Retirees Face Funding Shortfall

By Peter Sarmas on 11 Sep 2016
No Comments yet, your thoughts are very welcome

 
Melbourne Auction Results 11th of September 2016

79%
Clearance
Rate

782
Reported
Auctions

Sold at Auction: 621    
Passed in: 161  

 

Sold Before: 87    
Sold After: 0    
     

 

 

Source:REIV

 

Melbourne Market Wrap September 11th, 2016

The spring auction season has opened strongly, with about 1,700 auctions already held. Clearance rates are holding up well as demand for property meets supply. However all is not equal, houses are selling at a faster rate than apartments which are taking up to 64 days (CoreLogic).

A clearance rate of 79 per cent was recorded this week compared to 77 per cent last weekend and 75 per cent this weekend last year. There were 782 auctions reported to the REIV, with 621 selling and 161 being passed in, 69 of those on a vendor bid. 

 

shutterstock_Middle_Aged_Couple (1)

Source: Shutterstock

 

Retirees Face Funding Shortfall

According to Roy Morgan 415,000 people are expected to retire over the next 12 months. From a younger person’s view this sounds like good news because it frees up jobs, but from an economic perspective it is a dire situation as dependence on government funding increases.

According to findings by Roy Morgan, expected retirees have a calculated net wealth position of $281,000. This is well below the Association of Superannuation Funds of Australia (AFSA) which estimate an individual would need $545,000, while a couple would need $640,000 for a “comfortable lifestyle”.

Given the very low interest rate environment and current global uncertainty, the amount required to fund retirement is likely to rise above these levels. As a result more retirees will place a greater reliance on government benefits.

Norman Morris, Industry Communications Director, Roy Morgan Research says:

“The average level of savings and superannuation for those intending to retire in the next 12 months is well below what is required to be able to lead what ASFA describes as a ‘comfortable lifestyle’ or with no reliance on the age pension ie. being ‘self-funded’. The low levels of retirement savings will put more pressure on government funding for some time yet unless there are changes to eligibility rules, taxation or superannuation regulations.

“Many intending retirees have a substantial proportion of their funds outside of superannuation, which may be due to not understanding the benefits, not qualifying or being unsure about superannuation with all its rule changes. There will be a major education role for government to make clear what the rules are particularly when the current proposed changes have been sorted out. Superannuation is a very long-term investment which presents a major challenge to engage young people, a task made even more difficult if there is uncertainty about what the rules will be regarding access to funds in 30 years or more.

“Intending retirees who own, or are paying off, their home, have a major potential source of retirement funding. However, they may be reluctant to use it as the home is generally regarded as being sacrosanct and as such not taken into account for retirement funding. Meanwhile, those intending retirees who rent are at a disadvantage as they do not have the tax-exempt status of owner occupiers and as such are likely to find retirement funding options more difficult.”

“As with all overviews, this analysis only skims the surface- Roy Morgan Research is now exploring the long tail of those ‘too poor’ to  retire without Government support; and those who are simply choosing not to retire.”

Superannuation like property is a long term play which requires sound investment advice and planning. A number of property owners are equity rich but cash poor.

Some property investors see capital growth as the most important factor when planning for their retirement but capital growth without cashflow may not provide enough income to fund their lifestyle at retirement.

 

404_Bay_St_Port Melbourne(1)

Sc:Hocking Stuart

Sold Price, 404 Bay Street Port Melbourne, $1,016,500 (Street Advocate)

Once in a while the stars align for our client and we achieve an unbelievable result.

This time it was for someone we had bought previously and had made a $200,000 gain on his last purchase in just two years, not bad!

Peter was looking to sell an investment property he had owned and tenanted for many years in Port Melbourne. Initially he tried making contact with the property manager to view his property but had no luck getting through and two months past.

As time was slipping away and the AFL Finals campaign was nearing Peter engaged me to help get things moving. Within a week we had arranged to view the property with three local real estate agents we asked to be inetrviewed. The following week we had appointed an agent and were getting quotes for repairs and upgrades. 

Once the tenant realised we were going to sell  they were happy to find alternative accomodation. 

Now that the property was vacant i suggested we do a complete makeover from the very front to the back of the property which was desperately needed.

In a race for time we had two to three trades working around the clock so we could meet our September 10th auction deadline.

New carpets, floor boards and painting throughout the house were done. Even the gardens, paving and picket fence got the treatment. The finishing touch was the furnishing and styling done by our resident interior designer Seline, which made the place look superb! We managed to get everything done in only ten days, a remarkable effort and everything done at the highest quality and standard.

The photos attracted numerous inspections and buyers but we couldn’t tell for sure how many would turn up on auction day to buy the property.

A crowd of over 40 plus buyers gathered in front of the property on Saturday, eager to start proceedings. Real estate agent David Wood from Hocking Stuart Albert Park kicked off the auction with the obligatory vendor bid of $820,000. Bidding rose slowly and in $10,000 lots almost coming to a halt at $850,000. At this point I raced inside and informed my vendor that two more bidders were waiting for the property to be called on the market.

We made the bold decision to put the property on the market which was the right move, the bidding took off. A total of six bidders took turns trying to knock each other out until finally this modest two bedroom sigle front home broke the magic $1million mark selling for a massive $1,016,500.

Inetrestingly an identical home in an unrenovated condition, number 400, sold just a year earlier for $860,000. Needless to say my vendor was thrilled with the result and very happy he had undertaken all the work and chosen the right agent.

Congrats Pete and thank you!

 

Street Advocate Client Reviews

Peter,

Just a short note to thank you once again for your help in selling the property.

Dealing with you Peter was a pleasant experience, you were very professional with all aspects of the sale including:

·         Your knowledge of the real estate industry

·         Negotiating down the agents fee.

·         You understanding what marketing campaign was needed and directed the agent accordingly

·         Keeping me up to date by communicating via phone, text , email and weekly meetings

Not only will I use you in the future but I would have no problem recommending other vendors to you.

Thanks once again, Arnie Nuzzo

6 Highett Rd, Hampton

 

Thinking of buying or selling a home?

Visit our Street Advocate website or send an enquiry below or just call

Peter Sarmas on 0418 740 606.

 

Advocacyad_free

About the Author

Peter Sarmas is a Certified Property Investment Advisor (PIAA) and Vendor/Buyer Advocate. Before becoming the founder of Street News, Peter completed a Degree in Applied Science (Chemistry) and a Graduate Diploma in Property Valuations (Hons). Peter believes property investing is a major and potentially risky undertaking. In his view, everyone should have an independent person acting on their behalf when seeking property investment advice.

Category
Leave your comment

Share with friendsX