NSW Housing slump set to be the largest in nearly 40 years, Macquarie

News just out:
Housing slump set to be the largest in nearly 40 years, Macquarie says

Exciting times.

 

Exciting times indeed for people overgeared in Sydney and Melbourne...

 

Good for affordability and about time.

 

Usually when these sort of guys start calling it, it's close to the bottom...

 

exciting times for those who would like to invest in property with the goal of achieving a passive income
probably won't happen in capital city's but the regionals should produce solid yields

I'm thinking 10% wont be that uncommon in your medium sized towns - 5,000-20,000

 

Whats the reasoning behind this if you don't mind my asking? Im interested! haha

 

Yes I keep hearing regionals will be star performer??? I dont get this

 

sydney auction clearance rate 41% today.

 

8.3% for Ray White Inner West

 

hard to get loans, capital city's are flat so not much investor interest from city dwellers with equity,
stock on rental markets decrease, rents rise , yields increase

Add to this the strong possibility of increasing interest rates and that further depletes the buyer pool and puts upwards pressure on rents

It makes sense that if the perceived risk in the market (ability to purchase for capital growth) increases then rental yield will increase to compensate

Hence good for cashed up buyers looking for a passive income

 

Hmmm very interesting thanks Strongy!

In regards to the above referenced, your saying the regionals may see cashed up wealth individuals buy for high yield in regionals?

 

Attended my usual conference with the CBA senior economist presenting it's outlook - all doom and gloom, NOT!

Leading indicators are still showing strong appetite (demand) for lending stretching out for the next six months, AUD vs USD is down giving our exporters a boost, China demand still growing, unemployment still around 5% and decreasing, housing approvals still at high levels - (supply might drive prices rather than other factors), population growth (demand) is strong, infrastructure spend still increasing in NSW and continuing to grow for the next 4-5 years.

The market appears to have factored in 0.25% increase in rates over the next 12 months sue to US having lifted it's rates but the Euro/Jpn markets are still on near historic lows post GFC etc.

Yes, there'll be some correction but business as usual.

 

Labor pushing ahead with the removal of negative gearing at a time when it's not really needed....

I heard an investor say the other day (actually, directly to me), "I don't mind if the value of my investment goes down if it means FHBs get a crack".

 

So basically, the minute there is a "crash", FHB strengthen the demand side as affordability kicks in.

Round 'n round we go.

 

Probably not , most wouldn't dare invest outside Melb, Sydney etc
But I think there's definitely opportunity around the corner
I will be taking advantage of it if it occurs as I like to replace income with high yield where possible
I'm not that fussed on capital growth as I manufacture it through a more hands on approach

I think many other capital growth investors will take advantage of price dips in Melb and Sydney. Wether there is scope for growth in the near future due to credit tightening is crystal ball stuff I reckon.
Could all loosen off tommorrow or it might not for years

 

Yeah I think I might have been misunderstood a little bit.
I'm not thinking a huge crash is on the cards but from an investment point of view what would be the point of investing in your traditionally strong growth areas when the main ingredient for growth has been taken out.
I think regionals might struggle too as surely a lot of rental stock in these towns is owned by investors with multiple properties. Moving forward and it being quite hard to build a decent rental portfolio (for the average punter) I think the purchasing demand will dry out as investors might only be able to buy 1 rental property not 3 etc.

so my gut is

good areas of capital cities and large regionals - owner occupier demand is still there so prices may dip a bit but can't see where the next growth will.come.from.
hence negative cash flow and little growth = poor medium term investment

small - medium regionals - demand from investors to drop , decreasing prices a little and putting pressure on rents
cash flow positive , no growth = good for passive income investor

so doesn't appear to be much opportunity for those starting out there investment journey but those who can think ahead will still do well

and of course there are many regionals that have been hammered the last 5 years so I'm thinking they can buck the growth trend for a little until yields get too low.

 

think it will fall a bit, because it hasn't fallen that much at the moment. If you look at property crashes in Asia, Tokyo never recovered, Hong Kong bounced back

 

I would suggest however with Tokyo that there are many dynamics at play that make it incomparable to any Australian city, thus its market never really recovering. Including: 30 million greater metro population, massively ageing population (with very low birth rates for young breeding-age Japanese). Australia, whilst also having an ageing population, is also experiencing a mini baby-boom in the younger/breeding-age populace that Tokyo and most of Japan is yet to observe.

Adding to this that it was traditionally difficult for foreign investors to be allowed to buy in Tokyo (this has changed in recent years, however); and its easy to see why property prices never recovered again there.

Hong Kong has different dynamics again.

 

54 Phillip Street, Newtown, NSW 2042 - Property Details Sold for $1.95m in December 2016 (there were no bids at the auction, the buyer bought afterwards)

54 Phillip Street, Newtown, NSW 2042 Failed to sell/flip at auction last Saturday, now asking $1.795m

 

Tokyo = Cannot replenish population, xenophobic population that discourages immigration until very recently, even if so, they'd probably lose out to the US, Canada, Australia in attracting immigrants.

HK bounced back after 97 due to the first wave of rich mainland immigrants coming in.