Oran Park - This is what over supply looks like

Wowsers, that is a lot of the same type of stock, all hitting the rental market at the same time. Wonder what the yields look like? (For those who can actually secure a tenant...)

 

Who actually buys a new house/land build and rents it out? Why? Amateurs?

 

It can be part of the growth strategy. Depending on the area, sometimes you may achieve higher percentage of capital growth by building new as compared to buying established.
Obviously your initial yield may be low in some cases as similar supply comes to market around same time. But people may like to get new home grant ot stamp duty concessions etc.
Every pathway is different to the other and manually created by each one of us. People will create new paths based on their circumstances as they progress.
You just can't follow an existing path. It is highly impossible for any two individuals to experience same circumstances during each phase of their life.

 

Did anyone notice the same trend in the ponds - kellyville when this was all new?

 

Not to this extent. I remember when the Ponds started coming online around 10 years ago, supply was steady. Rates were high then around 8-9%. This is different because it's at the tail end of a boom and there is still heaps in the pipeline. Medium to long term the demand is there, a lot of people are moving into the area but if I was an investor who signed up for a h&l package late last year I would be feeling a bit uneasy right now...

 

Oran Park - Logan? Drawing a long bow...

 

Well, not everything is serious.....maybe the buying in Sydney at all let alone OTP and at Oran Park should have given it away as jesting.

but...

If you want to be serious, if Oran Park has a large rental v OO %, then that is exactly what many parts of Logan are.

 

You should see what's listed for sale. 200-odd properties, all basically the same, with only 17 sales in a month. And that's not even taking into account the hundreds of properties in surrounding suburbs. This is exactly the sort of area that lost all or most of its value in Ireland (when people say prices dropped 50-60% yes, they did, but overall. Many outer suburbs, newly developed, became practically worthless, while quality assets saw much milder corrections, bouncing back within a few years, and continuing to attract strong rental growth even through the recession).

 

I have a feeling people said the same thing back then

 

I saw some ads came up with vendor paying the stamp duty.....also a range on new houses - that is weird, does not look great to me, over time airport will save them though.

On another note, what will happen to the filthy Irish animal McGregor you reckon ? (his words, not mine)

 

Interesting point is that some of the biggest ghost estates in Dublin, around Belmayne, are close to the airport. Not sure it's helped them or not, but these areas are getting closer to recovery now, though a good 5 years behind other areas. Belmayne is a good idea of a ghost estate that was salvaged. Part of this was that the government took a lot of it over as social housing. It was in an absolutely sorry state right after the crash, as these were acres of brand spanking new buildings, a lot of them townhouses or small houses. Last I heard it's back to full occupancy and starting to bounce back again (though not yet near its original asking prices, but those homes were built right at the peak).

Oh and McGregor, I suppose I should be patriotic and support the guy. Though I heard his trainer said something about worrying he'll do something stupid in the fight. He does seem the type. If I were going to put money down I'd probably go with Floyd.

 

Are you buying any, Biz? And, if so, what kind of discount is getting entertained?

 

Not looking to buy but I might rent there for a bit!

 

Hypothetically speaking, if a 4 bedder at Oran Park which seems to be around 800K with around 3.5% yield falls by 60% to 320K and giving yield over 7% (assuming can find tenant), would it be a recommendable for yield play with long term horizon (ie 15 years, and hoping the capital is preserved or move in line with CPI) ?

 

bloody oath! but that's not going to happen... A 4 bedder costs about 300k to build, you would practically be getting the land for free.

 

There is absolutely nothing to stop this happening if things were to get real bad, you just wont be getting a newly built OTP for that much, but an existing place.....anything is possible if things really go bad or haywire....

 

If it got that bad it would be across the board. Wouldn't just be south west Sydney that would cop it.

It will never get to the point where over supply was an issue for more than 12-18 months. The developers would simply turn off the tap and wait until the demand builds back up.

 

Up to 84 properties now...that's up by 30% in a month....

 

I'm not sure. In Ireland we saw what I'd call the "exodus" from these outer fringe suburbs as they crashed. People didn't want to rent there any more than they wanted to buy there, so I'd worry it would be tough to find a tenant even if yields were decent. If you look at what's listed right now, these fringe suburbs in most cities are what's starting to stall. Often these suburbs don't have a whole lot to attract residents except the promise of future development and facilities. If prices drop, though, or the economy goes through a rough patch, these facilities might be delayed or might not happen.