This infamous quote was a remark from Kerry Packer on the business deal that saw Alan Bond buy the Channel 9 network for just over $1 billion in 1987 and sell it back to Packer for $250 million just three years later. I can’t help but see parallels between this quote and today’s residential property market but not in the same way of people losing out after buying but rather people losing out after selling. The missed opportunity cost of selling
Woolloomooloo Finger Wharf
Recently, Delta Goodrem sold her apartment on the Woolloomooloo Finger Wharf for $1.7m in 2014. She bought it in 2003 for $1.3m. It is now currently on the market with a price guide of $6m. When Delta bought the property in 2003 only achieved a gross capital gain of $400,000 over the 11-year period. The opportunity cost of selling at the wrong time has been felt by many. As we have all seen the incredible results of the past few months. Have we missed the fastest property growth period of our lives?
Down the south coast in Mollymook, 15 Shipton Crescent was bought in 2016 for $2.26m, sold for $10m in October this year. It originally sold in 1998 for $890,000 then listed for sale at $2.55m in 2012, didn’t sell, and rented before being sold for $2.26m in 2016. Imagine if they just held on to it.
99 Murriverie Road, North Bondi sold for $11.235m after being traded for $6.3m two years earlier. The home was originally sold in 2001 for $900,000, and development applications were filed in 2004 and 2007 to create the home we see today. In Sydney generally, prices double every 7 to 10 years, in unique cases it can be in 5 years. In 20 years this property has doubled three and a bit times!
25 Gilliver Avenue, Vaucluse sold for $15.18m when it sold the year before for $10.66m. The home was originally owned by the British Foreign Office where the Consul-General resided. When it was bought in 2020, the owner did not renovate, paint, rip out nor put in anything. It remained as it was when it sold. A gross capital gain of $4.52m in just a year, is more than most Australian CEOs especially when you consider that as a principal place of residence it is exempt from capital gains tax.
The last example is a property that was bought and sold within 3 months. 401/136-142 Barcom Avenue, Darlinghurst was bought in June 2021 for $2.4m, and a cosmetic renovation was completed for approximately $50,000-$100,000. The apartment was then sold in October for $3m. A gross capital gain of $550,000 in 3 months. Wow
What are the lessons? How can you avoid the potential cost of selling
In previous articles, I have already established the fool’s errand that forecasting and ‘trying to time the market’ can be. The property market ebbs and flows over time. There will be times of exponential growth and others of stagnation. To mitigate any opportunity cost of missing out on growth always be in a situation where you are always owning property in Australia. If you move overseas, keep your property and lease it. If are selling to buy, make sure you buy and sell in the same market.