Lost to the cancer council at auction

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I find this story pretty amazing.

Apparently there’s been a bit of a surge in charities buying up houses and auctioning them off.

It used to be a bit of retirees, luxury home type story.

But not anymore. Now charities are buying up inner-city terraces and suburban homes and raffling them off.

From Domain:

“Young would-be home-buyers locked out of the property market are increasingly turning to luxury home prize draws in a bid to get onto the property ladder.

While more traditional raffles and lottos have long captured the interest and imagination of punters, charities are increasingly competing in Sydney’s hot property market; raising funds by buying homes to then raffle off as younger generations look for a shortcut to home-ownership in the face of rising prices.

“We have noticed a real shift in recent years in the type of person buying tickets in our prize home lotteries, particularly for homes in the Sydney market,” said RSL Art Union general manager Tracey Bishop.”

And apparently most tickets are now selling to people aged 33-55.

And look at the numbers:

“In December 2016, the RSL bought a three-bedroom penthouse in Camperdown for $1,575,000.

Within three months they had sold about 2 million tickets for $5 each – totalling $10 million. One hopeful punter snapped up a record $1930 of tickets in one day.”

Not bad right. Buy for $1.5m, turn it into $10m. I don’t know what the costs involved in running a charity raffle are, but I’m pretty sure it’s not $8.5m.

So it’s a very tidy money-spinner.

But think about it a sec. What is the most a charity is willing to pay for a property?

Take this property here for example. They bought it for $1.5m, but even if they’d paid $2m or $2.5, they still would have walked away with a very tidy profit.

So charities are going to be willing to spend much more than the average punter.

So if you see a Cancer Council or RSL charity car show up at your auction, forget it. May as well walk away.

For me it’s just a sign of the times. We just don’t have enough houses.

If we had enough houses and people thought they could get a place through normal means, they would. They wouldn’t be sinking money into raffle long-shots.

But it’s not the case. We don’t have enough houses. Competition is super hot. If you don’t have a lot of money to play with, forget it. A raffle is your only hope.

This says a lot about the fundamentals supporting Australian property. Housing is still in short supply. Until that changes, prices will keep rising.

The charities have figured it out. Expect to see more of them at auctions.

Spiro Kladis
Managing Director, Cashflow Capital

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  1. Steve
    4 months ago

    It just goes to show the young people looking for the easy way it’s all to hard for them they don’t realise the time and effort want it and want it now people say can’t afford it but look at Geelong Adelaide Toowoomba etc affordable my Mum and Dad would have loved to live in CBD but settle in Cheltenham the word is keep going and you will get there enjoy the journey some suburbs I lived in give me great memories