Is this a terrible time to buy in Sydney?

*im the lady Seachange * ;-)

I'm looking to buy a 2/1/- apt in the eastern suburbs in the next week or two.
Not only is there not much on the market, but anything decent is still going well over listed price guide.
Looks like the boom is still going strong in central Sydney suburbs with the low interest rates keeping it heated.
Plan is to buy it, and have the option to neg gear within a year , then probably just rent somewhere else.

1. With all the promises of potential neg gearing being grandfathered, has it been explicitly stated that existing cap gains structure will be too? I've presumed so, but to me this is prob more of an issue than the headline issue of neg gearing .

2.After 6 solid months of unsuccessful searching and negotiating , should I step back and rent for a year until things cool off a bit? Risk is they may not cool off for a couple of /few years, because in my price bracket ( under 1 mill), the competitors are first home buyers, not so much investors.
To use the 6 year rule for ppor do I need to live in the property for the first three months? That could be a problem if I have a lease already elsewhere.

Ive been reading the forum pretty avidly since I signed up and enjoy it , I've learned a lot from you all.

 

i know the area well and your right the unit market is still very strong due to low supply and overall strong demand from quite a few different demographics.

If your looking for an investment there right now it's highly likely you'll be paying a hefty premium price. Personally i don't think prices are gong to drop much either when the market eventually cools. The demand is just so strong for the under 1mil price bracket.

 

Leo
I think the clock is at 12.00 .... peak. What goes up also goes down straight after peak

 

Further interest rate cuts in Sydney will only help keep the momentum in the market ticking along. That will only mean continued competition and a battle with other buyers. Much of the significant growth has already happened in Sydney.

Have you considered investing elsewhere, where there is a better chance of buying below market value? Ideally in an area where a capital growth spurt is starting.

Look for markets that have positive indicators for real estate growth. Population trends, increasing employment, infrastructure investment, signs of gentrification ( and attractiveness to owner-occupiers ).

See my more detailed post here: Property/financial advisers necessary?

 

Finance will also put the brakes on, no loans no property purchases. This is only going to get tighter next year.

 

I agree @MTR and im sure there will be some drop, especially in the overpriced high strata units but much more modest a drop in the boutique buildings.

Of course no one really knows for sure so will be interesting to see.

 

My heart wants the feeling of a backup plan - somewhere I can lease out or live in in my local area.( I know you heart feelings on here ;-) ) As a business owner, I know the power of flexibility with an investment.
BUT to make money from investments- and I'm in a position to quite comfortably access $800k, plus about $500k+ of my own, maybe holding off or investing in different areas makes more sense.

I know this area well. I've spent a lot of time researching it. I agree there are other options though, that are more likely to have more growth.

 

@Leo2413 was there a drop last cycle or did the eastern subs just sit flat? I would think the drop would have be <5% if anything

 

Syd west has already fallen back.
markets always fall back after they peak, it is really just a matter of time.

Its dangerous to be jumping into peaking markets, easiest way to lose money and then have to wait another 7-10 years for growth and trying to cover the debt.

Blue chip just falls harder, have a look at the last Syd bust cycle and what happened to northern beach suburbs, took years to recover.

 

That's the thing. The sort of places I look at may have a slight drop- guessing they level out or even 5 % or so. Never say never, but I can't see them plummeting. If it's a long term hold, it's a temporary ppor, with the long term investment side, in a place that's always likely to be highly desirable

 

The pocket in op vs northern beaches is very different though

 

I think the blue chip homes in this market will be hit harder than units imo. regardless i wouldn't be buying anything in this market. I'd wait until prices cool and then drop off. Then go hunting for a distressed seller or out of town agent who wants to sell at a great price and try to nab one that way. But definitely not in this market.

 

I think the Eastern Suburbs will always stay popular because it has accessibility to the city, there are beaches for lifestyle and UNSW is in the area plus hospitals too. People will always want to live there. Many Inner Westies settle for Inner West because they can't buy what they want in the East!

Northern Beaches on the other hand is a different kettle of fish - bad transport, it takes forever to get anywhere else. Its feels fairly isolated to the rest of Sydney except to say Chatswood.

Edit: agree with other posters, don't worry about jumping in right now. I think it will be slow growth or possibly negative in the next couple of years. If you do find the distressed seller or out of area agent....

 

I think mostly the well located stock in boutique buildings sat flat i don't recall any major drops but the housing market took a bigger drop. However during this boom now that market has gone insane. An old home on my street just sold $4.35m

 

Its not just the drop in price, bust cycles can last 7-10 years no growth. That is a long time between drinks.

In other words missing other opportunities to make money. Strategising is very important especially if you want to build capital/growth, this is required first to create future income streams/cash flow.

Many people buy at peak because they basically panic, but in reality they actually missed the boat. The real money has already been made, those who jumped in around 2013/14.

MTR

 

good idea.
I think its been great house hunting in Perth Blue chip areas for the last 7 years now, but we are not upgrading;(

 

That's why people buy there. The insula peninsula. Best beach side living in Sydney
If i had the pick of syd I'd live there

 

Agree 100%

 

I think seechange picked up some blue chip bargains that fell back significantly during the crash.

 

I should have purchased more in Sydney... damn it.
Though Melb has been brilliant market as well and still going strong....