and the the outer suburbs of Melbourne with a subsequent flow on effect to other areas.”

International commentators have noted that Australia is fortunate that it’s government and the RBA have not tried to fend off inflation altogether, but has been quite tough on managing what it can relative to other Western nations.

For those paying higher petrol and food prices, and increasing household income going towards mortgage repayments this is, however, of little comfort for many Australians.

Michael Marquette

Thirty five people a day are going broke in NSW, with figures showing a rising number of Western Sydney families losing their homes to creditors.

The volatile combination of interest rates, rising food and petrol prices is forcing people to declare themselves bankrupt.

Research commissioned by the Insolvency and Trustee Service for the State Opposition shows a 10.3 per cent increase in people in Sydney becoming insolvent and a 6.3 per cent rise in other parts of the state.

Sydney’s west accounts for 40 per cent of all bankruptcies, but even wealthier areas are feeling the pinch with the northwest, inner east and North Shore showing some of the biggest increases in numbers of families going broke.

The high numbers are causing major problems for financial counselling services, who are unable to deal with demand. One charity said “draconian laws” encouraged people to go bankrupt.

Commuter suburbs where workers are spending vast amount of money on petrol are among the hardest hit.

Campbelltown was the hardest hit suburb with 301 people declaring bankruptcy in the past 12 months, Mount Druitt came in second and Liverpool, Prospect and Greystanes made up the top five.

Households in affluent suburbs such as Drummoyne, St Ives, Manly and Beecroft are also collapsing under financial pressure – those areas were in the top 20 Sydney suburbs which reported the biggest jump in insolvencies.

Another growing problem is “sexually transmitted debt”, that being property settlement and credit card debt that is not properly dealt with after a relationship breakdown.  With the strains of debt increasing, the emotional stress this causes is unsurprisingly leading to greater pressures on relationships.

Simon Turner

The Federal Government will invest $150 million over five years with the aim of halving the number of homeless people turned away from homeless shelters.

A Place to Call Home is Federal Labor’s five year plan to establish up to 600 new houses and units across the country for families and individuals who are homeless.

The Australian Institute of Health and Welfare said in 2005-06 there were 3,383 requests for emergency accommodation (4.4 per cent of the total requests for emergency accommodation) that could not be met.

Federal Labor’s aim is to halve the number of homeless people turned away from shelters each year within five years and close the gap within a decade in an effort to ensure those who are homeless have shelter.

100,000 Australians find themselves homeless on any night. Of these, nearly half are under 24 years of age and 10,000 are children aged twelve or younger.

While the services funded to assist the homeless do their best – they accommodate more than 12,000 at any one time in around 7,500 shelters, units and houses – this is not enough to meet demand.

At Mission Australia’s Women’s Place Service, 56 per cent of the single adult women who seek accommodation are turned away.

In a nation that has experienced 16 consecutive years of economic growth, this is simply not acceptable.

For this reason Marquette Turner wholly supports any initiative that improves the lot of those experiencing difficulties.

The great Australian dream of home ownership seems to be disappearing before our very eyes. Australia is in the midst of its worst housing crisis in decades, the Reserve Bank statistics show that house prices were flat in the first three months of this year and they appear to be headed for a fall. Credit has dried up over the March quarter with lenders reluctant to offer finance.

This has depressed investment in new housing and new home sales have slumped. The rental market is tight and a shortage of supply is forcing rental prices upwards. Those on lower incomes are faring the worst with public housing funding decreasing while population has increased over the last decade. What a picture of gloom for those aspiring to enter the market at this time.

Purchasing a property in Sydney has become nearly impossible even though the prices of homes in the west and south west have been declining. Young people wanting to buy into the market face long queues and disappointment at auctions as they trawl through property guides and real estate offices. The statistics for areas on the fringes of the capitals show high numbers of defaults on mortgages resulting in sales of properties at prices below the original mortgage price, leaving sellers with ongoing debt.

Additionally the dearth of rental properties has led to skyrocketing rental prices with intending renters locked in bidding wars against each other to win a rental property. In spite of these increases the return on investment for investment properties has declined along with the decline in housing prices. This is a real catch 22. More landlords are choosing to increase rents, forcing people out of the rental market to move back with family just to survive, as the market is at near full occupancy.

Add to this picture the increasing numbers of people who face having to work past retirement age to pay off mortgages that they still have, and this paints a bleak picture of living in Australia today. The option of a sea or tree change is no longer a viable. Development on the coastal fringes is even putting pressure on locals as they are being priced out of their own localities.

Of course these difficulties are not spread equally through all socio-economic strata. In wealthier suburbs house prices have risen substantially over the last decade. However, even here the trends show some softening of prices over the last quarter.

Even if older Australians would like to downsize to make way for the young, the rise in building costs means a the smaller new apartment will cost them nearly the same price. So, with nothing left over, there is no incentive for them to downsize to a higher-density lifestyle.

The great Australian dream of a house with land may, of necessity, be over. Australia remains one of the few countries which has such high levels of low density living. Perhaps Australians will have to adapt to patterns of living more like those of other large cities where high density living and renting for life is the norm. With petrol prices forcing more people into public transport higher density living may be the only way out of the housing shortfall. Whether we are ready for such change is the question. A sense of insecurity remains about renting for life. The perceived lack of stability remains a stumbling block to a change of this kind, but is there a choice as land is becoming scarcer.

Can we make the psychological shift to this new way of living? The iconic image of ‘the land’ is still seared into the imaginations of Australians and the yearning for the quarter acre block harks back to this ideal of space and freedom. Yet is this model for living sustainable into an uncertain future? The backyard barbie, the hills hoist and the veggie patch may have to make way for new ways of living in our major cities.

More Australian families are moving away from cities and into regional and coastal centres, according to a comprehensive study of the nation’s rural and regional communities.

The 2008 Country Matters: Social Atlas of Rural and Regional Australia reveals that at the 2006 Census, more than 7.5 million Australians lived outside capital cities – an increase of 472,700 since 2001 – with the largest growth in coastal Queensland. However, it also confirms that people have been leaving smaller rural communities, especially young families.

A key finding of the report is that home ownership rates are higher in rural areas than in major urban centres. More than three quarters of homes in rural areas (76.2%) and more than two thirds of homes in small towns (69.4%) are owned or being purchased. This is higher than the rate of home ownership in major urban centres (63.6%).

The Australian has reported that Parramatta, Bankstown and Blacktown have become the home repossession capitals of Sydney.

Terry Ryder, property reporter, states that Bankstown offers “a smorgasbord” of reasons not to buy, and the Blacktown/Mt Druitt region is regularly held up as a symbol of society gone wrong.

Ethnic tensions, high crime rates and aircraft noise are reasons to stay away from Bankstown, and Blacktown/Mt Druitt is no better.

The places property investors should avoid

* Bankstown, Western Sydney, NSW
* Blacktown, Western Sydney, NSW
* Darwin, Northern Suburbs, NT
* Dinmore, Brisbane, QLD
* Esperance, Southeast, WA
* Giru, North QLD
* Kalgoorlie, Outback WA
* Katherine, Outback NT
* Lyndhurst, Melbourne, VIC
* Mount Isa, Western QLD
* Parramatta, Western Sydney, NSW
* Shepparton, Northern VIC
* Sunshine Coast, QLD

New figures released by Residex reveal that Sydney property values have increased by 6 per cent plus (6.39 per cent median) in the past 12 months.

This is despite nerves of a continuing slump as a consequence to rising interest rates and the housing affordability crisis.

As such, prospective homebuyers could do far worse than buy now – get your foot in the door before Sydney prices start to climb again!

We are likely to see growth over the next couple of years, predominantly in the apartments sector of the residential market.

There are vendors out there with their mortgage lenders circling. This means that there will be bargains to be had, so if you can afford to buy now, make the most of this opportunity.

Even Macquarie Bank do not expect prices to drop by the 30 per cent figure recently reported, and in fact predict a slow recovery this year.

With the potential for rates to be cut next year, the indicators for growth next year are looking solid.

The best-performing suburbs, according to Residex, were Whale Beach, where the median value grew by more than 25 per cent to $3.792 million in the year to March, followed by the inner city suburb of Chippendale, where a 25 per cent rise pushed values to $638,500.

The eastern beachside suburb of Bronte was third, with a 24.4 per cent hike to a median of $2.208 million.

The unit sector recorded gains, with Sydney apartments increasing in value by 6.18 per cent to a median of $402,000.

Simon Turner

Those unfortunate souls who default on their mortgages are unwittingly dragging their neighbours down too, with housing prices in these areas more likely to mortgagee fire-sales by as much as four times the average elsewhere.

For instance, of the 15 suburbs in Sydney with the highest number of mortgages that have been defaulted on, median houses have fallen 12 percent on average over the last four years. This is far higher than the 2.9 percent average decline in house prices across Sydney.

The likely reason for this is that a large number of mortgagee sales in a particular suburb can create a stigma for a particular neighbourhood. This in turn undermines the potential sale prices of other properties nearby, even though they may not necessarily be for sale because of mortgage stress. Buyers look at the prices of mortgagee sales and equate that ALL house prices should be of a similar value.

The subsequent effects of lower housing prices then further spread to neighbour’s property’s who maybe happy to stay put, but lower property prices limit their ability to use their property as equity for a personal loan or investment loan.

This situation further highlights the importance of investors doing their homework and of choosing neighbourhoods that DO NOT have a high number of repossessions.

On the flip side, however, if banks encourage people to purchase mortgagee repossessions, the demand for these properties will increase, pushing their value up and thus creating a somewhat more reasonable situation.

Simon Turner

No matter how the financial pinch is hurting you, a pinch is a pinch and the Marquette Turner team know that you’d rather not face it. Or at the very least, minimising the pain can only help. Thus, we’ve put together 7 ways to help save your home, or even your sanity. They may be simple and seem obvious, but surely by putting just one suggestion into action will ease the pressure. We hope they help.

1) ASK YOUR BOSS FOR A PAY RISE. Repayments have gone up more than twice as much as wages have gone up. And what’s the biggest problem facing many bosses these days? They can’t find good staff. If you are a good employee, ask for a pay increase to match your repayment increase. Don’t know how to ask? Then leave this article on your boss’s desk.

2) RENT THOSE EMPTY BEDROOMS. Even if you don’t like the idea of strangers sharing your home we’re sure that it’s far better an option that the idea of strangers buying your home when the bank kicks you out? As well as a mortgage crisis today, there’s also a rental crisis. Thousands of people are desperate to find somewhere to rent. Many are hard workers who want little more than a clean bed. If you’ve got a clean empty bedroom, it’s worth at least $450 a month, even more if it’s got its own bathroom. We keep hearing about a housing shortage in Australia; but we never hear about the six million empty bedrooms across the nation. We’ve got more than enough room for all of us, it’s just that we’ve built bigger houses than we need which means we’ve got bigger payments than we want. Don’t struggle, rent out an empty bedroom. Go on, place the advertisement and watch how many nice people turn up. You’ll be surprised how easy it is.

Save yourself!

3) RENT YOUR HOME. If you want to cut your payments in half, move out and rent your home to someone else. Where are you going to go? Home to Mum and Dad. Stay with friends. Rent in a cheaper area. Rent a smaller place. Any one of these suggestions, if you can manage them, is surely better than losing your home. And, besides, it may only be for a few months.

4) DOWNSIZE. The high cost and the stress of snobbery isn’t worth it. Sell your home and move to a more sensible option. Before you say, “I’d never live there,” go and have a look at it. You can buy a great 4-bedroom home in a quiet street in a wonderful community for less than $300,000. What would you prefer? That people think you’re rich, but you are really stressed out and battling to survive? Or, that people think you are battling, but you have low debt and you are ever-so-happy? The price of pretending to be prosperous is very high – both financially and emotionally.

5) DRIVE A HOLDEN. Well, not literally, perhaps a Ford. Or even a Toyota. The point is this: Do you really need that expensive European job with the big repayment? No doubt you may deserve a fantastic car because it makes you feel good after all the work you do. But do you deserve the agony? We’re talking about saving your home/sanity here. And if that means back-trading your car for a cheaper model, don’t think about it, do it. And, tell me, do you really need two (or three) cars? Come on, seriously. Is there no public transport in your area? Would it hurt to walk to the bus stop or the train station?

6) STOP WASTING MONEY. If you don’t think you’re wasting money, take a closer look at your expenses. It’s amazing how people justify the wastage of money these days. For example, they spend ten or twenty dollars a day on coffees and lunches. That’s up to $5,000 a year. They could eliminate most of it by taking their lunch to work. Sure, brown paper bags are not exactly the current fashion accessory. Pack your lunch and save your home.

7) GET A SECOND JOB. Already got a second job? Well, get a third one. Do anything (legal) that will bring in some extra dollars. Mow lawns in the area. Start a rubbish removal service. Clean windows. Drive a hire car (it’s better than a cab). Become a waiter. Walk the neighbours dog. Deliver junk mail (and get fit at the same time). Hard work never really killed anyone, did it? Kill that mortgage before it kills you.

Surely one of these suggestions could make your pockets feel a little less empty. Maybe they’ll even inspire you to find other ways to help save! Good luck.

Simon Turner

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