Since 2013, we saw a few factors lit up the five years boom in Syd and Melb. *Low interest rates *Consistent strong population growth *Downsizing *FHB grants & stamp duty cut Just curious, what you think would be the new cause of booms in the future if there's going to be one? Can there be some new things happen that we can't think of now...even if it's in 2025 or 2026...
Market cycles Study cycles and you will see a definate pattern. If you are in Adelaide on sep 7 we are running a seminar on this.
Hi Xenia, Will you have a video or online materials to share with people who are interested in the seminar but cannot attend due to location etc ? Thanks
Rental yields were comparatively high in Sydney in 2012/2013, making real estate attractive to investors, and at that time we also saw some first home buyers buying early on as it was cheaper to buy than rent. The following has been our observation: Capital boom is followed by rental boom; Capital boom leads to rental yields dropping There is an over supply of rentals with all the development that has gone on and the number of investors buying IPs, which may impact rents for some time As yields drop, investors look at other markets offering better returns As investors leave the market, overtime as the population grows, there is low supply of rentals, and more demand, which pushes up the rents, resulting in higher rental yields Cycle repeats
The issue now (in Sydney) is how long it will take to absorb the excess supply - and will rents still hover at current levels if rates remain low irrespective? I'm all of for a spike in rents but not if higher interest rates come with it.
Jobs and salary has to continuously rise for population to continue growing and absorb excess rental capacity.
More than yield CG drives the investors exuberance. Credit price and availability plays a very important role in continuing the boom.
No new cause, just add... immigration, foreign buyers, strong economy, infra structure spending, rezoning
I believe investors have started to leave Sydney due to low yields, meddling by financial regulators (making financing much more difficult and expensive), and the media scare campaign about a 'bubble'. That said, Sydney is unlikely to crash. Look now at Gosford/Newcastle, and the Illawarra. Values have been increasing by Sydney amounts for the past 2 years of so, and yields have dropped to levels Sydney seen at the start of last year. When I bought my first one near Wollongong over 4 years ago, the yield was over 6%. The same property if you bought it now will get about 4%. It does come in cycles, and the market is starting to change. Identify an area where yields are still relatively high, that have the fundamentals such as diverse employment, strong economy, and the area is likely to increase in value. It will plateau at some stage, so be ready to get out at the right time and deploy capital to the next growth area. Sydney yields will come back up over time and the cycle will start again. Or just buy something anywhere and hold it for 30 years if you can, and time make sure some wealth is created.
I'm gonna take a punt and say small biz innovations will play a much bigger role going fwd in subsequent booms. This will also drive immigration, foreign investment etc. Sydney, Melbourne and Brisbane will lead the way.
Are you sure you have the first 2 the right way around? I've read that it is 1. migration to a region increases (the start of it all) 2. rental demand increases as a result (before growth) 3. rental prices increasing due to higher rental demand (yields go up because rent rises faster than growth) 4. this leads to higher ROI and attracts investors, which leads to higher purchasing demand and the start of recovery. 5. this generates momentum and finally yields go down (rent still goes up but prices go up faster), and this goes throughout the entire boom until we get to the 2-3% yields that we now have. I would like to think this is wrong because higher rent would be nice, but I've read that this is wrong and that rents come down after the boom and both rent and yield bottum out at the end of the slump (ie lots of years from now) and only start to rise right around the point of recovery. Hope I'm wrong, but planning on that not being the case to make sure I can last through a long long period of no rental increases.
Credit. Isn't the answer always more credit? Isn't everything else moot if banks aren't (for whatever reason) lending ?
