Join Australia's most dynamic and respected property investment community

Are the Sydney, Melbourne and Brisbane residential property markets in bubbles?

Discussion in 'Property Market Economics' started by Arashi87, 26th Jun, 2015.

  1. Arashi87

    Arashi87 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    101
    Location:
    Sydney
    Tekoz and Gockie like this.
  2. Be Developer

    Be Developer Property Developer Business Member

    Joined:
    19th Jun, 2015
    Posts:
    1,078
    Location:
    Australia
    Sydney - Yes
    Mel - getting there.
    Brisbane- affordable
     
  3. JDP1

    JDP1 Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    2,839
    Location:
    Brisbane
    Sydney is not quite but close to a bubble. I would have said yes but then look at their economy which does seem to support it, so I'd day no, but close.
    Melbourne is fragmented, with eastern suburbs like Glen Waverley in a small bubble.
    Brisbane - no f---ing way. Not even remotely close. .Not in any suburb there, good or bad.there is stable and moderate growth in a lot of suburbs but very far from bubble territory .
     
  4. Arashi87

    Arashi87 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    101
    Location:
    Sydney
    next 2 years will be very interesting for Syd and Melb ... survey shows both cities going downhill :rolleyes:
     
  5. CatCafe

    CatCafe Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    154
    Location:
    NSW
    Wow the shape of the property cycle graphs for Sydney Melbourne Brisbane look conpletely different.

    Why would Melbourne decline faster than Sydney?
     
  6. rizzle

    rizzle Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    49
    Location:
    Melbourne
    I dislike the word bubble because it implies a 'bursting' (i.e. something catastrophic). On the whole I think our markets have proven to be fairly resilient under poor economic (GFC). Yes they plateaued and in some places went backwards. But there was no catastrophic crashing of prices (and that was one of the biggest economic crashes of my lifetime).

    Sydney might plateau for a few years after this boom. It could even go backwards. I doubt there will be a catastrophic crashing of prices (population growth expectations too strong over the long term). So no, none of those markets are in a bubble.
     
    Tekoz, MJS1034 and Perthguy like this.
  7. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

    Joined:
    19th Jun, 2015
    Posts:
    1,225
    Location:
    NSW
    WattleIdo likes this.
  8. Harro

    Harro Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    121
    Location:
    NSW North Coast
  9. wombat777

    wombat777 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,418
    Location:
    33°41'24.7"S 150°55'34.3"E
  10. Perthguy

    Perthguy Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    4,682
    Location:
    Perth
    I can see Sydney going backwards after the peak but agree it's not a bubble. It's just the normal "boom/bust" cycle that all real estate markets go through. In reality, the "bust" is an easing of prices followed by flat growth. In real terms over time, there is a decline in values. I don't follow the Sydney market but the last Sydney boom felt bigger than this one? Or has this one surpassed the previous one now?
     
  11. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,362
    Location:
    Perth, Melbourne, USA
    Its dependent on your exposure and timing. If you look at previous boom/bust cycles, properties can and have fallen back as much as 20%+, dependent on area etc

    For argument sake if you were sitting on $2m property invested in Syd market and it fell back 10%, with 95% LVR, that's not going to be a pretty picture, you will be in the red. Bust cycles are much longer than boom cycles.

    We are actually now witnessing the Perth market falling, close to 10% after a recent short boom cycle and it may continue to fall, once again exposure/LVR will determine impact.

    MTR:)
     
    rizzle likes this.
  12. Perthguy

    Perthguy Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    4,682
    Location:
    Perth
    I think that is relatively normal for a typical boom/bust cycle. My impression from the media is that we are now in a real estate bubble, which is a lot more severe and dangerous than a typical real estate boom. According to some, this bubble is 15 years in the making and the "burst" will see the mother of all crashes with 40% wiped off property values across the board. IMO: boom/bust 20%... yes. Bubble/burst 40%+... no.
     
  13. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,362
    Location:
    Perth, Melbourne, USA
    Really, I am getting confused, thought bubble was same as crash.

    Nothing new here media has reported 40%+ Drops before, most recent GFC, of course never happened, even so called top economists said the same, just shows you how wrong they were, truth is no one knows.

    I guess my point was you may only need 10% drop in property if you are over exposed to one market and LVR is too high for a real catastrophe. No point worrying about what could happen, most important thing is managing your own risk, no one else will.

    MTR
    :)
     
    Darren A likes this.
  14. Perthguy

    Perthguy Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    4,682
    Location:
    Perth
    I could be wrong but my impression is that a bubble is bigger and more artificial than a housing boom, takes longer to develop and will see far greater drops in property values than in a boom/bust cycle. The graphs I have seen of the Sydney market included boom/bust cycles within the developing 'bubble', which has supposedly been forming for over 15 years. According to this article, when a bubble bursts, prices go back to or lower than at the point where the bubble started forming. i.e. in Sydney's case, that would be back to 2000 prices. I think most investors on this site would go into a buying frenzy if Sydney prices suddenly dropped to 2000 prices. The issue being that if there is a frenzy of buying, prices would very quickly recover. None of it makes sense. It's just a normal boom/bust cycle, there is no 'bubble'.

    http://news.domain.com.au/domain/real-estate-news/the-housing-bubble-explained-20150606-ghha4m.html
     
  15. Kangabanga

    Kangabanga Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    247
    Location:
    Brisbane
    if interest rates went back up and banks had to tighten their loans to 80%LVR and commodity prices went back to all time lows, Sydney prices could go way way down, maybe not to 2000 levels but maybe somewhere in between that and current prices.

    It wasn't too long ago that the price of unleaded dropped to $1/litre for a couple weeks. That hasn't happened for around a decade IIRC
     
  16. Whitecat

    Whitecat Well-Known Member

    Joined:
    3rd Jul, 2015
    Posts:
    1,088
    Location:
    Brisbane
    The problem is jobs. Only affordable if you are working
     
  17. JDP1

    JDP1 Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    2,839
    Location:
    Brisbane
    Whitecat, I used to have 3 white cats.

    Anyway, yes brisbane jobs scene has been sluggish, but has improved a bit in the last 3 months and is holding its numbers according to seek.com..for non mining jobs.
    I think what you will see is gradual improvement in non mining jobs numbers , nothing spectacular like Sydney, and hence their price growth.
    Commodity prices will eventually rebound and when they do the bigger brisbane miners of Rio, bhp, Anglo American, peabody, Vale will hire more strongly, which will flow onto their supporting cast ie the mining services like McMahon's, arup etc. . This will flow onto much stronger price growth for brisbane .