Interesting article on the two tiered economy

For anyone who hasn't seen this article:
Things are bad outside the Sydney-Melbourne bubble

According to this the smart money for property investment is still in Vic and NSW in short to medium term.

Would love peoples thoughts.

 

Depends if you like to follow the herd or buy in down markets. Personally, I think following the herd is risky.

 

I think you need to buy in down markets when the fundamentals are strong. Can't speak for Perth but I don't think SE Qld is a good bet at the moment. Which was definitely the herd move last year at least.

 

Wow. Great share. And it's right. VicNSW is strong. The other half of Australia.... no comment.

 

It's good to see these articles in the major newspapers. People in Syd/melb think things are all roses....where the reality is that in lots of places the country is more or less in a recession.

If you ever wondered how one nation got its resurgence I'd suggest that the two speed economy is a major contributor.

 

True. When investors abandoned regional mining towns it doesn't mean it was a good time to buy. I agree fundamentals still need to be strong.

 

Thanks for posting Beelzebub. If the stats from this RBA rooster are anywhere near accurate, that explains a lot about the following markets :

Kent's fiddling with population and completion figures shows that in VicNSW one new home is being completed for every 2.6 new residents, which is about the standard: one home for every 2.6 people. But in Queensland it's one new home for every 1.7 new residents, suggesting prices are going to have to slide to shift them. In Western Australia it's far lower – an astounding one new house for every 1 new resident, suggesting an appalling oversupply.

And this bit also quite salient :
Rough guesswork by Terry Rawnsley of SGS Economics & Planning suggests that if the Reserve Bank had to pick the right cash rate to support the half of Australia outside of VicNSW it would pick something close to 0.5 per cent instead of present 1.5 per cent. To contain things in VicNSW it would need 2.5 per cent.

I agree with both of these aspects. Also expect the banks to take the lead in raising rates independently of RBA (just because they can, that's how they roll) and we're starting to see that. The comment from Rawnsley above suggests to me that it will be the areas outside of VICNSW in particular that may be hyper-sensitive to any such rises. Something to be aware of when considering personal strategies for 2017.

 

It was a 2 tiered economy last time too. WA/NT/QLD booming due to resource boom, VIC/NSW struggling. Rates were 8%+

 

A very good article. Sydney and Melbourne did experience some downturn during both hte GFC and the mining boom. Now they're reinvesting in non-mining industries - it was to be expected. Well done to those who are not resentful.
If every person in WA bought a house, their problems would be almost solved. Now is not the time to buy there. Not while the vacancy rate is above 7% and rising.

 

@Perthguy
Depends when you purchased

Perhaps high risk now because Syd and Melb been booming since 2013, arguably we could be close to peak.

I personally would not be buying in these markets regardless of whatever this article reports.

 

I have heard there is an oversupply of rentals in SEQld? Logan ...no idea just what I heard

 

Not so, Melbourne was a booming market during GFC 2008 I was buying/playing in this market, not many investors realise this. Boom Started in inner city - units and then filtered to middle ring.
Refer to threads on SS
I am pretty sure it was the only State booming at this time

 

Correct 08-09 and into early 10' Melbourne was rising.

 

Yes I was buying up in one the best performing suburb at the time development sites in Broadmeadows on the nose with locals of course. Also in Coburg.

Were you playing in this market?

 

Yes I bought in East Bentleigh in 09'... paid prob $50k more then it was worth... the next three years were tough with interest rates and prices stagnating/dropping... now I'm laughing ! That's property and cycles for ya

 

Same - paid 30K more than I should've in Frankston in early '10. Not good timing as market then stagnated until '14. No worries now.

 

I'm seeing similar signs now to be honest... I'm pretty active and it's time to be prudent with your investments.

 

I did read something in the last day or two about middle ring Melbourne starting to slow. They've been wrong plenty of times before, though. You say you are active which means you've been shopping/looking around? So I'll have to take your word for it.
I'm passive in Franga and loving it for now; enjoying it while it lasts. It's a long time between drinks.

 

great
Bentleigh one of the best performers this cycle. It's a no brainer median is I think close to $1M, significantly cheaper than surrounding bay areas. Good for you.

My investor/developer friend purchased a deve site he recognised the discrepancy in Bentleigh and surrounding areas. Just sold with plans and permits in place did very well. Lots of developers jumped into this area..
McKinnon School precinct pretty hot

all the best and welcome

 

Yes every Saturday on the ground plus countless hours during the week online.
Good luck