IMF warns of overheated Australian property market; Is it time to low-ball bid?

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IMF warns of overheated Australian property market
As though people needed another benchmark at this point, the International Monetary Fund weighed in on Australia’s housing prices Wednesday, to say that real estate is dramatically unaffordable, less so than any other country except Belgium. The IMF described prices as unsustainable, a third-again higher than the long-run average ratio to incomes and half again higher than rental prices, although folk who’ve negatively geared their mortgages can pretend not to care about that. The IMF advises countries facing risks like this to require its banks to hold more capital. But most of Australia’s smaller banks are arguing for exactly the opposite. Read the full story here.

For some real estate in Australia, Australians need not apply
Australian real estate brokers have been setting up websites that can only be accessed from outside of Australia to show Australian properties ahead of and to the exclusion of domestic purchasers. Brokers set up shop in mainland China, so the practice isn’t illegal – for the broker. Chinese buyers may be running afoul of Australian law around foreign investment. When someone actually decides to enforce those rules, I promise we’ll tell you about it. Read the full story here.

Perth’s zoning changes unlocked value in strange places
The market has finally caught up to four-year-old zoning changes in Perth, which allowed for unusual density in apartment construction. Returns moved from 15-20 per cent to a 35-45 per cent return on a small group of apartments. That’s pushed prices in some town centres and near rail stations up by $250,000 in two years. Apparently, there’s still property that’s been similarly rezoned but hasn’t been discovered by developers quite yet. Read the full story here.

Is it time to low-ball bid?
Now that rocketing price growth appears to have slowed – if not stopped – buyers are beginning to wonder if making aggressive requests for vendor discounts makes sense now. RP Data says the average vendor discount is about 5 per cent. If the market is truly softening, vendors may be willing to give concessions just to flick their properties onto a buyer. But demands may simply be insulting, even now. 

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