How will Regionals performs if Sydney stagnates/falls?

Discussion in 'Property Market Economics' started by propernewb, 6th Nov, 2017.

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  1. propernewb

    propernewb Well-Known Member

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    The Regional markets such as Wollongong, Newcastle & Gosford have seen massive gains as the Sydney boom has pushed many out of the market.

    @RPI has kindly posted a copy of QBE's outlook, which is that of prices increasingly slightly (5-7%) for Wollongong & Newcastle in 2017/18, before plateauing into 2020.
    Interestingly, Sydney's prices are expected to fall during this period.

    Is there any evidence or historical data to support this? Although there have been fundamental changes to the Regional centres e.g. NBN, improved services and overall quality of life, which have stimulated natural growth, large portion of the post-2013 growth has been due to poor affordability in Sydney.
    Why then, would Regional prices remain stagnant if Sydney prices were to fall and become relatively more affordable?
     
  2. Big Lez

    Big Lez Well-Known Member

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    I think it comes down to value for money.

    If you try and compare apples with apples, in Cronulla (as an example), you wouldn't find a house in a liveable condition for less than $1.8-$2 million. However, in the Illawarra region, I know for a fact that you could buy a house within walking distance of the beach for as low as $650k-$800k in some suburbs. Sure, you might have to commute to Sydney for work, but on the other side of the coin, houses are less than half the price of the Sydney equivalent.

    There a lot of first home buyers in their late 20's and 30's as well as retiring baby boomers who don't want to be paying such a large sum of money for a house in Sydney when you can buy something within striking distance of Sydney for less than half the price.
     
  3. sash

    sash Well-Known Member

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    Yep....as Sydney drops....the regions like the Illawarra, Hunter, Central Coast perform...though I reckon they only have about 18 -24 months left.

     
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  4. HGM

    HGM Well-Known Member

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    But the Illawarra suffers precisely the same symptoms as Sydney right now: stagnant growth or even slightly falling prices, fewer buyers showing up, failing auctions. That's the case with the northern suburbs at least (Woonona, Bulli, Thirroul, Austinmer) which are the most attractive for Sydney buyers. In Austinmer the median has been declining for months, in Thirroul and Bulli it's been flat. Haven't seen one successful auction here since August...
     
  5. AlexV_Sydney

    AlexV_Sydney Well-Known Member

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    property price wave in example

    (prop1&2 are same quality)
    2017:
    Prop1, 30km from CBD: 800K
    Prop2, 60km from CBD: 500K

    Imagine that in 2018:
    Prop1, 30km from CBD: 700K
    Prop2, 60km from CBD: 650K

    What happens next? Obvious - people in Prop2 move to Prop1 to live closer to cbd, so either Prop1 goes up (more demand) or Prop2 goes down (more supply), or both.

    Opposite things happen when Prop1 in 2018 is 1M and Prop2 is still 500K.

    in any case, when there are no major changes in suburbs, their prices will be automatically adjusted after some delay when one suburb performs much better than others
     
  6. Kangabanga

    Kangabanga Well-Known Member

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    Most of the price gains in regionals are due to the "ripple effect" of caused by investors,

    The ripple effect works both ways...
     
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  7. Xavier

    Xavier Well-Known Member

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    Interesting... I have a friend who bought a new townhouse in Bulli who keeps talking it up
     
  8. HGM

    HGM Well-Known Member

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    Easy to talk it up as a place to live. But at a median higher than Sydney the good life doesn't come cheap... But as Kanga says above, the "ripple effect" works both ways and there's already signs that the Sydney crowd have suddenly departed from local open houses and auctions.
     
  9. euro73

    euro73 Well-Known Member Business Member

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