2020+ Melb/Syd to outperform Brisbane again?

@Jana what caused that previous boom? I’d argue “better prospects for country” isn’t a catalyst for 160% capital growth.

I agree if Brisbane was to boom, Fomo and people seeing value would cause Logan to rise as well. No question about it. But that’s not investing in an area because of its fundamentals, that’s buying into an area on the hope of another area going up, making it even cheaper and rising by default. Is it not?

 

To give my Opinion why, in the 4yrs leading up to the GFC median weekly incomes increased from $798 to $1018 in real terms, nearly 28% wage growth. If your Logan IP was worth $90k and your average wage was $45k or x2 in a time when mining was booming.

Incomes have growth just under $50 a week over the last decade, that Logan IP is $300k on a combined average household of $82k so nearly 4x now. Rates don’t have far to go So what will drive the next one?

 

Don't think I've seen anyone who's investing in logan et al , suggesting they're doing it because they expect it change it's nature . For me it is very much a rising tide lifts all boats . And if that works , what's wrong with that ...

Cliff

 

Nothing wrong with it if that’s what you want to do, I’m just challenging the reasons why in case I’m missing something. I would invest anywhere there’s fundamentals and opportunity I just don’t see it here.

 

I spent some time trying to work how to invest in shares, but never succeeded . One think I learnt is that fundamentals don't have the biggest direct impact on share price price movement .

Sentiment does .

I've also learnt that the fundamentals of a specific area aren't the biggest factor moving property prices . The biggest factor is sentiment .

I've seen property prices in many areas go nowhere for a long time even though there have been significant changes in the character of the area and then double in a short time frame while there has been no specific change in the area . Comes down to sentiment .

For me the fundamentals I looked at of an area have been , AVOID Mining areas .. and while I look at investment in an , I'm almost counter intuitive . EG in Gladstone in early 2000's there was a massive amount being spent on new infrastructure so a lot of people figured out it would be a good place to invest . mmm Many jobs in the building phase but not long term so we specifically decided not to buy there .

Get the timing right in terms of cycle and you can make money , in a shorter time frame than most other people . Melbourne , which seems to be where you prefer ( correct me if I'm wrong ) , well I'll be surprised if it out performs Brisbane in the next 5-10 years.

Cliff

 

I'm not weighing in on the whole Logan debate, just with regards to sentiment being a big factor to move prices - I totally agree. At the end of the day, I've noticed no matter how positive fundamentals are, its really the sentiment or changing sentiment which controls price movements.

And the 64 million dollar question, what controls sentiment?

You could name a few factors but I have seen enough to know sentiment change is a crazy beast with an unpredictable mind of its own.

 

Hi Cliff thanks you make some valid points, I agree too sentiment has a large role to play, difficult to measure.

No not me sorry I have nothing in Melbourne as yet. Brisbane only and I agree I think Brisbane has much better prospects in the short/medium term.

 

@Codie The last Logan boom had happened because of Brisbane boom. No one invested in Logan expected a separate boom for Logan. Logan can only boom if Brisbane is to boom.

I don’t have any properties at Logan, I just happen to comment to show Longan type investors mentality. I still think Brisbane has far better places than Logan at this stage.

 

No , You can't " measure " sentiment , BUT , IMHO , you can watch it's impact , and in my experience it's an early indicator of a move.

Anyone who spends a lot of time watching listings , talking to agents will get a feel for what is happening .

Is there a way to time a perfect entry ? Not sure , for me it's a work in progress .

Do you try and pick the bottom ?
Do you wait until you see changes in Sentiment ?
Do you wait until you see early movement ?
Do you wait until the market is moving strongly ( though at the beginning ) ?

In the last Cycle in the early 2000's

• in Logan we were late , came when the market was moving , recognized what was happening and bought aggressively . Couldn't be as picky with what we were buying due to competition / lack of stock . A couple of Dodgy properties but still did very nicely even with the dodgy ones .
• In Rocky , I think we nailed it , Bought just as sentiment was shifting , but prices hadn't really moved so still moderate levels of stock so could afford to be choosy . Sold some early to fund a new PPOR in Sydney .

Current Cycle

• Picked the bottom just after the GFC in Mosman , Sold close to the top but probably 10 - 15 % short
• Picked the change in Sentiment in Manly just as the market was starting to move . Sold pretty well at the top . In reality we should have bought at least one more , rather than buying in Brisbane.
• Perfect timing of new PPOR in Sydney as above in Manly .
• In Brisbane , In retrospect we could say we were early , but with good levels of stock we were able to get some good deals . Did see a change in sentiment which was reflected in around a 10 % lift in the 12-18 months after we bought which was then stopped by Bank Changes. So bought early , but not at the bottom ( which would have been just after the floods - Note to self , next time Brisbane floods ..... )

Cliff

 

Hi Kangabanga,

We might need to look into this when we come back to Brisbane in 12 months time. We're going to do another reno or a splitter or something like that where we can add value. We'll be buying another yacht and parking it in the marina at RQYS so living in Manly would be brilliant. Maybe buy, live, reno, sell. Who knows, but I'll definitely look you up when we're back in town and see if I can't shout you a beer and bribe you for some local knowledge. Maybe even the best crabbing spots...

Cheers,
Michael

 

Totally agree with sentiment and I would add each property within each street, suburb and state, even location and so on...there are micro and macro economics at play here!
If we are looking to generalise then by all means look at the statistics however make sure they are relevant to your property.
I prefer comparable specialised data, comparable recent sales within 3 months or so within my streets and suburbs as a guide to what is happening rather than generalised articles.
Just have a look at this house:
https://www.realestate.com.au/sold/property-house-nsw-castlecrag-132331698
sold for $8,710,000 so $710K above the reserve of $8M, and I thought it wasn't even worth $8M, so what do I know, I have no crystal ball.

 

Ya better not live in Manly or you'll probably end up enjoying too much and staying. Its boating, fishing, prawning, crabbing and squidding all year long. Awesome beaches at tangalooma(stradbroke island) just a short boat ride away. Not as crowded as other capital cities.

Funny you mentioned RQYS, thats where I caught this Mudzilla walking the mangroves next to it before Christmas last year. Almost 3 pounds.

 

Many are suggesting that Sydney and Melbourne are going on another boom run, however property experts such as Simon Pressley and Anna Porter are making the observation that the factors driving this last quarter growth are not underpinned by the solid fundamentals of the previous boom. We are not for example getting the same volume of Chinese investors as before and currently the recent price rises have been due to lack of stock. Our economy and wages growth is currently sluggish and this has been offset by 3 interest rate drops and slight relaxation by the banks. Sydney and Melbourne prices are already too overpriced and the ability to hold properties in these cities are difficult.
So we have Brisbane, Adelaide, Canberra and Perth as possibly more viable options for investors. Even if data shows that Sydney and Melbourne outperform Brisbane I would question the data based on the way things are averaged out rather than suburb by suburb analysis.

 

spot on , great analysis . I don’t really care too much about the wider Brisbane stats . Houses in blue chip suburbs within 10km of the cbd in good school catchments etc will do well over the next 3-5 years in bris .

 

That's pretty much my view. For me, the entire Qld boils down to a handful of areas in Brisbane. Houses only. Couldn't care less the broader stats of Qld or even Brisbane. Niche markets have always been my thing and has worked well for me and I'm sure others as well.

 

Another vote of a great analysis from me. In particular regarding Sydney and Melbourne being very overpriced, which anyone if they were really being objective on this forum and elsewhere, instead of pandering to their vested interests, can see.

Hopefully I'll buy my Sydney PPR this year (low stock in terms of quality and quantity is mainly my issue rather than no $) and once I'm ready to invest I would so much not be purchasing in Sydney in particular.

 

Local too. Look often - happy to alert you to any deals if I know what you want

 

Rentvesting.. rent in syd/melb.. while investing IPs in logan/brisbane.. This was quite popular many years ago (somersoft era).. but it is a dumb strategy.. most investors have missed the growth in syd/melb

 

Not sure about the dumb, it all depends on budgets, targets, property cycles, planning, where you want to live and so on.

 

Medium to long term, there is heaps of growth to come in Syd and Melb.

Some people will just never learn. The demand for these two cities it just beyond massive. When the sentiment swings all positive, Syd and Melb will fly. And fly hard. As we're currently seeing.


My favourite objection I often hear is income to loan ratios . It's all hocus pocus. Many households have many good incomes which won't be reflected in the ratios.