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
I’m heading to Singapore for a few days to facilitate a scenario planning workshop on behalf of the Asia Business Forum. There is something intimately exciting for a futurist to be going to arguably the most future focused of all countries and to spend just a brief time immersed there. There’s no doubt that great…
Read More >Greenwashing is a term used to define marketing actions by organisations, claiming to take an environmental approach to their products or services, when in fact, they are doing nothing or very little. Greenwashing is a form of marketing hype, and in turbulent times, many companies may be contemplating ‘sexing up’ their image by tapping into…
Read More >Strategic Futurist Marcus Barber will be the key note speaker at the Australian Computer Society’s annual conference to be held in Adelaide on July 30 at the Adelaide Convention Centre With the theme ‘Survive and Thrive’ Marcus will discuss the likely issues of the near term future and why right now, organisations do not have…
Read More >The next Advanced Strategic Planning one-day workshop being run by The Australian Strategic Planning Institute will take place at Rydges in Adelaide on the 13th of July and bookings are now open The TASPI workshops are jam packed with ideas and processes to ensure that your operational, business and strategic planning efforts deliver the…
Read More >Hands up if you remember the dot com bubble? Or how about the Y2K bubble? Housing bubble? ‘Bubbles’ as they apply to all things economic are little more than an oversupply of positive confidence in a particular area of economic concern. In fact ‘Bubbles’ are caused by the SAME things as ‘Recessions’ just at opposite…
Read More >Just a handful of places are left for The Australian Strategic Planning Institute’s one day Advanced Strategic Planning workshop at Karsten’s in Melbourne on the 26th of May. Please note that there are no places available for the June workshops in both Brisbane or Sydney, and the Adelaide workshop in July is half filled though…
Read More >Richard Pratt has succumbed to a battle with prostate cancer and there’s no doubt that many words will be written on paper destined to end up as recycle materials at his VISY Industries plants. There’s a harmony in that thought – all those words of type and paper discussing Richard Pratt will be recycling through…
Read More >Thousands of Australians are just receiving or are about to receive a pretty handsome cheque from the Federal Government as part of the economic stimulous package. The question then is ‘what do I spend this on?’ Below I offer a futurist’s view on where certain generational types might consider spending the bonus. As a…
Read More >It is almost a year since the Australia 2020 Summit was held in Canberra and it is expected that Prime Minister Kevin Rudd will provide feedback on the summit, the ideas it generated as well as the ideas of those not at the summit who provided input and thinking. Of course a lot has changed…
Read More >A few years ago whilst researching and generating ideas for the National Geographic Channel’s futures based TV shows ‘Future Matters’ I discussed the idea of what I then called ‘WEs’ or Wearable Electronics. I mentioned that this was a substantially different approach than portable electronics, which is what most mobile phones and laptop computers were…
Read More >