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

I don't know how accurate the surveys are but here you go:

AUSTRALIAN PROPERTY DIRECTIONS SURVEY | RESIDENTIAL PROPERTY

 

Sydney - Yes
Mel - getting there.
Brisbane- affordable

 

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 .

 

next 2 years will be very interesting for Syd and Melb ... survey shows both cities going downhill

 

Wow the shape of the property cycle graphs for Sydney Melbourne Brisbane look conpletely different.

Why would Melbourne decline faster than Sydney?

 

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.

 

I agree with the sentiments expressed in this article:
http://www.reinsw.com.au/imis15_pro...peculation_condemned_by_industry_experts.aspx

 

Yes, this article seems to be a factual representation of what is ACTUALLY taking place.

 

Video ...

http://lifecorp.com.au/special-report-sydney-property-market-what-to-expect-next/

Signup for the free webinar ... I know you want too.

Seriously though, good advice for anyone contemplating off-the-plan - particularly in the current Sydney market.

I'm guessing he is just using investing techniques ( i.e. CF+, buy below value, etc ) many here are using.

( he has other videos here https://m.youtube.com/channel/UC8e1WjFtB4D-EZXVvbeR0zA )

 

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?

 

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

 

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.

 

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

 

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

 

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

 

The problem is jobs. Only affordable if you are working

 

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 .