If Sydney drops... Does Brisbane still grow?

Pretty much what the title says...

Of Sydney finally has a correction....how does it affect Brisbane?

Does Brissy keep on keeping on or is Sydney so bonkers it could take the rest of the country with it?

 

Hang on, I'll just get my crystal ball

There's a few ways it could play out...Sydney and Melbourne tank (because of government intervention ie removing negative gearing and APRA changes) and take down Brisbane, Adelaide and the ACT.
I could see Syd and Melb tank which will cause investors look for better prospects in QLD or SA.
I could also see an event that no one predicts which has who knows what kind of an effect on the property market.
The APRA inspired changes to lending I can see helping the SA and QLD markets as they are typically a lower buy in and also typically have a higher yield (for the time being) Sydney and Melb people looking to invest may not be able to get approval for investments in their own backyard but may be able to in cheaper markets

I've noticed that over the past few property cycles Brisbane has typically peaked 1-2 years after Sydney. There was a spreadsheet going around which had median prices for each capital city going back 30 or 40 years.
One thing I know for certain, Brisbane with either increase, decrease or stay the same

 

i think if sydney falls significantly it will take most of the country with it (maybe not darwin)
like the ASX if BHP crashed. just affects the whole sentiment of the press and people. Doesn't have to be a real connection (of course there certainly would be with lending criteria, banks losses etc) it can be a psychological one also. My guess.

 

Little known factoid, Brisbane property prices always increase by at least a gazillion % conveniently just as the steam goes out of Sydney market. Thought everyone knew that. QUICK buy everything!

 

Depends on the severity ..but most likely yrs bn will still grow . As Sydney goes down, Sydney money will be freed up amd target a better investment for potential cg-brisbane; given also that the two are historically and currently in different cycles.
Only if there is a total wipeout of the Sydney market will we see Brisbane not grow (but thr amplitude of declines won't be as much as Sydney)..wasn't this thr case also in the gfc? Thr mining states did have resources and our friend China to save our arse back then..but still even with much lower commodity prices (coal amd lng), I think Brisbane has enough diversification to hold its own. I do not think that will be the case for Perth nor Adelaide.

 

Steady as she goes for Brisbane.

 

The correlation will become more apparent when Qld adopts ESDT. Until then Brisbane will remain out of step with the eastern states.

 

First Comment , Sydney is unlikely to go from Boom to Crash . IMHO It's likely to stop with a minor pullback then a period of sideways movement . Reason for the pull back is more that you don't have crazy competition for prices pushing individual buyers to pay more than they want to . At some stage I'd expect there to be a bigger correction , but that will be more determined by out side forces such as a recession we have to have , GFC mark 2 , major change in lending policies. It's unpredictable though obvious when it happens .

At the top of every market there is a period of irrational exuberance where people pay over the top , everyone's talking about property and pundits say " this time is different " which is happening at the moment . However no one can really predict how long this will go on , But it doesn't go on indefinitely and will stop at some stage. Any one who successfully predicts when this stops will be relying on random chance . A while ago Shadow predicted the Sydney median would reach 1 mill. Many ridiculed this , but it seems he was pessimistic

My observation in previous cycles ( personal observation and review of previous cycles ) is that when Sydney stops Brisbane ( and SA and Tassie ) kicks on .

Reason ? People make money in Sydney and when they see the market is approaching or has reached the top they look for other places to make money .

Consensus action by informed Property / Somersoft members is a leading indicator of what the market as a whole is going to do ( I call this the pchat score , which at the moment has Brisbane , Adelaide and Hobart as the buy places , Sydney as hold or sell depending on your specific plan ) . I've seen this consistently happen since I joined Somersoft 2000. There are long term members who consistently buy in places before they become the topic of conversation on the forum , however you don't need to do that to do well .

Sydney's last generalised boom finished in 2003 , though some places did move up after that . While brisbane was moving prior to that ( similar to now , middle ring stronger , outer ring picking itself up off the floor ) , Brisbane's last peak didn't come until 2008- 2010.

Personally , the sooner the boom in Sydney stops the better . I'm long in Brisbane with lesser exposure in Adelaide , Hobart and Launceston ( bought for higher returns ).

Cliff

 

If Sydney or Melbourne had a minor correction, Brisbane might be unaffected or may see growth if investors shift to that area. If Sydney or Melbourne had a major correction Brisbane could potentially correct too to some extent, however Brisbane isn't very overpriced. Demographia ranks its median multiple as 6.2 (the normal range is 2-5) compared to Sydney 12.2 and Melbourne 9.5 (down from 10). Though 6.2 is on the expensive side compared to world cities (even New York is only a 5.7), even in the worst case scenario Brisbane doesn't have far to return to that fundamentals-based long term mean price range. I think any correction in Brisbane would probably also be temporary - if it is overpriced, it's not very much so. A correction there could also feasibly be completely or mostly contained to apartments.

 

Don't worry about what's happening in Sydney ,after looking at the new land values for the BCC footprint and when you look the way some values have gone up over 200k in value ,as some investors in inner Brisbane financial and social status has changed once they read the value range and the land tax bills..
2017 annual land valuations | Environment, land and water | Queensland Government

 

I say Bris and many other places will continue on, as they have own cycles.

Only a bad downturn and higher than expected rates would stop or cut short other expected cycles.

I would be more worried about coastal regionals close to Sydney coming to s dead stop if Sydney stopped all of a sudden, not North Coast, QLD etc

 

I'm finding trusting cycles and property clocks difficult. For example many people thought that Sydney had reached its peak 2 years ago and then look what happened. Imagine if you decided 2 years ago to wait it out only to find that you are now priced out.
With the Perth cycle, it's been in decline now for almost 9 years. That's a long time to wait for things to turn around if you bought back then.
What if I tried to invest counter cyclically and bought in Adelaide because it was at 9 o'clock compared to Newcastle, which is at 12, and then Adelaide only grows 3 percent and Newcastle jumps another 6 percent.
Then Hobart which has been the worst performer over the past 20 years decides to go berserk in 2017, will it go back to where it was before when the frenzy dies down or is there something new happening.
I think due to mass migration, population growth and international investment, the way the markets are performing is making it harder to read.

 

Ur

Yeah I would agree. I'd suspect the coastal regionals of Sydney and those Sydney suburbs with a lower demand to supply ratio than Sydney will be hit harder.

 

Depends on whether Brisbane economy goes into a recession like Perth has from the mining downturn.

It seems many Syd/Melb investors have expanded into Brisbane past couple years, especially places like chermside and logan. IF they were forced to sell from a downturn, they might have to get rid of their Brisbane properties as well and "flood" the market with these properties.

A lot depends on the local brissy economy. Unlike Perth, there's billions more in GST funding coming in this year, but will that be enough to offset the decrease in income from lower commodity prices and rising unemployment?

And if we get an Australia wide recession by the end of the year, no way will prices in Brisbane go up.

ATM tightened lending seems to be hitting every state.

 

Nobody knows/knew what the RBA will do exactly, they can see what those 2 rate cuts did & remember the banks were worried about a Labour Royal commission, you can see what they do when not worried !

Cycles are not an exact science, look at sales and what is happening is best.

Where I look in Sydney, prices have stayed pretty much the same for over a year, you read about record auctions etc, but I would not base everything off that.

 

http://www.theaustralian.com.au/bus...e/news-story/2e56a277ad352db5df02a0acf38c12f0

Terms of trade boosted by commodity prices

Chart Pack-Commodity Prices | RBA

 

If sydney goes down, money will be lost.

No mention of a clause in my loan contracts promising that any value lost on sydney property will be made freely available for reinvesting in Brisbane.

If sydney goes, there will be less money available to sydney investors to invest anywhere including in Brisbane.

 

I'm talking about new entrants not existing owners. As Sydney goes down, it will deter new entrants into the Sydney market and seek alternative markets or alternative investments.

 

If they have investments in numerous States and Sydney drops would they do a sell off in the other States to save their Sydney properties?

 

I don't know... I think it's a poll question. But if push came to shove I'd sell whatever IPs I think have the worst future potential and least upsides.