November 7, 2023 by Dymphna

How ‘walk to shops’ = $2.6m over reserve

It’s a lot of money to avoid teaching your kids to cook.

Here’s a funny story from a recent sale reported in The AFR.

A property for sale in Canley Heights Sydney sold at auction for $2.6m over reserve! That was over double the price they were expecting!

You’d have to be happy with that wouldn’t you.

But it was the reasons behind the sale that were interesting to me. Here’s the interview with the agents who sold it:

Why did this one sell?

[Ly] We had three groups that really wanted the property for whatever their reasons might be. It was as close as you’ll get to the local shops and adjoins a 30-park Fairfield municipal car park.

[Mai] A lot of people were interested because of the R4 zoning and the location and the land size. It’s the original brick house, but an old brick house is very strong and solid. It does need a lot of work inside.

Was it overpriced?

[Mai] Yes.

Lol. In all my years reading these stories I’ve never heard an agent come and just say, yes, this was over-priced.

But interestingly, the bidding war came down to two developers and an overseas buyer:

[Mai] What was surprising was we started with $1.5 million and 10 minutes later we were at $4.6 million. That is common, but it’s common when you have a property with 20 registrations.

[Ly] No local would have paid that particular price. The three bidders were all out of the area. The actual buyer was from overseas, from Vietnam. The other two were a syndicate from the eastern suburbs and an under bidder from Milsons Point.

[Ly] It’s got land development potential, but it does need more land to make it worthwhile. From my understanding, the two under bidders thought about maybe purchasing it and trying to acquire the property next door and land banking.

And why did the overseas buyer want it? Why were they willing to pay so much?

[Mai] I asked the buyers: “Are you buying to live in it, invest or to build later?” She said: “My husband and I have three kids here.” They came here to study. They’re uni-aged kids. They like that property because they can go back to Vietnam and the kids can stay there.

Canley Heights high street has a lot of food. She said the kids can go and eat and have no need to cook. As a mother, I understand that.

Normally, they look at the school, not the food. But she said: “My kids will be close to the shops and the Vietnamese restaurants, so my kids can eat and go home, so they will have no need to cook.” As a parent, I think it’s very good.

$2.6m over reserve just so your kids don’t have to cook?! Wild.

I mean, what’s three subscriptions to Lite’n’easy worth?

It just goes to show, there’s a million way to market a property.

But the other interesting thing here is the return of foreign buyer demand to the local market:

[Ly] It feels as if South-East Asians are coming to Australia and doing what the Chinese did five to 10 years ago.

What I feel from the international buyers is their money is more safe in Australia than it is back home. The fear of the government taking their funds or freezing the funds is probably far higher than of it happening in Australia.

We’re seeing this in the data too. Foreign buyer demand is lifting.

I’ve said it before and I’ll say it again, there aren’t many asset classes in the world like Aussie property.