Covid property search diary

Die hard 4.0 - Live free or die hard

 

34 seems quite logical

 

Just like taxes too...

 

Vacancy rates in each suburb are not so black and white and depend very much on the supply of available properties and other factors such as location, features, seasonal and condition. In a metro Sydney suburb I would expect to see 30-60 rental ads for any property type (eg 2 brm units) in a healthy market. Anything under 10 would indicate a demographic issue where its a rare type of property and may have limited demand.

Lately in some suburbs I'm seeing rental ads go from 60 to 200+ which is then an interesting indication of temporary market influences like Covid.

 

Date : Sat 8,15,22 August 2020
Areas covered : Sydney south, Northern beaches, Sutherland Shire.

Intension : check the places around and see if there are opportunity. for IP, or next PPOR
The market : as usual, most of the properties are not good for rentals, therefore it is hard to get good rent.

Outcome : keep watching

Realisation ... :
Markets are generally separated into three price tiers in Sydney.

<800k, sweet spot for PPOR, because for FHB they don't need to pay stamp duty.
<700k, even sweeter FHB may not even need to pay LMI, so they can just get a 95% loan, as for the 5%, they can just withdraw from their super. that's 40k from a couple.
this is why properties in western sydney below 700k are selling like hot cakes, (if they don't have any problems).... that's the reason.

800k-1.2 mil, out of touch for FHB, there are a lot of sub-par properties out there in this price range, and I believe banks are very careful about these... a deposit of 150k to 200k, and stamp duty of around 40k would hurt, mines for investors as they are often non-rental friendly, cannot get high rent, and would most likely in the range of getting NSW land tax.

over 2 mil, it is hard to generalise because a few stocks and each one is different.

 

Interesting observation and I like this diary idea of yours.
Care to share any comments on the $1.2 - $1.5mil gap and $1.5 - 2.0 mil gap for these areas? I think these are prime price points for PPOR buyers that are not necessarily FHB.

 

Using Sutherland Shire as an example,
900k-1.2 mil, I have a feeling that PPORers with all the finances ready are really picking the house with the best features, those with more renovated bedrooms, bathrooms, kitchen, pool, landscape etc will go quickly, others with none of these tends to stay in the market for a LONG TIME.

and in the Sutherland shire, stocks from 900k seems to increasing, those which are ideal for PPOR goes quickly.

but these basically are no good for IPs, as rentals are barely enough to cover outgoings, and land tax would kill returns.

 

Aren’t the majority of buyers non Chinese? Or you are looking at particular suburbs having an ethnic bias?

 

the strange thing is that the 4s and 14s is for most suburbs, I think the property market in Sydney is mostly driven up by Chinese, without them supporting that numbered property everything becomes difficult.

 

Yeah, I guess customer-focused is Marketing 101...

 

on the extreme side of the spectrum, you have hong kong's luxury high rise residences, they will strategically get rids of the 4s and get more of the 8s, so a high rise of 50 floors actually have a level 98.

(because they skips the 4s and get more of the 8s )

 

Haha Or someone living on the 68th floor actually on 44th taking away all the 4s and 13, and 4xth floors. The guy might wonder why the Feng Shui was so bad despite on 68th.

 

Hey @fl360 - I’ve really enjoyed these updates and what’s been happening lately?

 

update after 12 mths...

we did not buy anything (in capital cities), because of the price and lockdown.

However recently because of
- inflated equity on PPOR,
- higher savings,
- higher amount of listings
- stopped Govt COVID $$$ support
- generally bad economy

we have started looking again - more for bargains in non-capital cities - more like a holiday home / home for retirement.

 

Thanks for the update fl360.

Hindsight is a wonderful thing but anything you would have bought then would have probably gone up by ~25%? Is a bargain now cheaper than the 25% increase or further below that?

Best of luck with it, I was in a similiar boat to you and didn't buy either by the way ;-)

 

I actually did this thinking in my head, assume I bought a house right at the bottom, say April 2020. and sell 2 months ago.... I probably would have made 100k after stamp duty and agent fees (and interest cost), and since I have to pay CGT on that, I probably would have pocketed 60k after tax.

If I sit in my home, not travelling and spending much, I would have accumulated the same after few months.

I am looking at another property is more like for my retirement in few decades time.

 

I am afraid that you will write the same thing in another couple of years. Do not write a diary. Take action.

 

Who is saying I am not ? my PPOR is getting some nice tax free CG since it is in Sydney, 20kms from CBD and on >550 sqm block. Walk to station.

Base on my needs and investment rationale I am currently looking for "unique regional at a fair price".

Anyway, there is something which I have observed recently, which could impact the property investment dynamics

1. People maxed out their borrowing capacity to buy PPOR in capital cities, in turn have no capacity to invest....

2. Universities allow students to study remotely for the whole degree, obviously some degrees cannot be done online, like Medicine, but the Asian focused ones like Commerce, Accounting and the like.... if pushes comes to shove I suspect the Unis will not force them to come to Australia. and if this becomes the norm will disrupt some IPs targeted to overseas students.

3. the sea / tree change people who are earning decent salary from their capital city CBD jobs.... that could be their last job based in capital cities, IMO they cannot get another better, higher salary jobs in Capital cities since jobs usually will require X/5 days in office. They better get a good job in their regional centre - which could be hard. When a restructure happens these remote staff will be the first to be chopped.

4. Capital cities houses are so expensive now - after all the expenses and tenants issues return could be very low for the next 5 years. which is why I am not looking there, also any Sydney IP with land will be in the land tax territory.

 

You also observed a year ago that there would be covid bargains, right…….

 

as in my previous thread, this is the time which is worth looking around because

- higher amount of listings
- stopped Govt COVID $$$ support
- generally bad economy
- Banks jacked up fixed rates recently
- APRA more influence on banks lending, higher rates required for stress test etc.