Recently it was suggested that residents in Manningham could sell their property at a high price to developers, and then move to a similar place with loads of spare cash. Manningham Leader article In response to that article, we have had this interesting food for thought sent in.

Note – The smiling Gent on the article was selling and significantly down sizing – not finding a comparable property.

 Total Expenses

Paul Molan has publicly declared if residents didn’t like the idea of living close to high density apartments (DD08) in their side street or court, a family could sell using the proceeds to duplicate their amenity nearby. We would argue it may not be all that viable. If we were to use the recent sale of a brick veneer established property in Whittens Lane (approx $750,000) as an example when costs are taken into account the seller might be looking at purchasing in the range $670 to $680,000, to retain some cash in hand.

Prices may eventually rest with what developers would pay for affected properties. *If there is a glut of permits issued combined with poor apartment demand it could lead to a flattening of property values in the zones.

e.g. The reduced demand for apartments is already apparent by the increasing gap in the price between houses and units shown in the chart below. e.g. in September 2010 the median house price was $790.000 compared to a unit approx 17.5%  cheaper at $650,750 and by August 2011 the median house price was $717,000 compared to a unit approx 31% cheaper at $495,000.  Keep in mind these are median prices – not necessarily comparible featured properties.

Costs to Purchase a property for $750,000                      Costs to sell at $750,000                                                   

Government stamp Duty $40,070                        Agent commission 2.5%  …. ………   $18,750   (negotiable)

Titles Office Fees              $  1,350                          Titles offices sundries and solicitor..$  2,500

Solicitor’s Fees                  $  1,200

Total……………………….$42,620                          Total……………………………………. $ 21,250

 

Out of pocket expense would be even more if a discharge or registration of mortgage were involved and/or settlements could not be synchronised. (bridging finance)

Further costs would be incurred for removalist ….$1.000  plus any modifications necessary in the home purchased.

To cover all contingencies a sum of at least $70,000.00 should be allowed.

It would be much more acceptable if council were to encourage cluster Town House infill in the DD08 zones. Joint ventures with  developers could be negotiated where the proprietor retains an additional dwelling plus the possibly of an agreed amount of cash etc.. e.g. Queens Avenue (150 meters from council offices) is almost entirely Town House clusters as is Whittens Lane.

So you have to ask yourself could you really move locally, give up $65,000 + in the process , find a similar quality property, with similar amenities, and have spare money ?

TABLE: Keep in mind these are median prices – not necessarily comparible featured properties.

Date	Median House Price	Median Unit Price
Sep-10	$790,000	$650,750
Oct-10	$799,500	$657,500
Nov-10	$795,000	$619,500
Dec-10	$753,600	$535,000
Jan-11	$824,000	$510,000
Feb-11	$800,000	$540,399
Mar-11	$770,000	$525,000
Apr-11	$816,500	$437,750
May-11	$679,650	$401,125
Jun-11	$763,400	$477,000
Jul-11	$717,000	$495,000
Aug-11	$692,500	–