Two Tier Property Markets


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Advice on 2 tier property markets, what to look out for and how to manage your investment risks.

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Two Tier Property Markets

  1. 1. Evaluator 2 tier markets 2 tier markets I m p o r t a n t a d v i c e f o r P r o p e r t y I n v e s t o r s
  2. 2. <ul><li>“ In 2005 the Real Estate Institute of Australia, in collaboration with the ACCC, published a ‘ statement of concern ’ about the practice of two-tier marketing in the real estate industry, expressing concern about the practice of misleading two-tier pricing, or two-tier marketing. </li></ul><ul><li>Two-tier marketing refers to the practice of having two prices or tiers in a real estate market, one for the locals who know the market values in that area and one price for other buyers, often from interstate, who are not aware of the local market prices. The ACCC believes the practice is a form of misleading or deceptive conduct.” </li></ul>
  3. 3. This presentation is about the 2-tier property market in Australia <ul><li>What is a 2-tier market? </li></ul><ul><li>Who do they affect & how? </li></ul><ul><li>Why do they happen? </li></ul><ul><li>Where do they occur? </li></ul><ul><li>What can you do about it? </li></ul> Australian Property Reports Valuations, Building and Pest Reports available at one convenient website.
  4. 4. What is a 2-tier market <ul><li>A two tier property market is one where locals pay one price and people from other areas pay a higher price for the same property. </li></ul><ul><li>The ACCC believes this practice is a form of misleading or deceptive conduct. Real Estate Institute of Australia members are not permitted to participate in it. </li></ul>
  5. 5. Who do 2-tier markets affect and how? <ul><li>The people who pay the higher prices are usually from other cities, states or countries. </li></ul><ul><li>There is a particular risk of 2-tier pricing for people buying or investing from another country. </li></ul><ul><li>Estimates have put the number of investment properties sold at above fair market values at 46% in some markets, and sometimes as high at 80%. </li></ul><ul><li>Buyers are then often stuck with a property they can’t sell without a loss. </li></ul>
  6. 6. Why do 2 tier markets happen? <ul><li>Two tier markets occur because of two main factors: </li></ul><ul><ul><li>Poor understanding of the true value of property in particular areas, and </li></ul></ul><ul><ul><li>unethical sales practices among some property marketers. </li></ul></ul><ul><li>Local knowledge of market conditions is important when buying property. Don’t sign anything until you have done your research. </li></ul>
  7. 7. Where do 2-tier markets occur? <ul><li>Two tier marketing of Australian property occurs across the whole of Australia. </li></ul><ul><li>It began in the Gold Coast in Queensland , however due to the dynamic property industry and growth in property investment in Australia over the last two decades the practice is now rife across the country. </li></ul>
  8. 8. What can you do to manage your investment risk? <ul><li>If you are planning to purchase a property in an area which may have a 2-tier market in place </li></ul><ul><li>Make sure you get an independent property valuation prior to committing to a purchase. </li></ul><ul><li> can provide simple and convenient access to property valuers across Australia. </li></ul><ul><li>Evaluator is a web business that is not affiliated with any property marketing group and does not take a commission or any other incentive from property marketers. </li></ul> Australian Property Reports Valuations, Building and Pest Reports, available at one convenient website
  9. 9. What can you do to manage your investment risk? <ul><li>If you have already bought property in a two tier market and have paid above market value </li></ul><ul><li>Contact the ACCC Infocentre on 1300 302 502 (Australian local call) for further advice, or visit their website at . </li></ul>
  10. 10. This presentation is brought to you by Australian Property Reports Valuations, Building and Pest Reports, available at one convenient website