NSW Opinions -Sydney

A better word might be "correction" and will happen even with a interest rate cut.

 

I know a franchisee of a major agency in the south west. We bumped into each other couple weeks ago. I have know him for over 15 years. He told me that in his area, sales have slowed alot the last month or so. He said stock which was short of supply mid year is now starting to build up. He said auction clearance rates have dropped alot. Stock is just sitting there. Very different atmosphere to what it was 3 months ago. People aren't just paying anything now to get in.

 

Fair enough. I imagine any agent prepared to take a risk like that would want to make sure that you are pretty serious about selling.

 

This chart is from data from last week-ends auctions in Sydney.

When you see headlines like "Sydney auction market back to 2012 levels"
and text like:
Sydney recorded its second consecutive clearance rate below 70 per cent, at 69.9 per cent, just above the year-low 69.6 per cent reported last weekend. It is cold comfort to someone (us as BAs included) trying to buy in the Inner West or LNS - where auction clearance rates are 93.9% to 88.5%!!


It is clear that W Sydney and other fringe areas have come off the boil. REAs are selling prior to auction (again) whereas once this was VERY difficult to achieve. We are getting calls back from REAs too - they did not need or have time for this before.

So we see growth starting to moderate a little around the edges in Sydney. Good property, priced well, still sells very quickly.

The Central Coast is going ballistic as W Sydney was 12-18 months ago. Valuations are reportedly (from REAs) often not stacking up - just the same as occurred in W Sydney.

 

Yes. I'd agree. But it also means the market is slowing down if they are sitting for longer on the market. So we might start seeing prices slowly drop to get the stock moving again. Once that happens, it's a one way street. The downwards trend will begin. That will be the start of the correction. More for some places than others as usual.

 

We sold one WS house prior to auction back in July. At that point I felt as I wasn't going to get better result at auction.

 

From first hand knowledge I don't think the inner west clearance rate is accurate.
There were a number that were pulled and not reported.

But still one of the better performing regions.

 

What kind of correction are you expecting, 5-10% or more?

 

I am no expert - 30%+ in real terms before the start of next boom.

 

I would classify that as tanking.
I don't think anyone is qualified to make these calls so your opinion is good as anyone's.

IMO inner ring will not drop anywhere near that.
West and south west, who knows, maybe. Might be good buying if it happens.

I think the froth will get blown of the top in the inner ring and most will put off selling if they can't get the number they want.

 

30%?! Why 30%?

 

Not necessarily, 30% in real terms spread over several years is not tanking in IMO.

 

Was talking to a property soli client the other day. A few months ago they were doing 120 settlements a month almost all investors. Since APRA changes, they are back to normal workloads again. They saw a direct correlation and most settlements for the owner occupier market.

 

It's 30%+. Again, not an expert but just my opinion.
1. Correction is proportional to the overshoot in boom times and Sydney did overshoot by quite a bit.
2. Availability of too much housing stock in the coming years
3. APRA lending restrictions and availability of credit.
4. Crackdown on illegal foreign buyers
5. Current state of our economy.

 

Sorry but that is absolute garbage. There is not a chance in hell unless something catastrophic was to happen would we see any such correction. 5% max.

 

Johnpropchat, curious, how many properties do you own in Sydney?

 

It may be garbage or may be not!

5% is nothing, it goes down by that much when it starts falling from the peak(which is where Sydney currently is). A few years of sideways growth is actually negative growth in real terms.

 

From a strategy point of view (excluding dev strategy and the like), I'm genuinely curious about the "get-in get-out" strategy a lot of people have... Isn't the old adage "never sell" unless the property is a howling dog? Isn't the "profit taking", buying costs/selling costs eroding some of the gains?

As an example, my 2 bedroom unit in Ashfield (Haberfield side, not south of the railway) has obviously done pretty well in the last 10 years, but I'm not looking at taking my profits and parking them elsewhere. Even if Sydney cools down/moderates/tanks/crashes, a long-term hold strategy means this IP will always do well.

Genuinely curious.

 

None. If you think I am just being negative about Sydney then please don't. I did say it was just an opinion.

 

No I won't. However another question, do u have intentions on buying in Sydney ?