NSW Leppington land off the plan

There are many reasons why people avoid Rivo, if you do search in this forum, can pull some clues.

 

@highlighter I totally agree with you about buying in established suburb, I have always bought properties in other states in established suburbs. The only issue is lack of affordable properties that have land content in areas that are within 30km of the Sydney CDB.

IMO the first home owners market in Sydney is very strong, there are a lot of people in their 20's that don't have their own home. If H & L in fringe suburbs did drop to under 600k their will be large number of buyers entering the market again as the price point is attractive to them. Even if values dropped 10% in established suburbs it will still be out of reach for first home buyers.

 

Are you speaking from an investors or a owner occupied perspective? To what extent do you believe the prices will correct in Sydney? I doubt the price will ever fall to the extent that you think. Tell me the established suburbs where you can currently buy a house as a first home owner or even be able to buy one when a correction occurs, if ever? Off the plan properties and H+L packages sold data won't necessarily be very accurate on the site. If I sold the last 660k H+L packages on the site for for example, I would just edit the price to the next highest H+L package in the area and sell that property. Redfern, Surry Hills etc used to have a bad rep too, look at where they are now. Riverstone is close to the Satellite suburbs, Rouse Hill and Marsden Park which are going to be the next major city hubs in the future. Also, the so called fire sales will never eventuate for houses as they are always undersupplied in Sydney. I believe you are probably referring to OTP apartments. You'll be hard pressed to find any new houses for under 600k - These houses will be sold within the day of the listing if they exist.

 

No offence but you look pretty young. When the market is cactus its cactus. If you were around in the early 2000's you would have seen exactly what @highlighter is saying. Prices dropped over 100k back then when prices were half of what they are now for stock on the fringes. Developers were discounting and throwing in incentives to sell blocks. Then it went dead for a long time. Hardly any new estates popped up for years.

 

@Pentanol I agree with u there. Any H @ L package under 600k with a block more than 300 sqm will be snapped up quite quickly if the location is within an hour from the city.

This price point is a sweet spot for first home buyers who don't want to be in an apartment.

 

As an investor - it is critical for a good investor to understand how bubbles work, and that markets can and do correct.

As to a Sydney correction, I don't know, but I'm Irish. I've seen a market drop more than 50%. No one (or few) believed that would happen (including me at the time, I'm not claiming to have a crystal ball or be some soothsayer here. Truth be told all the signs I saw in Ireland are there and I still find myself doubting a crash could happen, and I've lived one. But people have an inherent bias that leads them to assume, or even powerfully believe, disasters won't happen).

That said, if you track the extent of corrections in most major bubbles, the market tends to contract to or around the long term mean of the median multiple (a ratio between median house prices and median household incomes). e.g. NY corrected around 30%, Las Vegas around 60%, Miami around 60%, LA around 50%, Dublin close to 60%. Prices fell just over 40% in Spain, too (I don't have a city by city breakdown there, though I could probably find one). Corrections to that extent aren't by any means rare.

I'm not predicting this for Australia... the truth is, I don't know what will happen. As I said, I doubt we'll see that large sort of crash on a widespread basis. But even if we don't see a large correction, prices are likely to see some correction eventually. It's just common sense. It's simply how markets behave.

I'm also not suggesting particular individual will be able to afford a property in a good suburb either, and in some cities, prices have gone beyond the reach of the median buyer. But that still doesn't make city fringe suburbs a good investment, and there are still quality options in some cities (I'd just avoid the really overpriced ones - cities like Brisbane, Perth, Adelaide, Canberra etc, good suburbs in these cities have many good homes that will always be in demand). New investors are better off looking for quality homes in cities they can afford than fringe suburbs in cities they can't. Those good homes are your best safe harbour assets (in Ireland, good quality homes in good suburbs did correct, but recovered very quickly, and continued to be in strong demand even through the worst).

I'm not only referring to OTPs as well. I believe HOLs are also at risk in many areas (not universally, just as not all apartments are a risk, but broadly speaking). The fact is, the fringes are a vulnerable area, where most buyers are less likely to have paid-off mortgages, are more likely to be recent buyers without equity, there may be fewer services/shops/etc and a longer commute making those areas less desirable if more desirable suburbs come down in price. The fringes attract lower income earners both as buyers and renters, and they attract investors who can't afford to buy in better areas, and lower income earners are simply more vulnerable, even in a small correction.

Recent developers are often vulnerable too, and in fact when you're looking at HOLs you're often looking at small business operators, they're not your Harry Triguboffs or other multi-millionaires able to lend to investors when they can't settle. They're small business owners who often just don't have the capital to hold in a stagnant market. So in that way, HOLs can be more vulnerable than OTPs.

Even a mild 10% correction would see people (builders and owners alike) in a lot of these fringe areas forced to sell - prices haven't even fallen much, if at all, and we're already seeing many of these regions struggle. Contrast this with established suburbs, where owners often have far more equity and more importantly aren't competing with a lot of other brand new assets and desperate vendors. Consider too that with high supply, all new listings in fringe suburbs in a small correction would worsen that oversupply and therefore increase any vendor's or developer's competition.

When people think of a bubble bursting, they often think it's a universal downtrend, but the fact is the majority of falls happen, and can even be contained, to those new development regions. New York was a great example of this: price falls there were mostly contained to new stock. Dublin was similar, city fringe estates (the lifestyle "hubs" of the future, as was also claimed of places like Belmayne) made up most of the crash. Good quality assets did correct in the panic but nowhere near as much, and they recovered much faster.

My advice right now is this: is a crash about to happen? Maybe, maybe not. But a good investor recognises that markets do correct and plans for it. I personally think now is the time to avoid OTPs and HOLs given the increasing and significant oversupply in these markets. We just do not have the growth to absorb it - population growth is decreasing, our demographics are unfavourable, and borrowing conditions are also turning sour so our supply of new investors is drying up too.

I also think any correction in tightly-held established suburbia (the areas uncluttered by recent development and dominated by established owners) will be, at the very worst, a short term overreaction (again, very broadly speaking). Good suburbs in Dublin recovered within 5-8 years, are generally ahead and during the later half of the recession attracted very strong rental inflation (the banks tend to clam up in a crash, locking out even people able to buy - and where do those would-be buyers want to rent? Good homes, not the fringes). Ghost estates because ghost estates within a terrifyingly rapid period, and so many things detracted from their popularity - too many broke people, crime, many were sold off for social housing. These areas have only now started to recover and may never reach their previous values.

City fringe homes are only a "sweet spot" for new buyers while they're priced out. Nobody wants to live an hour out of the city on a postage stamp in a cheaply built mass produced home if they can afford something better. If prices come down in more desirable areas, that is where buyers will go. Same trend happened in USA by the way... they were referred to as 'zombie subdivisions' there.

 

The only thing surry hills has in common with the fringe suburbs is that they're both in Sydney ! You can't use examples of urban gentrification for suburbs 2km to the CBD and apply that greenfields development sites 40km west.

 

@Daniel007 It always starts with affordability. Young people always brings vibrancy to a place so when other people with a lot more money starts moving into the price, price starts increasing, pushing the lower socioeconomic people out it will see some significant growth as it becomes more desirable. As I said, it is relatively close to satellite CBDs in Marsden Park with many big employers and the Rouse Hill town centre. You basically don't have to leave the area. There is very few places left to go as a young home buyer and I would pick Riverstone over Leppington any day for all its amenities for new H+L packages which is the the point of this thread. Established properties that may still be affordable will probably be in Penrith or Kingswood. @Biz is correct that I have not seen the impact of the market going through a significant correction but if you are buying it as a PPOR and have some buffer to be able to hold it for the long term then it doesn't matter what the market does. If you don't have a buffer then it may be safer to buy an established house.

http://www.dailytelegraph.com.au/ne...e/news-story/1b536d26006ebb72b2e615c2c5ff31d6

 

I agree, being cautious is important. At the moment, I really can't see anything short of a 'black swan' event that can cause this correction. I don't see the interest rate increasing in the near future, foreign investors being restricted until at least the next election, lax regulation etc. Everything appears to point to Sydney having enough steam for another few years or more. Due the PC sentiment it is obvious that investors are always looking elsewhere for investments due the APRA squeeze which makes rental yield and debt recycling strategies more important. I hope that most investors are already aware that Sydney is close to a peak. So what do you suggest people who can't afford to buy houses (new or old) in established suburbs do, especially those that wants to get a house to live in now? Do you tell them to wait in hope of a correction (remembering that the last generation also heard the same thing) or buy somewhere you can afford or buy an established house (losing stamp duty concessions and first home buyers grant) to eliminate valuation risk at settlement?

 

Personally I think there's a lot of fantastic opportunity to be had in other cities. I think the highest risk areas right now are Sydney and, to a lesser extent, Melbourne. I'd avoid these cities based on the gulf between home prices and median incomes, as the majority of people who can afford current prices at current values are either stretching themselves too far or are vulnerable to any external change e.g. rising rates, economic shock.

I don't think waiting for a correction is the best bet. I do think there are currently assets in good areas available at far prices, and I'd consider extending into those areas. e.g. Brisbane apartments are in oversupply, but Brisbane homes in quality areas are in many cases not too expensive - it's our third largest city, it's got a lot going for it in terms of tourism and general pleasantness, and the it hasn't seen the sort of runaway growth of some cities.

The same can be said of Adelaide, Hobart. Perth I believe has come down quite a bit, so at worst it's halfway down the cliff, and its growth prospects are therefore better in my opinion than Sydney. We can't be sure Perth's bottomed but even if it hasn't, it's become much more affordable. If people look to good quality assets in good cities, in popular areas, near decent schools, in suburbs dominated by owners - and there are many such properties around the country that remain reasonably affordable - I think this presents a very secure investment in a changing market. I think cash flow is also becoming increasingly important, as is looking for good properties to which value can be added for growth. I don't think rapid capital gains will remain the engine for the next decade.

In terms of waiting, what I would say on that front is don't clam up, but something to remember too is when markets correct there are often bargains to be had. I don't think it's any more possible to time the bottom of a market as it is to time the top, but you can look for broad clues. Keeping some capital aside (or out of the priciest cities) can be a good strategy for some. When bubbles do burst (if the worst case scenario were to happen) it would present a fantastic buying opportunity 3-5 years down the track. Economics do tend to recover quickly (in a decade or so) after bubbles, not necessarily in terms of a return to previous heights but in terms of solid growth. Cities in Ireland are back to double-digit growth. Most good investors were able to stay afloat even through the worst.

Another point I'd make is be wary of panic. If you buy or own a good quality asset in a diverse economic area (so not in a one trick regional town) and you avoid Sydney and Melbourne, the scope for a sharp correction is limited. In terms of the median multiple, cities like Brisbane, Canberra (might be pushing into too expensive territory), Adelaide, Hobart, Perth - they're all in the low 6s and 7s - which is barely bubble territory, if a bubble at all. Even in a deep correction, these assets aren't going to tank as hard as assets in Sydney (which is on 12) or Melbourne (on 10). Fundamentals are as much a market floor as they are a ceiling - because there will always be fundamentals based demand from population growth, tenancy needs etc. In Dublin, for those good assets, it was usually better to hold. Most good suburbs are now ahead.

I'd say yes, the best advice is buy somewhere you can afford, and buy the right asset. Quality family homes will always be in high demand. One of the vital things to look for right now is competition. Buying into the city fringes or into an apartment might be "affordable" but it's also high risk, because these are the oversupplied portions of the market, and in a pinch there is simply too much competition to secure tenants, and too many assets to generate real growth beyond speculation.

Look at a suburb like Kaleen in Canberra. Not incredibly cheap, but it's a good example of a tight suburb. Lots of older family homes with potential, very good school, very popular with young families and little recent development. This is the sort of "good" suburb I'm referring to. You see in that suburb listings and sales are roughly equal, which means it's attracting solid demand. Kaleen Real Estate for Sale | allhomes

Contrast this with Moncreiff, a fringe suburb. Similar if not more expensive prices yet very little demand, little infrastructure, tiny blocks, a relatively unpopular area, mostly empty. These just aren't moving. Moncrieff Real Estate for Sale | allhomes which means you have builders potentially struggling, a lot of competition, the buyers are almost all leveraged so in a pinch more will be at risk of selling up. It is a ghost estate waiting to happen. You'll see too the stock vastly outnumbers the very few recent sales.

If the market does correct, I'd be betting on Kaleen. I'm not saying it would be unaffected, but most buyers in the area will hold on (they're mostly owners - why would they panic sell?), you're not competing with skittish builders holding 20 blocks no one wants, you will continue to attract demand from families who will probably shun Moncreiff (they're shunning it now, and there's no school, it's at the edge of the city, and who wants to live in an empty suburb?)

I'd also say it doesn't take a black swan event. The recession and GFC, these were consequences. Prices stalled in 2006, and started falling in 2007, long before rising unemployment or the GFC or any of that. The economy was still growing 4.5% per year in Ireland at that point. The recession was a consequence, not the cause. All the 'black swan' events came long after price growth disappeared.

 

At the end of the day you're trying to flog your stock in Riverstone, lets look at the opportunities from Leppington's perspective for an unbiased comparison.

- Leppington will have a fairly significant town centre with a mix of retail/office/commercial
- Edmondson Park will also have a major town centre built by Frasers, masterplanning already done
- Liverpool CBD is 15-20 min drive and is a genuine satellite CBD, lots of infrastructure investment here
- Obviously the South West Rail line which will eventually be expanded

- Badgerys creek airport and the future industrial nearby
- The existing Prestons industrial estate which is going bonkers currently
- Crossroads bulky retail, costco and new AMP industrial estate
- Luddenham- Sydney science Park which will include thousands of STEM jobs and multiple education/uni lab facilities

At the end of the day, looking at it from an 'investment' perspective, how can Leppington be trumped by Riverstone when considering all infrastructure being invested into the South West? I'm not saying Riverstone hasn't got anything going for it, but it can't complete with the investment and employment which is attracted by Badgerys Creek and the Sydney Science Park. Personally, I wouldn't be buying any at this point of the cycle but long term prospects easily point to the South West.


http://www.dailytelegraph.com.au/ne...t/news-story/6f737188ac62d3bf0b013afb123b3885

http://www.dailytelegraph.com.au/ne...y/news-story/9ed8e525b6bd00d09aff1bdc82849fbb

Edmondson Park Town Centre Master Plan and DCP
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Not really, I'm only doing this job because I love properties and want to eventually move into the industry. I'm a full time analyst during the week and earning well above the median (obviously still a small fish in the PC community) but my point is that I don't need this job at all to survive but its good pocket money. Just trying to build contacts until I'm ready to start a business like the other young guns. If I was trying to flog off my stocks, I wouldn't do it in a forum where I would be torn to shreds. I'm just giving information that I have as someone who sells both stocks in the Norwest (Rouse Hill, Riverstone, Schofield, Marsden Park) and South West (Merrylands, Liverpool, Oran Park etc). Norwest is more prestigious than South. No rich people will voluntarily choose to live in Leppington. The Hills is where its at. The metro to Bankstown won't even be built until 2024 at the very least so you can imagine how long it will take to get to Leppington if ever. The metro near Riverstone will be accessible by 2019 which will be at least a full decade ahead of Leppington.

 

You're still talking as an investor. I'm saying, what happens to the people who wants their own home and living in Sydney. Buying a house in another state isn't exactly going to allow you to live in a house in the meantime. I've already diversified by buying in Brisbane, Sydney and Canberra. Got one pending in Melbourne. People can't wait forever, they lose may the lower priced H+L package and are priced out again waiting for their chance to come further out or potentially wait another 20 years before anything happens if they chose to wait for correction before buying family home.

 

I can only speak for myself, but if I wanted to live in Sydney right now, I would rent.

 

'Rich people' don't buy a H&L in Riverstone either. North West obviously has more prestige than the South, but i wouldn't convey that it's like living in Pymbe when it's in the Bankstown LGA. Regardless, we're looking at it from different perspectives, you as a PPOR purchase and me from investment potential.

By the way, Leppington already has a station within the South West rail extension which links to the East Hills/Airport line, no need to wait until 2019

 

Would you buy in Riverstone in the 700k mark or in Leppington in the 900k mark? I was talking about the Sydney metro which will not even reach Bankstown until 2024. Its still quicker to the CBD than Leppington. Have you even read what the OP wrote, its obvious that we are looking at a PPOR perspective. We would not even be talking about Sydney if its from an IP point of view.

 

I didn't get a PPOR vibe. If it is PPOR then the OP's at least concerned about losing money, and mentioned having made money on their previous purchase, so presumably that's important to them. Whether it's PPOR or not they don't want to see their value evaporate.

 

Do some numbers.. 550k land all settling now. 300k home to put on a 450sqm block. 850k all up STARTING price... it's not even Box Hill.. its like Nelson and Pitt town its that far.. don't just think about where the gables starts.. it's like a 3km long masterplan. Land prices have gone up 30k since it launched early last yr/late yr.. they priced it too high to start with.

 

450sqm block $595k, note we are not talking about 300~330sqm block size as riverstone.
Council Hills vs Blacktown.
If u drive through rivo we will get feel of that area. Ok, lets say other than rivo or box hill, what do you think 800k best investment area in Sydney only.

 

@SteffS for 800k if I had to settle now and H & L package. It would be in Edmondson Park/Bardia, it is a similar distance to Box Hill and Rivo to the city but it has more upside due to the Edmondson Town Centre being built. In saying that I wouldn't want to buy any H&l package for 800k that I have to settle now.

I m looking for H&L packages for around the 700k mark with 2 or more years settlement, IMO the logic being I would haves save close to 80k in holding cost while I wait for it to settle.

As I am an active investor I don't want to buy in Sydney right now but just like a lot of people I have my family that live in Sydney and my six figure paying job is in Sydney as well. I guess this is why a lot of people are still buying in Sydney even though the market is at its peak.