‘Whatever is done lovingly, with righteous purity and with peace of mind, is a good action’  Ramana Mahashi

Last month, a client had his Sydney Custodian house revalued by NAB for $625,000. He bought the house 13 months ago for $523,000 (actually still a conservative valuation in my opinion) achieving 20% growth or $102,000 in that short time.

On the flip side, another of the big four banks were funding a client buying two houses side by side (a big plus in my view).
The houses and land were identical in size but one valuation came in at $410,000 and the other at $485,000! How does this happen? The bank via the Valex system appointed two separate valuers.

The point is, do the homework yourself especially if so called, ‘professional valuers’ and major banks don’t get it right.

I always cringe when an inexperienced client starts a conversation with ‘I spoke to a local real estate agent who told me houses are worth $XXX’.

I’m not cynical, but when it comes to agents I take their opinion with a grain of salt and always have.

A good way to flush out the facts from their fiction (and we even do this with valuers) is to ask four fundamental questions:

1. Provide all recent house sales including land size, house size and age of house calculating the portion of both house and land separately to make up each sale price.

2. Calculate the worked back land value on all comparable sales on a dollar per square metre rate.

3. Provide comparable land sales or houses that sold for land value to establish a dollar per square metre rate.

4. Identify the reason the seller sold and whether the transaction was an investor or an owner occupier (owner occupier transactions are a true reflection of local market value).

My latest Team Custodian video discusses my view on real estate agents further. You can watch it here: https://youtu.be/CiII_g8u-HQ

As we know, the intrinsic value is in the land, the house when new can be fully depreciated. I bring up land values because the DVG in Queensland released their updates last month, which is their annual update to value every block of land. This is then used to calculate your rates and land tax. The threshold for land tax varies in each state with Queensland by far the best to hold more assets.

Brisbane land values were up 10.5% and Gold Coast up by 9.5%. This figure is to June 2014. My view on the ground is that these numbers when updated to June 2015 will be much higher based on sales recorded, particularly in the Gold Coast corridor.

The East Coast market is galloping ahead; house prices were up last quarter 4.8% in Melbourne, 3% in Sydney and 1.3% in Brisbane – Gold Coast. Perth is continuing to decline as the mining boom implodes.

Interestingly, the Brisbane inner circle was up 3% for the December quarter meaning that wider growth is on the way.

Interest rates stayed on hold in March with the prediction of two more rate cuts to come. This is incredible, particularly as we’re experiencing record population growth and the Inter-Generational Report 2015 Forecast states that we need another 9 million homes by 2050 or 250,000 homes per annum. We’re struggling to provide 180,000 houses per year now – so that’s 70,000 homes not being built each year to meet demand.

So they’re this month’s big picture numbers but I wanted to finish with a feel good story from Toogoolawa. As you may know I go to Toogoolawa School every Monday morning, where we have 61 boys. Each Monday we do meditation with the boys and either myself or a teacher tells a story about the thought for the week.

The thought for this week was the importance of overcoming fears and April, one of the teachers, talked about Gabe who had been with us for a year. He’s 13. He suffers from anxiety.

Prior to coming to our school he hadn’t been at school for nearly two years due to some terrible bullying in the mainstream school system; which is ironic because our kids fall into 3 categories: mad, bad and sad. The bads and some of the mads are with us because they’ve been kicked out of all other schools, generally because they’re bullies.

And yes, the sads can be the victims. We don’t have a bullying problem at Toogoolawa.

On Gabe’s first day at school he was so petrified he couldn’t even get out of his mum’s car. On day two he made it to the front veranda and sat there for one hour, then called his mum to come and get him. It was weeks before he did a full day and months before a full week.

Gabe just nominated himself to sit on Student Council. I had tears of bliss in my eyes while I shook his hand congratulating him on his achievement. All the kids were behind him.

The famous sage Ramana Mahashi said, ‘Whatever is done lovingly, with righteous purity and with peace of mind, is a good action.’

I would recommend we all get around some ‘good action’, even if, like me, you’re just there to support. The feeling is indescribable.

Kind regards


CEO, Custodian

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