Aussie Property Market Lunacy: Now You Can Teach Your Children How to Mindlessly Speculate on Never-Ending Capital Growth
Real estate in Sydney and Melbourne is some of the most expensive in the world. That’s why Australians have one of the highest debt to income ratios in the world. But that doesn’t keep real estate obsessed Aussies from finding new and creative ways to speculate on never-ending capital growth.
One of the latest schemes to feed this country’s insatiable appetite for buying homes is a fractional investing program from a mob called BrickX. BrickX secures a property and then divides it up into 10,000 “bricks,” offering those units for sale to investors who perhaps can’t afford to buy a home of their own.
Depending on the property, each brick could cost from A$50 to A$100, or more. That’s just low enough to enable your child to raid the piggy bank and get on the property ladder before the end of primary school.
As you might expect, if the value of the home increases, the value of each brick goes up, offering kiddy size capital gains. There’s even a little monthly rental income to spread around to brick-owners, that is, if anything’s left after paying for insurance, management fees, repairs and maintenance, and vacancy.
So how do the numbers stack up? Have a look at these little gems and decide for yourself:
4/8 James Street, Manly, NSW
https://www.realestate.com.au/sold/property-apartment-nsw-manly-125451706
This 2-bed, 2-bath, 0-car-park apartment was just secured by BrickX for A$1,191,900. It’s expected to rent for A$800 per week. That’s a 3.5% gross yield. After operating costs, expect the yield to sit at 1.9%.
That’s right, you can earn the same income as you would in a savings account, buying into the market after five straight years of double-digit growth. That makes total sense. You should do it, son!
Here’s the street view on Google. I guess that explains why the ad offered no photos of the outside.
Next up is...
6/10a Challis Avenue Potts Point, NSW
https://www.realestate.com.au/sold/property-apartment-nsw-potts+point-125209498
How lovely is the space between these walls?
With this brick, you buy 1/10,000th of one bedroom and one bathroom. At least they secured it for under A$1 million. The contract price is A$885,000. Hey, and the net rental yield is higher at 2.04%. Sure, there are plenty of savings accounts out there paying a little better than that, but where’s the excitement in that?
These bricks are cheap at A$66. This may be a good choice for your rebellious daughter who’s not completely convinced it’s a good idea to hand all her money over to someone else to invest for her.
And check out the street appeal:
One more…
2/120 Commonwealth Street Surry Hills, NSW
https://www.realestate.com.au/sold/property-apartment-nsw-surry+hills-125298506
Don’t let the A$1,300,000 purchase price scare you away. This one surely has plenty of room left to run higher. It may only be a two-bedroom, one-bath apartment, but it is in the exclusive suburb of Surry Hills. Plus, it rents for A$860 per week. Never mind the 2% net yield. It has increased in value 10.42% per year for the last 5 years. And we all know the future is like the past.
As I’m sure you’d expect after seeing the front of this property, these bricks are a little dearer. Your kid will need to fork out A$95 each. You may consider teaching him a thing or two about debt on this one.
Consider lending him 80% and charging him interest a few percentage points above the yield. You can never teach negative gearing and Ponzi investing too early in life. If the bricks go down in value, you can always call in the loan and foreclose on some toys.
Maybe by then, you’ll be able to sell them online for STEEM!
Which one of these will be the first that you force your kids to buy?
If you enjoyed this post, please upvote, follow, and be sure to leave a comment. Thanks :)
@jasonstaggers
That is crazy! Are these bricks actually selling?
Last I saw there have been almost 6000 investors most of whom will have bought hundreds of bricks. The thought that these properties might go down in value never really enters the mind of most Australians.
But you already know that being an Aussie yourself :)
Of course, property doubles in value every 7 years, right?
one of the stupidest investment schemes I have heard of! great post I liked your humor
There is alot of lunacy going on in Aus...great article ive looked into this bricks scam before...
It's like they're just picking properties at random. It takes no intelligence to find deals like this. Craziness.
Great post! I followed you. ☆☆☆☆☆😎
Thanks. Same!
Ill stick to my cryptos for now but In the future I will diversify into other things like precious metals and realestate, Crypto just has the most potential for gains
I can't argue with that. I expect we'll see a massive transfer of wealth to crypto holders over the next few years.
I must say the rental yield is very low for real estate. For less then 5% I would stay away. The capital gains do sound interesting but why not invest in a city where you can find both?
I think you may have missed the sarcasm in my tone. Great insight though. :)
Haha I did, kind of stopped reading after I saw the low rental yield in the beginning lol!
Now I will upvote it ;)
Absolute madness, if everyone buy a house now, who will buy the houses for the next 30 years. There will be no buyer left, and the whole industry will die. Crazy
It is definitely unsustainable. Would you believe nearly half of all home purchases in Australia over the last few years have been by investors?
Thats nuts..
I know, and I hear these stories almost every day.
Good luck to them when they loose their overtime or worse their jobs when the recession finally hits, it's going to be a bloodbath, time to get out of the city I think.
Did you see my post, “When Should We Sell Our Silver & Gold” part 2 you might find it interesting. Cheers
Read your post. Good stuff. No sense over paying if you can wait.
I think the prices people are paying for houses, will cause them to regret that decision for the rest of their lives. Cheers