NSW Downturn - Inner v Outer Suburb Performance

Discussion in 'Where to Buy' started by Ben P, 16th Jun, 2022.

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  1. Ben P

    Ben P New Member

    Joined:
    16th Jun, 2022
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    Location:
    Emu Plains
    Newbie here, probably a dumb question but, the Finder website released a Property Investment Index recently, and it indicated that the suburbs in Sydney most likely to withstand the coming downturn were inner/middle ring suburbs, rather than outer suburbs. (at least in terms of houses).
    This seems to contrast substantially with what I know happened in the last downturn (late 2017 - mid 2019), when the outer suburbs hardly dropped and the inner/middle suburbs had some huge drops. I followed those results down to the suburb by suburb level.
    Who should I believe here? I'm looking to sell my outer suburb home and upgrade to a larger home in the middle ring, and I thought the downturn would put me at a relative advantage (not withstanding borrowing power from interest rate increases). Is it because the last downturn was triggered by both peak affordability and restrictions on loan margins, rather than by rises in interest rates?
    Pretty concerned.
    Cheers
     
    Shawn6334 likes this.
  2. See Change

    See Change Well-Known Member

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    18th Jun, 2015
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    5,110
    Location:
    Sydney
    It can be unpredictable .

    My long term observation is that outer areas tend to go down more when you have a down turn . More likely to have people who don’t have much back up , financial competency and they get into trouble , so you’ll always get some who get into trouble .

    Given that cheaper areas typically do go down more after a boom it means that percentage wise you can get a bigger percentage gain in cheaper areas than nice areas during the next boom .

    On your plan , selling in a cheaper area and buying in a more expensive area for a PPOR makes perfect sense to me .

    GFC hit the big end of town so Mosman had deals as did the places they had their weekenders .

    The week after we bought our weekender 11 years ago the AFR had a headline saying “ the coast is toast “ reporting the highest mortgage vacancy in australia in Port Stephen’s ( corlette / Nelson bay )

    When the market goes down there will be individual bargains around .

    One of the best learning exercises we did was making offers we could afford on places we couldn’t . We didn’t end up buying one at that stage , but we were surprised at the low counter offers we received and going through that process made us very confident in how to handle low balling .

    supposedly a fair percentage of sales are “ motivated “ but they rarely advertise it . We did once , but purely as a marketing ploy to generate interest .

    Cliff
     
    Last edited: 17th Jun, 2022
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  3. TheBigDawg

    TheBigDawg Well-Known Member

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    18th May, 2022
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    1,645
    Location:
    Sydney
    It is unpredictable however generally speaking, more expensive suburbs rise in value first than it ripples out to the cheaper suburbs.

    Falls are the same.

    Generally more expensive markets drop first, than it ripples out to the outer suburbs. We are seeing this now, and its going to accelerate very quickly over the next few months.

    If you timed it well enough you could probably sell and than buy slightly cheaper than you otherwise would have, the questions is when, which is the golden question!.

    If you have intent, best thing to do is sell now and stay with family (if you can) and then buy in the middle ring December 22 or early 23. That's when the bargains will really be kicking around.
     
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  4. See Change

    See Change Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,110
    Location:
    Sydney
    I normally don’t suggest seeing in Sydney unless your buying at the same time as I’ve seen several people caught out trying to finesse that move ,
    But it there was ever a time to do it now would be that time .

    When you’re out watch the market VERY closely . We’ve seen it change in a couple of weeks either way . Quiet to hot in a week or so and joy to dead in the same time frame .

    if you’re cashed up , watch closely and make low offers .

    While it can take a while for the whole market to move 5-10 % , there will be inmdividual deals at those sort of discounts we’ll before .

    cliff