House prices - where to from here (sydney)

Thanks Cliff. Yep, I knew that....I used the first example that came up based on my search criteria for re.com.au. I should have checked the state. My apologies. Here is a more relevant example to show it is still happening in NSW.

591 Smithfield Road Greenfield Park NSW 2176 http://www.realestate.com.au/property-house-nsw-greenfield+park-120893297

 

Just to be clear..I am showing examples that prove like Cliff has said that the amendments to advertising methods have not yet been put through parliament. It is only a bill at this stage in NSW. @D'Mo was told that it was already law as of October 1st.

 

Not so, last boom/bust cycle in Sydney blue chip areas got hammered just as bad as properties in not so desirable areas. Same with Perth my home State and Melb.
It's a fallacy when markets go pear shaped all areas fall and blue chip fall harder.


MTR

 

I think Perth will provide great opportunities in the very near future, just too early to jump in yet just my opinion

MTR

 

Im not talking about blue chip areas. But i think I should have added 'if bought really well' to that post. I've never had property I've bought lose value in the last 14 years. I think it has alot to do with my strategy though. Just my experience.

 

Leo, what are these areas that go Boom/Boom, not boom/bust???

As I will be the first to jump in. This is not how cycles work, I have been through 6 property cycles now, and each has resulted exactly the same way boom/bust.
Regardless how well you may have purchased we unfortunately are not immuned to market forces. Be nice if we were, we would just continue to buy blindly.



MTR

 

Hi @MTR ,


That's why i don't buy anything unless i get it really at a good price and I can add value. I can honestly tell you every deal I made when the market had the slump phase the value didn't go below what I paid for it. None of my deals have ever 'busted' yet.

 

The discussion was not about your personal experience it was about property cycles and how all properties suffer when markets slump. Good luck if you purchased well but that is not the issue.

I just don't want investors getting suckered into believing blue chip never falls which is what the property gurus like to spruik

MTR

 

@MTR I agree with you all properties suffer, and the 'blue chip' ones sometimes suffer more than others. When I say "high demand areas" I was more referring to areas that are affordable and in good locations and or gentrified. But really its more about how and what you buy and when it was bought that will determine the impact of the 'boom/'bust' cycle on each individual investor. It definitely wont impact all investors the same .This is not just my experience but also from others I speak to. But generally I agree with what your saying.

 

Yes, agree with regards to product.
If your strategy is building land and house packages in the sticks where there is an oversupply of land recovery will most likely take much longer than if you purchased where there is limited land.

MTR

 

I have 10 years experience and none of mine have gone below purchase price either. My worst was 3 years of flatness.
What I have is a lot of great buying, (some more than others). Luck that the Sydney market has been so strong as well. Well located and generally locations simply in high demand. No regionally located purchases (as yet).

 

I would just like to thank MTR for adding reason to the discussion

 

@propernewb there are a lot of good reasons to try and buy BMV and add value. It insulates you from some risk so when markets go flat or drop, it hopefully limits any negative effects on you.

 

so i guess the part ive not yet reconciled in my mind yet is and using Sydney market as an example..


- RBAs decision to hold rates... and looks like it will be a while until they actually increase IR's.., even if they do it would be slow & steady increments (25bps).
- Sydney dwellings still lower than what is actually required (according to misc reports eg BIS)
- Cost of funds still fairly cheap.. access to finance might be a problem (for Investors who reach max capacity?).. FHB being priced out to outer areas

Until there is a catch up of supply, what would be causing such a correction of xxx% ?
Sorry if this is asking a dumb question?

 

If say a GFC Mk2 hits, stocks would fall hard, credit dry ups, Aussie dollar falls, unemployment rises, mortgage defaults rise and/or less buyers, more forced sellers, down she goes. A localised recession would do the same, just a less severe result than if the rest of the world was following suit. There is much optimism on this forum that neither will happen but it would be wise IMO to make sure your portfolio is positioned well to weather such a financial storm if it happened.

 

Yes, agree totally.

Don't buy blindly just because you think the markets will never tank, especially if you are Leveraged to the eyeballs and servicing debt is tight for you.

Everything HP said, and our exposure to China

MTR

 

No optimism from me. Except that the market will recover from a GFC type event or a recession. I am expecting a lot of pain between now and then and I have positioned my portfolio to suit negative conditions for some time.

 

Bullish vendors and real estate agents hoping to cash in on the recent boom have been left red faced today as a large (980m) block in highly desirable pocket of Ryde/Eastwood passed in at auction. While it's only one example in one part of Sydney, I'm curious to know what else has happened in the last 6-8 weeks...
Just because a neighbouring home sold before auction approx 2 months ago for over 1.8 million, these guys completely misread the market at the start of the campaign, w expectations of nearly 2million. Sad for vendors but the agents surely have something to do w conditioning their approach...
Ps, check out the video it's a cracker

http://www.realestate.com.au/property-house-nsw-denistone-120660653

 

Video is a cracker, more like a home warming party for the local agents.

 

Where to from here?? Brissy seems to be the hot contender........ however

What I am seeing now is Melb FHB jumping into this market and starting to push prices up. North of Melbourne has never been a desirable area ie Thomastown, Lalor. However these areas are only 17 km from the CBD, great rail. Reservoir went nuts as it is in zone 1, look for the areas next door because they are significantly cheaper.

Do you homework of course

MTR