Soft House Prices or Unrealistic Vendors?
There’s been a bit of discussion in recent months about a softening housing market around Australia but I wonder how much of it is more indicative of unrealistic expectations on behalf of sellers? In futures work we think in terms of Assumptions and Expectations and aim to test our understanding and so I offer this isolated example of the housing market in action for you to think about whether ‘softening’ prices are a reality. Around three years ago a two bedroom brick veneer house in Cummins Rd, East Brighton sold for approximately $440,000, which was pretty much market value at the time. The new owners subdivided the land and about a year ago built a three bedroom townhouse of a pretty high standard on the rear of the property. The style of house is likely to be attractive to a more limited market and there’s no outside space to speak of. So what would you say would be a fair price to expect at auction?
Potential bidders were pretty clear. The Real Estate Agent (Buxtons) did a great job at talking the property up and highlighted everything that was good about the property. But I wondered if the agent knew he was flogging a dead horse so to speak because he asked for an opening bid of $800,000 and eventually kicked the auction off with a vendor’s bid of $700,000. When no further bidding emerged he placed another vendor’s bid at $750,000 and the property was passed in.
Now I’m not too sure what pricing strategy the vendor had. I know that the vendor has also done a fair bit of work in the front property in which they live and I wondered if their price was based on not only what they paid for the original property, and what they spent building the subdivision, but also was an attempt to recoup money spent on their own home? But for me, having paid $440,000 three years ago and having spent perhaps another $200,000 or so adding a sub-division property out the back, expecting what is believed to have been a sale price of well over $800,000 seems an example of unrealistic expectations.
Right now entire single block double story dwellings a few years old are selling in the area for about $850,000. Some would say that even in a warm housing market, a realistic and fair price for the new Cummins Rd dwelling out the back is closer to the $600,000 mark. I’m sure you know of similar examples around Australia and beyond. When we consider real estate as an indicator of social and economic health, we need to be careful about placing too much emphasis on auction outcomes, unless we also consider how realistic the expectations for sale prices also are. And that perhaps something for lenders to also consider
From an organisational perspective it is pretty common for senior managers to spend significant energy considering when to upgrade plant and equipment, be it machinery, vehicles or IT infrastructure. The upgrades can occur on the run (in response to a surge in demand for instance), as a result of necessity (say as a result of…
Read More >If you’ve seen me speak before you already know I take a provocative stance when it comes to areas like personnel development, training and recruitment. Clients also know that once we’ve opened the door to thinking differently, they’re guided through some significant ‘of course’ moments in terms of how they approach developing their people and…
Read More >I flag from the outset that I haven’t been a regular readers of newspapers for almost a decade, only slightly less than my giving up on mainstream TV News shows. As such you should take this with a grain of salt, coming as it does from someone who reads maybe a paper a week and…
Read More >In the search for fuels and energy sources that act as a replacement to Oil, there’s much hype and claims that need to be tested. In much the same as claims about carbon capture technology being built onto existing coal fired power stations seem to lack both viability and credibility (in my view), the same…
Read More >Every day people in positions of ‘opinion authority’ make choices about what ‘opinions’ they will offer on a whole array of subjects. And it would be fair to say that over the past five years or so, many of those ‘opinion authorities’ have been significantly negative on Australia’s manufacturing sector. There’s no doubt that the…
Read More >As a futurist spending much of my time assessing emerging developments and their implications across an array of industry sectors, I am frequently asked for a view on ‘consumer trends’. Common questions are ‘what will consumers want in the future?’ ‘Does our product (service) have a place?’ ‘What is driving consumer behaviour?’ ‘How can we…
Read More >The Trucking Industry, as a key part of the wider Supply Chain and Logistics Industry is coming to the end of an era, right at the time when it should be being refreshed. Put simply, there just aren’t enough drivers for trucks, and to date, attempts to recruit more drivers have been less that what…
Read More >In case you haven’t had time to keep up with these events, here’s a quick overview of the Everyday Sexism project’s attempts to hold FaceBook to account for its explicit support of sexual violence against women as portrayed in the many permitted Facebook pages that promote rape, rape culture, and violence against women. Facebook appears…
Read More >Today I have a bee in my bonnet, so please look away if my frankness might bother you. In the last couple of days I’ve had yet another conversation with a Local Council planning team manager about Strategic Planning for their Council that bothered me a great deal. What really has me bothered is that…
Read More >Whilst many people have heard about Drones in terms of their military applications, the concept of micro drones and their use in civilian settings is not quite so well known. It appears that the surveillance capability that technologies like Drones provide, are edging their way into more social environments. That may or may not be…
Read More >