Last week I registered to bid on a 2 x bedroom, 1 x bathroom, 0 x garage apartment at Bondi Beach. The real estate agent had a price guide of $1,200,000. It went off at $1,605,000.

I did not bid because I do not usually bid unless the property is on the market and is below my client’s affordable purchase price.

The apartment sold for 1.64% net yield over total purchase costs or 61 times net rent. This is a phenomenal number by any measure other than money is cheap thanks to the lender and buyer of last resort, the Reserve Bank. Where else do you park a lazy $1,605,000?

Take into consideration the time to find a tenant plus any reduction in expected rent, and the numbers get worse. Here is the competition. There are approximately 10 x studio; 50 x 1 bedroom; 70 x 2 bedroom, and 15 x 3 bedroom units for lease. Between July to September 2020 661 rental bonds were lodged with the median weekly rent been $675. Only 25% were higher than $800 per week.

Which Goldilocks bandwagon are you on?