Down under real estate
Tomorrow is Thanksgiving and at first blush, you may not think there’s much to be thankful for regarding Florida’s real estate market, but it would be a mistake not to take another look. I was recently in New Zealand and Australia and compared to their real estate market, we’re looking pretty good, not to mention their unusual real estate culture.
To start with, the price of real estate all over New Zealand, which is comprised of a north and south island, as well as New South Wales, Australia, the state where the city of Sydney is located, is priced in the stratosphere. In every city and town I visited, I picked up either a local newspaper or real estate book and was hard pressed to find a sale or property listed for under $500,000.
New Zealand is very beautiful with incredible waterfront and mountain water views, but a property where you could even smell the water started over two million. The New Zealand dollar is currently about 17 percent less than the U.S. dollar so even adjusting for the exchange rate you’re looking at some serious numbers.
Sydney and its suburbs, where the Australian dollar is on par with the U.S. dollar, was even worse. Homes and condos in Sydney proper were very expensive, usually starting in the million dollar range, and an average three bedroom two bath house in a suburb of Sydney started about $500,000.
Property taxes are a little more affordable than Florida ranging between $1,500 to $2,500 annually but usually only 20-year mortgages are offered, which, of course, increases monthly carrying costs. However, the real kicker that impacts Australian real estate is when you sell it, at which time the federal government imposes an 8 percent sales tax stamp on the sale price of the property paid by the seller. With prices and fees like these, it’s naturally very hard for first time buyers to get into the marketplace resulting in most young people renting.
The other interesting thing about real estate in New Zealand and Australia is the method of sale. Most properties are sold at auction, which they call private treaty, rather than a system like ours. Both the newspapers and real estate magazines list available properties with pictures, descriptions of the properties broker information, viewing dates, auction dates and usually reserve dollar values. Sometimes you have to call the broker for this reserve number, which is the least amount a seller will accept.
Interestingly, on one of my last days in Sydney, there was a newspaper expose about brokers who were quoting below reserve sale prices to potential buyers in order to increase the number of bidders attending the auction. Naturally, this is illegal and brokers could face fines of up to $22,000.
One last point – the real estate books were very large – about the size of Life magazine for those of you who remember it. But what I found especially charming were the adorable little graphics on the ads indicating the number of bedrooms (graphic of a bed), baths (graphic of a shower), living areas (graphic of a sofa), office space (graphic of a computer monitor) plus a few I couldn’t figure out. Unique marketing that definitely caught my attention.
It’s good to be home back in the real estate environment I’m comfortable with where waterfront can still be purchased for under a million, and auctions are a last resort. But I wouldn’t mind seeing a few jumping dolphins indicating waterfront property or a sunset for Gulffront property on some ads. So maybe there is something to learn from our friends down under after all. Happy Thanksgiving!