Property prices are determined by what somebody is prepared to pay. So if a couple – who really want to stay in a particular area – are prepared to pay a ridiculous amount for a Queenslander, this purchase pushes up the valuations for the entire area !!!

Later, the next sale in the area expects the same and more and so the vicious circle of real estate is born ;-(

Now add an auction to the mix – with a little emotion on side – and the property prices skyrocket even further !!

But wait that’s not all.

Rates are tied the property’s land valuation. This last week, the rates in Brisbane increased between 9 to 60 percent depending on the land valuation. After a week of criticism by owners, Lord Mayor Campbell Newman defended the rate rise as needed to fund the Brisbane city capital works programs.

This increase also affected residential owner occupiers and property investors differently.

Obviously, investors will push up the rental to cover the increase in rates. This will put even more pressure on tenants who’ve already had to bear two interest rate hikes and their effect on the weekly rental.

Property prices keep going up. Interest rates and property rates go up.

When will this madness end?

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The reserve is the buy purchase price!!!

The building industry exploits this reserve. The bank property valuators use these sales figures during the mortgage application process. The developer will always add a little extra onto the sale price which means the buyer will not get a 100% mortgage and will have to fund the difference!

The images that follow are for a typical wooden Queenslander for sale in Morningside. This suburb is about 15 minutes away from the Brisbane CBD. Typical middle class area, nothing special.

According to the South East Property Price Guide, there have been 6 comparative Morningside sales now in November in the $500-599k range.

Five minutes away from the CBD in West End, you can get a 65 sqm bachelor unit for $400k, $1300 rates and $2500-2700 in body corporate fees.

Still, would you buy this 3 bedroom, 1 bath, no garage, wooden Queenslander property at the expected bargain auction reserve of $560,000+?

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