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I bought a Brisbane home and regretted it - I was trapped in hell; What a sucker I had been, thinking that happiness lay in home ownership
Topic Started: 19 Aug 2013, 01:27 PM (29,801 Views)
miw
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b_b
19 Aug 2013, 06:10 PM
At a theoretical level, the fair yield differential between a 25/75 (land / build) and 75/25 property is 1% per annum to account for the higher depreciation. Assuming:
BTW in Brisbane, across all the units I have considered except one (which had other attractions), the rateable unimproved value of the land has never been lower than 30% of the market value of the unit at the time I considered it. 35-40% is typical, 50% is findable, and on occasion you see up to 60% but it is pretty rare.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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Catweasel
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Shadow
19 Aug 2013, 06:41 PM
A person who owns one individual apartment on the land wouldn't win as big as a person who owns the whole block of land plus all the apartments on it.

Cat needs to expand its thinking.
Mouzealot need to understand that mouse can own a land and a that its the apartment sit on.

If mouse own all a apartments in a hurstmere road the block, it need to AUD10,000,000+!

At a least.

But out of average mouse pocket.
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The Ponz
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Shadow
19 Aug 2013, 02:37 PM
Most of Georgina's problems stemmed from her decision to buy a unit rather than a house.

For the same money she could have bought a bigger house on its own block a bit further out and probably been a lot happier.

I only buy freestanding houses. The value is in the land not the building, and you don't get much land with a unit.

And yeah, get a building inspection and listen to their advice.

I know people who failed to get a building inspection and only found out after the first heavy rain after buying that the house floods - it's at the bottom of a gully and gets all the run-off from multiple properties higher up the hill. They've had to replace the carpets four times in the past couple of years, plus repair other ongoing water damage.

If they try to resell they'll have to hope the next buyer doesn't get an inspection...
I'd hazard a guess that she couldn't afford a house in New Farm :to: hence purchasing a unit
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miw
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Shadow
19 Aug 2013, 06:12 PM
The value is in the land, and ability to develop that land greatly increases the value over the long term. Plus you don't have to deal with annoying and potentially expensive strata issues.
This is the accepted wisdom, but is it true?

I just did an analysis of all the properties I have owned for more than 10 years, and here's what I came up with:

2002 unimproved land val as % of unit market value: 32.4%
2012 unimproved land val as % of unit market value: 36.8%

So, across all the units the value of the land has appreciated slightly more quickly than the buildings, but both have appreciated in value. But if you look more closely at the numbers there are two outliers - one where the land value as % has gone down a lot and one where it has gone up a lot (or maybe I got a great deal on one and overpaid on the other - who knows. There are certainly transactions that I did then that I certainly wouldn't do now.)

If you take those two out, you get:

2002: 34.8%
2013: 36.3%

Which is even closer.

Alternatively, you can break it out as:

Unit value appreciation 2002 to 2013: 134.8% (143.1% without outliers)
Land Value appreciation 2002 to 2013: 162.6% (153.2% without outliers)
Building Value appreciation 2002 to 2013: 121.5% (138.1% without outliers)

You can of course object that this is a small sample in one city, but the blithe statement that the value is all in the land doesn't hold water. The buildings have more than doubled in value over the last 10-11 years whichever way you slice and dice it. All you can say is that land appreciates faster than the building value.

But then, people pay rent on buildings and not on land. (there's another sweeping statement that is not totally true, of course.)
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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Shadow
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Evil Mouzealot Specufestor

miw
19 Aug 2013, 07:56 PM
This is the accepted wisdom, but is it true?

I just did an analysis of all the properties I have owned for more than 10 years, and here's what I came up with:

2002 unimproved land val as % of unit market value: 32.4%
2012 unimproved land val as % of unit market value: 36.8%
Yes, but my point is that if you own the land (the whole block, not just the land associated with one unit on the block) then you have potential to develop later, drastically increasing both the yield and the underlying land value. The potential for future gain is much greater when you own the block.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Trojan
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WTF?
277 users currently reading this thread?
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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Shadow
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Catweasel
19 Aug 2013, 07:45 PM
If mouse own all a apartments in a hurstmere road the block, it need to AUD10,000,000+!
No. The mouse who bought a decade or two ago for $500K when the block had only a freestanding house on it now owns a block of land holding many apartments worth $10 million.
Edited by Shadow, 19 Aug 2013, 08:13 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Ned Flanders
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peter fraser
19 Aug 2013, 01:39 PM


poor Georgina's not the sharpest tool in the shed.
Yes, the perfect mark for the predators that surrounded her and the jingoistic national mantra of 'buy property at ANY cost, you cannot lose'. Next stop for Georgina, bankruptcy proceedings.

------------------------------
" ... which is that all-too-familiar dynamic in Irish life where people tell lies, cover them up and create all sorts of collateral damage, sometimes spread out over decades, and never take responsibility."
- Alan Glynn
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peter fraser
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Ned Flanders
19 Aug 2013, 08:14 PM
Yes, the perfect mark for the predators that surrounded her and the jingoistic national mantra of 'buy property at ANY cost, you cannot lose'. Next stop for Georgina, bankruptcy proceedings.
Someone earlier said that she sold out with a slight profit. I don't know the lady so I've taken that information at face value in the absence of information to the contrary.

Not so bad for a fool who should have taken advice from others on this important purchase. Had she done that she may have taken a handsome profit.

Edited by peter fraser, 19 Aug 2013, 08:30 PM.
Any expressed market opinion is my own and is not to be taken as financial advice
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miw
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Shadow
19 Aug 2013, 08:09 PM
Yes, but my point is that if you own the land (the whole block, not just the land associated with one unit on the block) then you have potential to develop later, drastically increasing both the yield and the underlying land value. The potential for future gain is much greater when you own the block.
You can buy units and unit blocks for their redevelopment potential as well. In fact, I have you to thank for getting me to analyse the numbers over time because I think I have found some indicators that can help me spot that.

In partnership with family I do own one free-standing house bought expressly for its redevelopment potential and expect eventually to do well out of it. But, unsurprisingly, its nett rental yield is about half that of my average unit (because the redevelopment potential is priced into the overall value but a renter ain't going to pay for it), and we will be waiting 6-10 years for a rezoning before that potential can be realised.

And we have annoying and potentially costly issues like neighbours who are jerking us around over a boundary fence.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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