Is Sydney overvalued?

Discussion in 'Property Market Economics' started by Alex123711, 19th Mar, 2019.

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  1. Alex123711

    Alex123711 Well-Known Member

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    How do you know if it is/ isn't? What metrics can you use, or can you compare it to other cities? Which cities would be a good comparison?
     
  2. Trainee

    Trainee Well-Known Member

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    Yield and cycle will help. Melbourne is the closest.

    More interesting question. What does a undervalued sydney look like? What would make you think it wont fall further? Is undervalued something you can only see in retrospect?

    2008 sydney was undervalued. What did the market look like? Why didnt you buy?

    Classic fear of losing money more than joy of making it. Theoretically anyway.
     
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  3. Alex123711

    Alex123711 Well-Known Member

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    Melbourne is closest to being overvalued did you mean? I wasn't looking at real estate in 2008, so i'm not sure. In hindsight why weren't more people spruiking/ buying in Sydney?
     
  4. Morgs

    Morgs Well-Known Member Business Member

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    What do you think?
     
  5. Trainee

    Trainee Well-Known Member

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    The obvious answer is that its only undervalued in retrospect. In 08 sydney looked like it was going to get sucked down with everything else after being dead for 5+ years.

    You cant compare sydney and hobart and say sydney is overvalued because hobart is cheaper.
     
  6. marmot

    marmot Well-Known Member

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    Certainty not helped by the big changes in immigration and the possibility that new immigrants will be pushed to other cities, according to reports in the media the other day.
    High vacancy rates tend to push yields in the wrong direction and may see an exodus of investors over the next few years , which might even put more pressure on house prices.
     
  7. standtall

    standtall Well-Known Member

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    It varies from property to property.

    Examples from friends' purchases:
    • House value $1.5 million - weekly rental value - $750 - BIG RED FLAGS
    • House value $800k - weekly rental value $600 - OK Value
    • House value $1.1M - weekly rental value - $650 - RED FLAGS
    All above freestanding houses are in same Sydney suburb and within 300 meters of each other.
     
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  8. Alex123711

    Alex123711 Well-Known Member

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    Can you explain how they will be pushed toother countries? Haven't heard of this.

    I never understood the people buying these, even with negative gearing they must be significantly out of pocket?
     
  9. Sackie

    Sackie Well-Known Member Premium Member

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    I've been saying for yonks and yonks...the premise of the question is flawed, that Sydney is 1 single entity.

    Value is often found hidden amongst a heap of crap.

    In the words of Master Lee: " It is like a finger pointing out to the Moon; don’t concentrate on the finger... or you will miss all that heavenly glory.” – Bruce Lee
     
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  10. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

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    'Sydney' itself is made up of hundreds and hundreds of sub-markets, 'overvalued' is a subjective term.

    Do you mean will the Sydney market continue to fall in price?
     
  11. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    from article
    "An annual cap of 160k (form earlier 190k) is to be placed on the permanent migration intake,
    Cabinet has also signed off on a regional settlement policy which will impose visa conditions requiring a fixed number of the general skilled migrant stream to reside in cities other than Sydney and Melbourne for a minimum of five years.

    There will also be incentives for overseas students, who numbered more than 500,000 last year, to attend regional universities and those in cities other than the two largest capitals.

    In a bid to address congestion in Sydney and Melbourne, the Morrison government is poised to announce an annual cap at similar levels to those under the final years of the Howard government, before they were dramatically increased under the Rudd and Gillard governments."

    Nocookies
     
    Last edited: 20th Mar, 2019
  12. Someguy

    Someguy Well-Known Member

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    This policy has not been well thought out has it. Unemployment is high in rural areas and that is the reason why many residents move to the city. Unless there is some sort of jobs boost (AUD crash and manufacturing!?) or is the plan to just farm people and the jobs to be construction and infrastructure.

    Also the cap on immigration surely goes against the interests of core voters and donators to the liberal party, desperate attempt to appease some smaller parties that seem to be gaining traction that I doubt will be implemented in any serious way
     
  13. sash

    sash Well-Known Member

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    Is the pope catholic? :D
     
  14. gary176

    gary176 Well-Known Member

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    Which part of Sydney is over valued and which parts are still undervalued

    In my opinion, a lot of places with new developments like schofield, ponds etc are way over valued...I still think places close to parramatta with some further drops will become attractive, I particularly like Northmead from a family prospective also it’s procimity to parra and Westmead hospital
     
  15. standtall

    standtall Well-Known Member

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    The Ponds and Schofields are an easy target in this forum for some reason but look at numbers:

    Suburb - Median Price, Rent
    The Ponds - 1.02 Mil, $630pw
    Schofieds - 840k, $560pw
    Epping - 1.55 Mil, $650pw

    It's the middle ring where all the 'bleeding' is happening!
     
  16. Triton

    Triton Well-Known Member

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    Pointless without knowing land size etc. Also, it's folly to look at yields for free standing houses without considering capital appreciation potential, sub division etc
     
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  17. standtall

    standtall Well-Known Member

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    I can say that price difference almost entirely came from the building component.
     
  18. marmot

    marmot Well-Known Member

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    According to a report on Bloomberg, the number is being cut by 30,000 and 23,000 will have to relocate to regional areas.
    It might mean about 15,000 less people in Sydney looking for a rentals or purchasing a home.
     
  19. bumskins

    bumskins Well-Known Member

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    I wouldn't be surprised if it's not just window dressing and no changes/enforcement are actually enacted.
     
  20. Dalien

    Dalien Member

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    People are focusing on yeild. For most of the common folk that aren't interested in sub dividing, knock downs etc it a good metric.

    I work on Fair value is 100 times weekly rent. Eg 700pw =$700,000.

    For me while buying my place as PPOR, weekly rent for past 2 years was 790pw and I brought for 700k.

    Cash is king in the end of the day. It's what you can regularly get if required.

    Look at lendlease atm, company posted year on year profits( mostly capital gains), but means **** without the cash flow.

    For those that say lend lease profit downgrade is because of recent loses. I ask the question of how much each years profit contributed to asset revaluations and accounting tricks? Trust me, CPB will have its day soon, as the all survive based on growth in debt backed by asset revaluations and other accounting tricks. Real cash flow in these business suck.

    In summary, capital gains are based on how well you pick your potential cash flow. The rest is the boat moving with the tide.