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Australian Property Market Crashing in June 2012; Developers discounting land by 50%
Topic Started: 2 Jun 2012, 04:21 PM (1,770 Views)
Alec Smart
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Hello

As a buyer I received an e-mail and link to this developer website http://www.southbankestate.com.au/?page_id=15

So a Southbank Estate Lot that is normally $240,000 could be bought for just $120,000 today. 50% discount.

This type of developer marketing strategy isn't employed unless they the seller/developer is desperate.
Not enough demand and too much supply in the property market.

Heavy discounting doesn't occur in a stable or growing property market.

If this land sells at 50% discount this will only condition buyers to believe the land is only worth $120,000. This will also reduce land values and will reduced property prices.

Now of course if the land does not sell at 50% discount the developer is in trouble http://www.southbankestate.com.au/

A sign of the times......
Edited by Alec Smart, 2 Jun 2012, 04:22 PM.
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genX
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Alec Smart
2 Jun 2012, 04:21 PM
Now of course if the land does not sell at 50% discount the developer is in trouble http://www.southbankestate.com.au/
I wish they were listed on the ASX.
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peter fraser
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Alec Smart
2 Jun 2012, 04:21 PM
Hello

As a buyer I received an e-mail and link to this developer website http://www.southbankestate.com.au/?page_id=15

So a Southbank Estate Lot that is normally $240,000 could be bought for just $120,000 today. 50% discount.

This type of developer marketing strategy isn't employed unless they the seller/developer is desperate.
Not enough demand and too much supply in the property market.

Heavy discounting doesn't occur in a stable or growing property market.

If this land sells at 50% discount this will only condition buyers to believe the land is only worth $120,000. This will also reduce land values and will reduced property prices.

Now of course if the land does not sell at 50% discount the developer is in trouble http://www.southbankestate.com.au/

A sign of the times......
Alec - have you contacted them to get full details?



Any expressed market opinion is my own and is not to be taken as financial advice
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Olmule
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Hey that's in Perf.

Don't be tempted though...that area is rough. Lot's of people in tracksuits waiting to invade your home/throw rocks at you.
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Alec Smart
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Olmule
2 Jun 2012, 06:30 PM
Hey that's in Perf.

Let’s say the lots do sell for $120,000 each.

This creates a few problems.

1. This sales data can then be used in the future by Valuer’s for land valuations.
2. This would then set the land value benchmark for future sales in that estate. In a sense the developer is so desperate for a sale at any price (50% discount) they are slitting their own throat and driving down prices of future sales in that estate.
3. The sales data can be used by Valuer’s for future valuations for land in that suburb or area. A fair market valuation is conducted using comparative sales data analysis.
4. Buyers believe that the comparable land is valued at $120,000 because it is that value.
5. So land values in the area could decline by anything up to 50% for comparable land.
6. This drags down property market prices.

This is a worry if you are a buyer.

Why the hell would I go out and buy comparable land for $240K when it has sold for $120K at Southbank?
Buyers would not do that...

Aaagh I thought Perth was meant to be the shining light in the Australian property market?

Buyer beware in the current Australian market.
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