Another story I have to add, a friend of mine who was involved (as a contractor) in what he described as a speculative build on the northern beaches of Sydney sent me some info about the house that was built in case I was interested to buy it, as the owner was under pressure to offload.
Land cost approx 1mil, build 1mil, Expectation to sell for 2.5 mil. Not going to happen now but would likely have done so 12 months ago. Build almost complete. Looking to offload for 2mill or a tad less. Costing 3k per week in interest to keep it afloat.
If you look at these numbers, thats a 20% drop if it can actually be sold. Thats now, which is before the end of 2011, where SQM estimated a 20% fall for 2mil plus properties. It would also need to go back up by 25% to get to 2.5mil.
To speculate, I expect this property to sell for a few hundred grand less than the current ask, and get to 2.5 million in 10 to 15 years which in real terms, due to inflation, will be no more than 1.5 million in today's money.
