Sydney Maco

They say that timing is everything. Everyone’s circumstances are different, and something that’s wrong for most people, might be right for you. If for example a family with 3 kids living in a 2br unit need to move into a house, now is the right time for them to sell. Remaining in the 2br unit longer may present an opportunity for a house maybe $20-30K less if they wait another year. But can you put a dollar value on the difference in giving the kids a comfortable home and yard to grow up in during that time ?

Investment in property is meant to be totally devoid of emotional attachment. The minute you form some emotional attachment to a property, you know that you have strayed from a sound investment strategy. Unrealised losses can be a real pain to bear, these can make you miss other opportunities, simply beacuse you can’t face selling up. Capital gains tax is the ransom that the government hold over your property, you cannot avoid it. It’s ever increasing with time, and it’s more painful the longer you put it off during your lifetime.

When you’re buying remember that the agent showing you the property is not working for you. They are working for the vendor. For example when a couple go to see a house, sometimes the wife doesn’t realise this and expresses her excitement in front of the agent, this reduces your bargaining ability. Agents don’t tell you the truth ever, doesn’t matter if you’re selling or buying. They tell you what they want you to think in order to manipulate you in some way. For example if selling, they’ll promise top dollar, you’ll sell this place in a week. After you’ve signed up, the’ll tell you the bad news, you may have to lower your expectations, the market isn’t quite that good right now. If buying by private treaty, they’ll overstate the price, if it’s going to auction, they’ll understate the price.

I hate auctions, except for ebay ofcourse. By ruling out houses listed for aution, you’d effectively halve your options these days. I still think the auction process leaves much to be desired, and that these opportunities are for either the extremely strong willed, or the careless. Now I see auctions as another possibility, you just have to move a lot faster. There is always the option of making an offer prior to auction. Provided your finances are in order, with pre-approval to a given amount, and you line up the necessary inspections.

Taxes are a fact of life, we can try and hide from them, but sooner or later they will catch up with us. Some people manage to get away with paying no tex, it’s so obvious when you see them. The objective is not to get away with paying no tax, but rather to live a comfortable life not burdened with the thoughts of being victimised. It’s sad when you see someone go through life feeling a victim of society. I’ve seen people in their 50s who still havn’t snapped out of it.

Why are houses so over-priced in Sydney ? Here are some reasons I’ve come up with;

- Overly-eager lending including low-doc loans, etc
- Increased spending by consumers during a period of low interest rates
- Media hype, including renovation shows, etc
- Big push from negative gearing by investors to minimise income tax
- First home buyer schemes which just get factored in by the market
- State Government land taxes
- A generation that wants a 4br with ensuite and study at age 25
- Parents contributing towards the purchase

A correction in the market is imminent, those with exposure will get burnt.
There has been a steady deflation in house prices in the last 12 months, despite this the government and the media remain in denial.
When we think of it sensibly, is a 4br house with 2 garages and no eves sitting on a 450m2 block 30Km from the city worth busting you balls for the next 20+ years. At under 8% p.a. interest this is currently below the radar, but soon it will all surface.

So property in Sydney is tricky at the moment. On the positive side, I’d rather be buying today, than 2-3 years ago. Finance is readily available to almost anyone, so there’s no excuse there. My advice is to make the agents really work for their money, don’t give them an easy time. Make them sweat during negotiations, you have the upper hand, take advantage of this. It’s your money they’re after (even if you don’t have it all today). They are not there to give you moral support, or help you decide between one house or another.