Negative Equity in Western Sydney

Anyone been affected by this?

Scary considering not even close to peak number of OTP apartments being completed in Sydney.

Off-the-plan Parramatta apartment loses value before lived in: Caution on pricing from valuers

 

Whether or not it is negative equity will depend on the LVR of the loan.
Marg

 

yep... hurts extra when it would be negatively geared and is negative cashflow also...

 

This has been talked about and predicted for ages on here.

Already happening frequently is Bris.

Can be both a cause of much pain and much happiness...depending on when you buy.

 

Oh Ok Thanks, Yes i see more and more articles in media about negative equity and Sydney now..

 

That's because you are looking for confirmation bias.

Everything you are positing and looking for is negative news.

 

Hi All,

Yes, I am sure there is some confirmation bias. However it is clear that the market is down, and there would be many recent investors with negative equity.

The property selection and investment lessons for me are:

1) Don't buy property off the plan. Buying OTP only works at very specific times at the beginning of a property market cycle.

2) Even young investors should have some investment loans on P&I. P&I is a great way to minimise downside (in a bear market) or supercharge equity (in a bull market).

3) The last thing I would add is that outer-ring suburbs might have good investment credentials for detached houses, but are often unfavourable for apartment investing. In the outer ring suburbs, the price of units and houses are too close together, and units in these suburbs are most vulnerable to price corrections. So suburb selection for apartment investment is more important than for investors into detached houses.

 

Two negatives make a positive

 

Not surprising when on one hand you see a seemingly endless array of cranes in Sydney still going and on the other hand the banks have stopped giving money out. It will take sometime (maybe years) before the supply has dried up, the Royal Commission is behind and rents start to climb before you see any movement again. Good time for investors to get cashed up because there will be plenty of opportunities...

 

Don’t believe everything you read in the media.

Articles on “negative equity” are meaningless.

Equity, positive or negative, is the difference between the value of the property and the amount owing. Obviously this is different for EVERY property.
Marg

 

Moral of the story: don’t buy off the plan crap

 

Wasnt there another article somewhere else recently with the large percentage (70%??) of OTP are valued less than when they were purchased (deposit placed)

 

It is probably worth noting that part of the reason OTP properties are down in particular, is the change to the depreciation deductability laws in the 2017 Federal budget. The loss of depreciation allowances on capex that you did not incur, makes it very undesirable to be the second owner of a property. Which means that OTP investors are concerned about the re-sellability of their property.

So while I don't like OTP myself, there are multiple reasons why this sector is suffering right now which goes beyond APRA and this moment in the property cycle.

 

it has been discussed quite extensively on the forum.

the negative equity is on paper "loss" if ppl can hold it for a number of years, they might come out alright.

the main problem/issue is that many ppl, who paid deposit, when come to settlement time, banks won't value the contracted price, if ppl don't have the cash to cover the gap, they then can't settle. they might be forced to walk away and lose the 10% deposit. that is an instant loss. big $ there

 

This was a crap deal from.the start and we will see a lot more of this noise as this settles out. No sympathy for the offshore speculators but I do think it was little unfair for the unaware locals...

 

You bought in western Sydney recently right? Could your confirmation bias be positive? I think So

Ps small or big negative equity for you?

 

I have bought property continuously for 10 years.
The wester Sydney IP had a GF built and leased for $10 less than primary dwelling.
Tha vals came in and I have positive equity and 5-6% yield.

In my opinion you are in a property investment forum.

Posting article after article and posts on falling market doesn't help. Members especially because you ha e only been a member for 1 months and this has been talked to death for the last 9 months or maybe 1 year.

I found a solution I bought from a couple who wanted to move on so price was. $20-30k below comparables in area which will grow and built a GF to improve yield.


Or you can sit on PC and post articles of Doom and Gloom. your choice

 

It's a fascinating thing to watch. Those who big time missed the boat or bought at peak prices can't help but focus on falling markets and doom galore .

Those who bought well and are stocked up on cash/equity can't help but see some great opportunities entrring markets now and are quite excited. They want their 2nd, 3rd and 4th stab at getting more good deals.

Fascinating stuff.

 

The OP is highly likely just a screen name for an existing member, an alternative account in other words. Wouldn't take a genius to figure out who it might be.

 

Sorry didn’t realise it has been talk so much about negative equity on here, sounds like you will soon be very very rich with 5-6% yield; thanking you for explain