Expert Bust #6 - High Wage Suburbs Not So Special

Discussion in 'Investment Strategy' started by datageek, 22nd Jan, 2021.

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  1. datageek

    datageek Well-Known Member

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    Median family household income is not a lead indicator of capital growth for a suburb. Even rising wages for a suburb doesn't work. Historical data shows there's no value in using these metrics.

    Above average wages for a suburb compared to its state is useless too as the following chart shows.

    [​IMG]
    The lowest income vs state average decile is the black bar to the left. Highest income decile is the red one to the right. No statistical significance.

    There have been plenty of opinions on this topic, but loads of historical data simply doesn't support the theories. The full report contains suggestions as to why it doesn't work. It's topic #6 in the Expert Busting series on the Select Residential Property website.
     
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  2. Investor1234

    Investor1234 Well-Known Member

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    Do you have a link to the original strudy/atricle?
     
  3. NickWCBA

    NickWCBA Well-Known Member

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    Loving the series on myth busting Jeremy!
    My question is what is a lead indicator of capital growth? Or is it simply a question of supply and demand. In which case I find it fascinating that according to your previous post population growth has little impact on capital growth.
     
  4. datto

    datto Well-Known Member

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    There’s hope for Mt Druitt! I knew it.
     
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  5. thunderstrike888

    thunderstrike888 Well-Known Member

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    Honestly how much money you made there now? I know you bought there long time ago so If you bought back in the days I'm guessing you bought each of your Mt Druitt investments for what $250k? Or less?

    Just 2 of these today and you'd be up over 1 Million today. Hopefully you bought 5 or 6 of them and you'd be laughing mate. All the haters would be burning seeing whats happened out there.
     
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  6. datto

    datto Well-Known Member

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    Well, there was good coinage to be made out of the Druitt. Same could be said for all of Sydney. Much more dough in other suburbs.

    I think there is more money to be be made in Mt Druitt because there are many houses out there around 500K. I reckon they should be 700K. Just my opinion.

    Many years ago I made the bold prediction of Druitt houses hitting 300K....that milestone got smashed long ago.
     
  7. Onyx_OCAU

    Onyx_OCAU Well-Known Member

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    I remember in the early 2000s it took a lot of guts to hang around in any of the Luxford Rd ring of 2770 suburbs after dark. It's probable that in the next decade or two, these very areas would have property values in excess of a million dollars!
     
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  8. thunderstrike888

    thunderstrike888 Well-Known Member

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    It wont even take a decade or two. It will happen much quicker than that. If you seen the lines of ppl waiting to get into property in those areas it will stun you. Once airport and St Marys transport hub is operational its off to the moon for these areas.

    Look at this house - I bet this house will sell for $600k.

    https://www.realestate.com.au/property-house-nsw-tregear-134664234

    This one already sold for $575 back in December. He would get $600k if he waited until today as well. Its a very old house with a cheap reno done to it.
    https://www.realestate.com.au/sold/property-house-nsw-tregear-134948538?cid=pdp:recent-sales
     
  9. thunderstrike888

    thunderstrike888 Well-Known Member

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    Ha! So by going off that I assume you bought your Mt Druitt houses for like $200k or less? What are you doing man? Time to retire. :p
     
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  10. Gen-Y

    Gen-Y Well-Known Member

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    Well it is true.
    More salary doesn't mean the investors buy where they live.
    They buy where it is going to give them a return for their investment properties.

    But if you are saying PPOR, that is a different kettle of fish. I would buy where I consider nice / safe and have lifestyle a higher wage can afford.
     
  11. Onyx_OCAU

    Onyx_OCAU Well-Known Member

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    Oh I know all about it, I'm one of those fools standing in line in the drastic heat lining up amongst the crowds. :p

    I've hit up estate agents when I see listings barely a day old, and have been told they're under contract. I'm waiting for school to be back so tyre kickers have something else to do with their Saturdays. Agents aren't exact the best at communicating and getting back to me either. They have it easy with floods of offers they don't need to extend any courtesy or customer service to gain their fat comissions at this time.
     
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  12. datageek

    datageek Well-Known Member

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    Yes, it all comes down to supply & demand. Some metrics are better at measuring that than others.

    Yes, population growth at the suburb level is a better indicator of supply than demand. At macro levels like city, it works a lot better.
     
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  13. datageek

    datageek Well-Known Member

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    upload_2021-1-25_11-6-35.png

    Cumulative capital growth Mt Druitt Houses vs. Sydney last 10 years.
     
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  14. thunderstrike888

    thunderstrike888 Well-Known Member

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    Look at that!!! I wish all the naysayers that were dissing the outer suburbs of Sydney would be on this forum.

    Honestly 99 out of 100 ppl where bagging out all the investors who were actively investing in these areas. Mt Druitt, St Marys, Colyton, Lethridge Park etc etc....if they only knew what the prices of houses there are fetching now.

    I would honestly say that anyone who bought 2-3 properties back in the day would have made easily excess $1 - $1.5 million now in those areas. easy!!!

    AND the ticker - those areas are flying to the moon as we speak. I would love to see this graph again in 2022. The gap will be wider.
     
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  15. datto

    datto Well-Known Member

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    Much less. But I have unfinished business before retiring. Anyway I haven’t got that much money.
     
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  16. bmc

    bmc Well-Known Member

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    department of planning predict:
    The population of Western Sydney will grow by almost 1 million people (or 46%) over the next 20 years. The region will continue to grow faster than Sydney as a whole; by 2031, Western Sydney will be home to 50% of the capital city's population, up from 47% in 2011


    talk about flash as a rat with a gold tooth.
    you will if you sell the commodore
    CURRENT BID: $1,040,000 - Lloyds Auctions

    dub4.jpg
     
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  17. thunderstrike888

    thunderstrike888 Well-Known Member

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    Love it!!! That is a huge chunk. If 50% of Sydney is living in Greater Western Sydney by 2031 well I think I need to buy a few more houses here. Been focusing too much on my Brissy investments might need to get another 1 or 2 in Sydney as well.

    Arrrggghhh - I need a bank that will lend me as much money as I want!!! I promise I will pay it back. :)
     
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  18. datto

    datto Well-Known Member

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    [​IMG]

    Yeah, it's nice but have they got one in an auto.

    A free hand is needed to grab the orchy bottle when necessary.
     
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  19. datto

    datto Well-Known Member

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    I reckon 650K by end of year.
     
  20. thunderstrike888

    thunderstrike888 Well-Known Member

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    I'm betting its going to be more by end of 2021. I'm seeing houses in Tregear and Willmot already hitting almost $600k now. Give it a few more months and we'll be at $600k.

    This would have gotten $600k I reckon now if he delayed a little. Cheap reno that one.
    https://www.realestate.com.au/sold/property-house-nsw-tregear-134948538

    Not sure why this sold for $630k but thats a VERY good price for Willmot.
    https://www.realestate.com.au/sold/property-house-nsw-willmot-132936874

    $575k
    https://www.realestate.com.au/sold/property-house-nsw-willmot-134117290

    These areas are exploding right now.
     
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