Showing posts with label Housing Market. Show all posts
Showing posts with label Housing Market. Show all posts

Tuesday, November 14, 2023

Scammed

I just got scammed for AUD 2,300. I got an email from my webhosting company saying that my card had expired and I needed to renew. Except it wasn't actually from them. Instead of an AUD 100 or so fee, somebody called HalalBooking London charged me AUD 2,381. Now looking at the original email, I see it came from info@thelabhaus.com rather than Crazy Domains. I contacted Commonwealth Bank and they will try to recover the money and I cancelled my debit card. The email looked perfect apart from the email address. I had thought that if a payment was still pending they could always cancel it. Apparently not true. Instead, the bank won't do anything until the payment is no longer pending and only then will they try to reverse it!

Based on this, it seems that there is very little protection against getting scammed here in Australia compared to in the US.

HalalBooking London actually is a website where supposedly you can book Muslim friendly hotels in London. I am guessing it is actually someone else using that name for added confusion value. I contacted the website and asked them to reverse the charge if it is them or be aware that scammers are using their name. I also informed Crazy Domains about the scam.

In other news, Moominmama's friend who bought a knockdown and rebuild property in one of the most expensive suburbs of our city is now asking whether we have a spare AUD 170k we can lend them. Because of the increase in interest rates their bank has reduced the amount they are willing to lend against their existing house. I can't give specific advice without a lot more detail, but seems to me that they are likely going to have to sell their existing house ASAP if they don't want to end up reselling the property they bought. My guess is that the RBA is still going to raise rates more at this point.

P.S.

According to ChatGPT, if I cancelled my debit card while the transaction was still pending the scammer won't be able to complete processing the transaction. This makes sense, but I am a bit dubious as Commonwealth Bank asked me if I wanted to cancel the card to prevent them getting more money rather than to stop them getting this amount. CrazyDomains said I should report it to the police. I already have reported it to ACCC.

P.P.S. 15 November

I got a response from HalalBooking. They said that someone did make a booking via their site for this amount and they detected it as a fraud and refunded it. They said that there is a security vulnerability in the bank's software that was exploited. So, this is looking like there will be a positive outcome.

P.P.P.S. 17 November

Good news - the money has been refunded to our account. I don't know whether this would have happened anyway or it is because I cancelled my card quickly or because I contacted HalalBooking.

P.P.P.P.S 4 December

I found, when compiling the monthly accounts for November, that did have to pay an AUD 70 fee for the international transaction!



Monday, January 02, 2023

How Can They Afford It?

One of Moominmama's friends (from undergrad days in the world's most populous country) told her they have bought a house in one of the most expensive neighborhoods here. They plan to knock it down and build their dream home including a swimming pool. It is in walking distance of their two children's school, the most expensive private school here.  Her reasoning is that it costs AUD 4 million to buy an existing house like they want, and this will be cheaper. Still, a crappy house there costs almost AUD 2 million. They haven't sold their existing town house in our neighborhood yet and they apparently also bought her parents an apartment here. She is an administrator at my workplace on probably AUD 100-110k a year and her husband was an associate professor (AUD 150-158k). He recently moved to Moominmama's employer.

 

My immediate reaction was: "How can they afford to do that?" I think Moominmama gets a lot of her aspirations from following this family, including sending our children to private school. 



Tuesday, September 06, 2022

Lowered my Mortgage Rate

I read in the Australian Financial Review that having an offset facility usually means that the mortgage interest rate that you are paying is higher and that this gap is biggest at the Commonwealth Bank, where we have our mortgage and offset account. The article said that the gap could be as big as 1.91%! I don't remember this being explained to me when we got our mortgage and offset account though I did discuss with the salesperson whether we should get an offset account. 

I have wondered why our mortgage rate was so high and tried to move our mortgage to HSBC to get a lower rate. They just continually ran me around and nothing ever happened. So, I gave up on that.

So, I phoned the bank and he told me that I should phone regularly to "review my discounts", which I have never done. Basically, there is a seniority discount - the longer you are with the bank the more the discount. So the standard rate for the offset account is actually 6.3%. I was paying 5.4%. He increased the discount from 0.9% to 2.29%, lowering my mortgage rate to 4.01%. If I switched to the no frills product cited in the AFR he could only give me a 0.2% discount off the 5.53% standard rate. 

I estimate the gain in net worth at the end of the mortgage, assuming we don't pay off the mortgage any faster, is AUD 271k at 6% inflation and AUD 188k at 3% future inflation. The saved interest is in the ballpark of AUD 90k. It feels weird to earn that much for about an hour's work.

Monday, March 28, 2022

Another Sale and a Failed Auction

Following the recent record gain on a townhouse, a freestanding house sold in our development last Thursday but the price hasn't been disclosed yet. On Saturday, there was an auction of another townhouse. I went to the auction and there were no bidders. The condition of the property wasn't that great. 

P.S. 29 March

The townhouse has been listed at "offers above $829k".

Saturday, March 12, 2022

New Record Gain for our Development

 This townhouse sold for AUD 835k:

That is a 101% gain on its original 2008 sale price, the largest gain to date in our development. This is also more than the AUD 740k we paid for our house. I added all the townhouse sales to my valuation model and it comes up with a value of AUD 1.307 million for our house for 2022. Of course, this is based just on this single sale for 2022. But there is another auction coming up later this month, which will provide another datapoint. I use a single value for our house for a year at a time. This new value also pushes us over another big round number networth wise, which I once thought we wouldn't reach till the end of 2024.

Monday, November 15, 2021

Auction in Our Development

 

After a few recent sales in the neighboring development, finally two houses were listed in ours. One was auctioned on Saturday. I went to the auction. The price was AUD 971k, which was a 66% increase on the original 2008 price. It is a record for our development both in dollar and percentage terms. The previous highest price was 850k back in 2015. This confirms that the recent sales in the neighboring development weren't flukes. There is another, smaller house for sale. It's one of those "by negotiation" ones. Neither an auction nor a listed price.

Tuesday, August 10, 2021

Local Housing Market is Red Hot

This morning I got a text from a real estate agent offering to send me an updated appraisal of our house's value because "prices are spiking". Then, on the way home from work I noticed a sale board in the neighboring development advertising an upcoming auction. In the corner, a small sticker had been stuck: "sold". When I tried to search for this house online, I found another one in the same development that sold last weekend pre-auction.


P.S. 14 August 2021

The price the second house sold for has now been posted. AUD 900k. That is a 100% increase on the original price, a new neighborhood record. It pushes the estimated value of our house to just over AUD 1 million.

P.P.S. 31 August 2021

Domain are now reporting that the first house (pictured) sold for AUD 976k or 124% above the original price! That would add another 6% to the estimated value of our house.

Sunday, July 18, 2021

Including Neighboring Development Sales in my House Price Model

This graph shows the increase as a fraction of the original when new sales price in two neighboring developments in our city since the beginning of 2015. The green dots are in our development and the red dots in the neighboring development, which was built by the same developer a year earlier:


The final red dot is the recent AUD 1.3 million sale. Using the increase above the initial price automatically adjusts for the different characteristics of each house sold. I only include free-standing houses. Our development also has row townhouses.

Prices are trending up over time in both developments but clearly houses are selling for greater premia in the neighboring development. By an average of 19%. But I think this is just because it was built earlier. When we use a logarithmic y-axis the two trendlines are almost parallel:


Therefore, I think it is valid to include the two developments in one model and just include a dummy variable for the neighboring development. Based on the analysis our house would be worth AUD 970k.


Monday, October 12, 2020

Adjusting Home Price Down

 

In the last couple of years I have used the Corelogic house price indices to update the value of our house. But this price has gotten more and more out of touch with sales prices in our development. Well, there was only one this year and it was a lot lot lower. So, I have now redone a regression analysis of all the comparable sales since we bought here. The dependent variable is the percent premium over the original sale price when the development was new and the explanatory variables are dummy variables for each year (0,1 variables that take the value one in the relevant year). This re-values our house at AUD 810k down from 852k last year. We paid 740k at the beginning of 2015 and so this hasn't been great investment-wise as it has appreciated a lot less than the average home in this city supposedly has.

This graph shows how the premium over the original price has changed over time:

In the last year prices have fallen quite a bit. I am not sure why there has been this trend, which is out of step with the rest of the city. One possibility is that the ongoing construction of a new large denser neighboring housing development in place of low rise offices has reduced the value of our development.


Saturday, November 02, 2019

October 2019 Report

This month we "inverted" our mortgage, paying off the mortgage and then redrawing it for investment purposes. As a result the mortgage interest should now be tax deductible. I carried out quite a lot of trades and money shuffling to carry this out.

The Australian stockmarket fell a bit in October and the Australian Dollar rose, but overseas markets rose. The Australian Dollar rose from USD 0.6752 to USD 0.6894. The MSCI World Index rose 2.76% and the S&P 500 2.17%. The ASX 200 fell 0.35%. All these are total returns including dividends. We lost 0.20% in Australian Dollar terms but gained 1.90% in US Dollar terms. The target portfolio lost 1.03% in Australian Dollar terms and the HFRI hedge fund index is expected to have gained 0.83% in US Dollar terms. So, we out-performed our target portfolio, the HFRI, and the ASX, while underperforming compared to the MSCI World Index and the S&P 500 (a bit). Updating the monthly AUD returns chart:



Hmmm... It is looking like my performance is an average of the MSCI and the target portfolio in recent months.

Here is a report on the performance of investments by asset class (futures includes managed futures and futures trading):



Private equity, real estate, and gold did well while hedge funds and futures did poorly. The largest positive contribution to the rate of return came from private equity and greatest detractors were futures and hedge funds. The returns reported here are in currency neutral terms.

Things that worked well this month:
  • Pengana Private Equity and Bluesky Alternatives did very well, gaining AUD 8.7k and AUD 10k, respectively. Hearts and Minds gained AUD 5.3k.
  • Gold gained (AUD 7.3k).
What really didn't work:
  • Winton Global Alpha lost significantly, reversing recent gains.
  • Pershing Square, Cadence Capital, and Tribeca Natural Resources all lost money.
Trading: We started the month closing a winning trade in Bitcoin, but then there were six losing trades in a row before a winner. We also lost money trading palladium. Using a narrower definition including only futures and CFDs we lost 0.96% on capital used in trading. Including ETFs we gained 0.89%. Using the narrow definition, we are now behind where we were at this point last year. This graph shows cumulative trading gains using the broader definition year to date:


Using this definition we are still ahead of where we were at this time last year.

We moved further towards our new long-run asset allocation.




The table shows how leverage increased this month as we moved the mortgage into the investment portfolio. Cash and bonds fell and all other asset classes increased their shares.

On a regular basis, we invest AUD 2k monthly in a set of managed funds, and there are also retirement contributions. Other moves this month:
  • USD 21K of Kraft-Heinz bonds were called early and we didn't buy any new bonds So, our direct bond holdings declined by USD 21k.
  • We traded at a small loss, as discussed above.
  • I sold 100k of Domacom (DCL.AX), 40k of Tribeca Global Natural Resources (TGF.AX), and 79k of Cadence Capital (CDM.AX) shares to harvest tax losses and obtain cash for the mortgage inversion. I subsequently bought back 40k of Tribeca and 80k of Cadence. I now have the funds which are marginable and/or are likely to pay large franking credits in my account and the non-marginable funds, which mostly also are likely to pay out fewer franking credits in Snork Maiden's account. As franking credits are applied to the tax bill it doesn't actually matter which account they are in, but I like to see my larger tax bill cut more :) I have a margin account with Commonwealth Securities, while Interactive Brokers don't offer margin loans to Australian customers.
  • I bought 20k shares of Hearts and Minds (HM1.AX) before the upcoming annual Sohn Conference. The fund is currently winding down the investments in the stocks recommended at the last conference and will invest in new recommendations following this year's conference. The share price is very close to NAV and I think following the conference there could be a boost in price. The fund has done very well since inception.
  • I went to Regal Fund's presentation here and was impressed and bought 20k more shares of RF1.AX.
  • I sold 50k of Pengana Private Equity (PE1.AX) shares because the price seemed unsustainably high but then bought back 50k at lower prices. This is not looking like a good move given the tax implications
  • We bought AUD 40k of Australian Dollars.
  • We moved around AUD 1/4 million to our offset account and paid off the mortgage. We then redrew AUD 1/2 million and sent it to my CommSec account and Moominmama's Interactive Brokers account. This reduced my margin loan a lot and increased the cash in her account a lot. The latter is deemed to be "futures" in the pie chart above. Cash in our offset account fell to AUD 40k.

Passed-in at Auction


There was an auction today for the house next door to us. It is almost identical though it is in better condition inside (our house will probably need AUD10-20k of refurbishment to put on the market I reckon). It doesn't have as good views/surroundings. The highest bid was AUD 690k from a bidder in another state on the phone and it passed in. Unless there was a post-auction negotiation, I guess we will see it on the market next week at a fixed price. Next week we should also hear from HSBC on how much their valuer values our house at.

P.S. 7 November 
This house is now for sale at $829,500. In the meantime, the bank's valuer valued our house at $850,000. I guess they want to sell fast.

Sunday, October 27, 2019

Mortgage Inversion Complete, What Next?

I completed the transfer of money into our brokerage accounts from the "mortgage inversion".  That completes a major step in our financial restructuring since the inheritance. We've completed the first two steps on this list. I am thinking of refinancing our mortgage to get a lower interest rate now I don't care about having an offset account with my main bank. But how to go about this? Should I go to a mortgage broker or just contact a bank, like HSBC, who are offering a low rate?


Wednesday, October 23, 2019

Mortgage Redrawn

Just enter the amount, press the button, and:

Now to transfer the money to investment. This is how I account for this re-structure:



Almost all our historical savings from wages etc ("current savings") have now been converted into housing equity and extra retirement contributions. Housing equity is now a few hundred dollars short of the value of the house as I left a small amount of the mortgage unpaid in order not to potentially trigger something undesirable by totally paying it off.

Monday, October 21, 2019

Trading and Mortgage Inversion Update

We switched from short one contract of Bitcoin to long two this morning, booking a USD 30 loss on the short trade. We are long two as the per contract risk is lower now. After four losing Bitcoin trades, hopefully this is a winning one...

I sold a lot of shares this morning and already was allowed to move some of the proceeds to our offset account. I also paid down AUD 100k of the mortgage and was surprised to see that I could redraw it immediately. I had thought I would need to wait to 4th November for the redraw balance to update. This means that I might be able to complete the inversion this week.

P.S.

So I paid off another AUD 300k later in the day. Am still waiting on a transfer of AUD 100k from my margin loan. When I get it I should be able to complete the "inversion".

Tuesday, October 08, 2019

Planning the Mortgage Inversion


I first wrote about this four years ago. I realized today that I could actually pull this off next month. At this point, I have close to AUD 300k in our bank account (which is an offset account). The mortgage is AUD 490k. If I sell some shares, which are currently in the red, like Tribeca Global Resources, realizing capital losses and transfer some Australian dollars from Interactive Brokers I can reach half a million dollars in our bank account. The amount of cash that can be redrawn is only updated on the 4th of the month, so I will wait to a little later this month to sell the shares and transfer the cash and pay off almost all the mortgage. Then in early November I will redraw the cash and transfer it to our brokers. As the mortgage is in both our names, I will transfer the money 50/50 to accounts in each of our names. After that, almost all of our mortgage interest should be tax-deductible. Of course, I could just pay off the mortgage. But the interest rate for a home equity loan is higher than for an owner occupier mortgage and am happy to have debt at relatively low interest rates and invest it in stuff that hopefully will pay a higher return.

Wednesday, March 27, 2019

Planning Permission Refused


I got an email today from the city planning office that the development in our neighbourhood that I had objected to was refused planning permission. The plan violated many individual rules, but basically the developers were trying to cram too much development into a small space. They planned on 56 town houses and commercial space and 12 apartments in a 5 storey building. The development occupies the two greenish blocks on the map:


You can see the size of townhouses and houses in the neighboring development (yes, we live there) to get an idea of how crammed this development was planned to be.

I objected to the height of the 5 storey building, which we would see from the front of our house, largely blocking our existing view to a wooded hill. Only 7 members of the public had filed written objections to the original plan despite wide advertising by the government of the application and consultation sessions in the neighborhood. I was the only person who wrote an objection against the revised plan the developers submitted.

I have been surprised how much work the developers have been doing on site. Apart from demolishing the existing office buildings, they have done most the excavation for underground car parks and then started building individual underground garages for the townhouses on the east of the site. They also recently installed a big yellow tower crane on site. How could they submit a plan that violated so many rules and then invest so much money on the basis of such a flawed plan. Will they have to change the work they have already done or will they get away with it? They have a month to appeal the decision, or they will need to submit a new plan.


Friday, January 04, 2019

Crowdfunded Real Estate


A relatively new investment concept is crowdfunding real estate investments. The idea is that an individual could directly invest small amounts in a range of properties or development opportunities thus reducing their risk. Rather than a fund manager picking the properties, investors could evaluate deals themselves.

I read about Fundrise on Financial Samurai. It seems to actually be closer to a traditional unlisted real estate managed fund, except there is more of a property development angle. They allow investments in both real estate debt and equity. They claim very high historical rates of return. I find it hard to understand how they could be so high. Equity investments could have leverage but debt investments must return the interest rate on the mortgage minus costs? I didn't feel that there was enough transparency around how returns are generated. In any case, unfortunately, it is not open to non-US investors.

So, I looked for crowdfunded real estate opportunities in Australia. This is what I found:

Crowdfundup – I only found one active project on the site.

Estatebaron – This website has more active deals. It focuses exclusively on property development. There seems to be very little information about each project and the site is much less polished.

Brickraise – The link seems to be dead.

Domacom – This is an ASX listed company. The company looked like they were heading to bankruptcy before a recent fundraising. The new money will only last just over half a year as their burn rate is AUD 5 million a year. They will need more than AUD 0.5 billion assets under management to break even given a 0.8% of NAV management fee. However, they have the largest number of deals on their site and have high quality information. Deals include a wide range of projects including solar farms and bioenergy as well as more conventional real estate. This is something I might consider when we have an SMSF up and running if it looks like the company will survive.

Based on this, real estate crowdfunding is not well developed in Australia. Do you know of other better websites?

Sunday, February 25, 2018

Rising Local House Prices


The graph shows the percentage premium over the original sales price (when the development was originally marketed) of freestanding houses sold in our development since we bought. Ours is the first datapoint. The most recent sale at auction yesterday establishes a new record premium. The regression model I fitted to the data predicts a price for our house that almost exactly matches my recent upgrade of the value. I use two regressors – the original sale price and the date of the new sale. Premia are higher on the houses that originally had lower sales prices i.e. the smaller houses.

Friday, January 05, 2018

Housing Saving

A new chart - monthly housing saving:

It's mostly mortgage principal payments. Initially, we made our downpayment in two payments over two months. I've truncated the scale at $10,000 - saving in January 2015 was $37k and in February 2015 $115k. The main interesting thing on the graph is the upward trend over time. This reflects the increasing money in our offset account and the resulting lower interest payments. As a result, the part of our mortgage payments that's reducing the principal increases over time. The periodic spikes are the three mortgage payment months - we make a mortgage payment every two weeks. The red line is a 12 month moving average.