Good Value

As Leigh Sales introduced a story on falling markets in her trademark 'educated bogan' accent, my focus marbles rolled away. For reasons unknown, there's a huge lava lamp flowing behind her on the 7.30 Report set, which rendered me unable to concentrate on much else. But as I said, the story was something to do with falling, to which I thought, "hmm the people of Cairns could relate."

Cairns is like most regional cities, but I can't quite confirm that because I've never been. My brother lived there for a while and invited me to visit at least seven times, but it seemed a long way to travel to sweat, not everyone thinks the same apparently because Cait Bester, of the Cairns Post, reliably informs us that investors will flock to the city and grind up against as much house as they can in the coming months.

We've heard this faultless yarn before and how did that turn out? Rather badly, but that might have been my fault because I did something unfortunate - showed listings on the rise, empty houses for sale, investors bailing on their rentals and Tasmanian housing finance winding back to late 90's levels (which that newspaper took the credit for). In spite of similar stories unfolding across the country, the spruik continues to happen - despite it being foolish game of contempt. No better than stealing a garbage truck, painting 'ice cream' on the side and hoping the neighbourhood kids chase you down the street to buy an ice-gruel cone. As long as you sell, who cares what taste is left in their mouth?

Again, a real estate agent has their finely tuned antennae picking up all the right signals and those signals say it's money making time. Why? Because Benny August is fanning some cash - six fifties to be exact...

In Benny's world, commanding legitimacy appears to be yanking out $300 large from the nearest ATM and fanning it for the camera. Now ponder some of the highly respected people who would fan cash for a photo - gangsta rappers, Jersey Shore cast members and yeah, real estate agents. That irritating metallic noise you can hear, that's the bottom of the desperation barrel scraping. As I showed above, real estate agents tend to pull the investor card when attempting to scare up a bit of business. The implication - if you locals don't get in now, all those investors will push up the prices and rent these houses back to you at inflated levels. An even more cynical interpretation - if someone doesn't buy a house now, I'm not gonna make the lease on this X3 next month.

Benny's reasoning for a coming investor plague was quite simple...

"With the share market the way it has been over the last few years, we are now seeing the older and younger generation start accessing their super or taking control of it. They are opting to put their hard-earned funds into something more solid – the good old bricks and mortar."

Yep shares are risky, ironically Benny had his jets so fired up he'd forgotten what he'd said only seconds earlier...

"A few years ago you would expect to pay $320,000 for a house and it was rented for $300 per week but now properties are being purchased at $280,000 with a return of $300 per week – an investor’s dream."

So that's only a 12.5% loss over 'a few years.' Form a queue behind me people, cause I can't wait to put my hard earned into something that solid. And Ben would know about discounts, here's some of his listings...

Listed at $349,000, 19 days later it was discounted to $325,000...

Listed at $385,000, 15 days later it was discounted to $375,000...

Listed at $325,000, 15 days later it was discounted to $300,000 and it's empty, which is becoming a theme in Cairns...

All three have been on the market around 40 days, or less and it can't be long before these sellers get itchy again, especially with pockets of hell opening up around Cairns.

This ain't Benny's, but it's currently empty and listed at $315,000, it sold for $355,000 in 2008...

In this situation, especially for first home owners, wouldn't it be nice to have an equity metre - just to see how much you had left? And for investors, when does value balance out the fear that isn't bottom your toes are touching, but the submerged wreck of the last guy who assumed he'd found bottom? The listings in Cairns are piling up and the language in those listings is becoming relentlessly desperate - furniture thrown in; owners have vacated; dramatically reduced; must be sold.

The question is, do Benny's minutes of experience and cash fanning skills provide any comfort this is near bottom? Benny's time in the business extends back to 2007 - he's telling you the worst is over - do you really want to miss the next leg up?