NSW Cashing in on Sydney doom and gloom?

Hello,

What are your thoughts on preparing to enter the Sydney Market?
Is anyone else hoping to cash in on the falling prices? So as to catch the next cycle

 

At least wait until the RC interim report comes out later today.

Could be a few things in there likely to further restrict the availability of credit.

May require a further revisiting of strategy.

 

Indeed, great advice. I'll start researching regardless as it takes me forever to narrow down good areas

 

Personally I am waiting for another 12 - 24 months. Would be interesting after election next year and when IO cliff hits people who bought in Sydney around 3 - 4 years ago. I think we are still at falling knife stage

 

Are you expecting fire sale across the country even when IO becomes PI? How confident are you?

 

I’d definitely wait till the IO Loans become redundant, you’ll find a lot of people unfortunately under a lot of stress. A lot of property Sydney wide will be be ripe for the pickings, target high rental areas a lot of owner occupiers I think will have safe guarded themselves for the impending changes.

 

Very confident. Negative sentiment will compound. Plenty of people over leveraged in Sydney in the past 5 years from FOMO. Plenty of baby boomers taking equity out of debt free properties to buy more also. I don't think it will be as bad in other states because the growth has not been as astronomical as Sydney

 

Yes, but not for a couple of years.

 

I have cash already allocated to buy if I see some fantastic deals. I personally think this could be another unique time in investing history where fortunes can be made/added to if you are ready and buy the right stock and are a little patient. This is assuming we see some fantastic value come on the market over the next 24 months. It is totally possible that we'll see some slight value but prices for the most part just goes sideways for the majority of high demand markets. Keep in mind, not all markets which have large drops are worth buying into, imo.

Key thing is - Be ready. Ignore the herd, they are always wrong. Buy in long term high demand locations if opportunities arise.

 

That's exactly my plan, save for the Sydney opportunity. The 2-3 year plan. And buy smart of course

 

Cycles aint what they used to be... and wont be again under these credit conditions. . You'll be waiting over a decade for the borrowing capacity needle to even start to move in SYD...and that's probably being optimistic. SYD is a fine place ( better than fine, really) to buy if you are buying a family home and intend to stay for 20+ years...but not a smart investment play unless you have deep pockets because you'll be holding that property for a good while under P&I conditions . Now, if you do have deep pockets and SYD comes off another 10-15% then things start getting interesting....if you can buy a suitable house with granny flat potential at a steal, so that you can afford to hold P&I, for example. But standard vanilla properties.... nah. Yields are too low to sustain P&I . Shooting for the growth jackpot is all well and good, but if the growth is 10+ years away and P&I arrives after 5 ...... how will you hold on long enough to realise the gains?Only for the deepest of pockets ...and even then it's a big punt. Put Sydney in you calendar to start looking in 8,9 years time... use that time to pay down debt

The rethink /recalibration needed to start at least 3 years back. get rid of low yields. Replace with cash flow. Focus on debt reduction. Insulate yourself against the P&I cliff and eventually restore borrowing capacity. Nothing has changed If anything it's only getting more and more necessary to do those things

Likely to be correct.... with the best part of decade of blah to follow.....

 

Sydney is world class city!!.

Cost to get out (CGT, Agent fee bla bla) and to get back into the market will suck out lot of the profit..

I'll hold onto it unless I need cash or can find better way to utilize the cash proceeds from the sale...

Cheers,