© Property Professor articles — www.thepropertyprofessor.net.au.
Reproduced with permission.
Yes. It might seem strange to say that it is OK to sell at a loss, but I will explain.
Most property owners know that the market is soft and in some suburbs and towns around Australia prices are lower today than they were one or two years ago. What many people don’t realise is that it is the more expensive sector of the market that has taken a huge hit compared with the more affordable sector. This is often the case in a property slump (the opposite is true in a boom).
Let’s look at a real-world example. Parrammatta is an affordable suburb in the west of Sydney and, according to RP Data, had a median house price of $543,000 in January this year. The price had dropped by 1.36% over the previous 12 months, which means the median house price has been almost $551,000 – a fall of about $8000.
North Manly is an expensive suburb on Sydney’s north shore, adjacent to on the best beaches in Australia. The North Manly median house price was $975,000 in January, having dropped 11.04% over the preceding 12 months. In other words, the price has fallen from $1,096,000 – a drop of $121,000.
In summary, if you were to sell your house at Parramatta for $8000 less than what you paid for it, you could upgrade to North Manly for $121,000 less than what it would have cost 12 months ago. Move into a million-dollar suburb for less than $1 million?
Sounds good to me!
Happy House Hunting!
• Written by Peter Koulizos, university lecturer, author and buyers advocate. Peter will be presenting at “The Essentials of Property Investment” seminar in Melbourne on 19th June. Click here for details.