Panic Setting in Sydney

This should be an easier trade than the avalanche of baby boomers who are trying to offload their PPOR and trying to buy a shoebox to downsize in Sydney.

 

You are all probably kidding yourselves if you think there's a strong probability of a massive collapse/correction/disaster looming for Sydney. It may well have a modest correction but in the end, the incompetence of local, state and federal Governments for decade after decade, and Sydney's unique geography will keep anything within 25-30KM and remotely near rail and motorways, well sought after. Outer suburbs which are miles from any motorways or rail...perhaps a shock is coming if the first home buyers there have piled in with 5 year I/O loans and they hit the P&I cliff starting in 2018,2019 and beyond.

RE mass exodus... do you really believe hundreds of thousands per year, year in and year out, will migrate interstate ? Retirees and some tradies might head to Orange, Bathurst, Wagga, Coffs, Port Mac, Batemans etc... in more modest numbers...but there wont be any mass exodus to Brisbane and Melbourne... there aren't enough jobs to absorb that sort of migration.

The only way Sydney will collapse in any serious way is for a big run on interest rates to happen at the same time as a big jump in unemployment ... barring those things happening, I expect Sydney will just have a good 7-10 years of not much general growth. Obviously A grade properties will still do well. B and C grade properties, which were getting A grade money for the last few years, wont though.

And that's a fantastic thing, generally speaking. Sydney needs to take a huge deep breath for a good few years and let wage inflation claw back 15-20%.... so 7-10 years of dormant growth is needed in my view. Melbourne needs the same.... and Brisbane needs that long to absorb all the apartments hitting in 2018.

Might teach the next generation to value cash flow management a little more. A lesson I think they will have forced upon them anyway by the lending changes that appear here to stay.

NSW and VIC Regionals and Perth will start to look attractive by comparison soon enough... when the penny finally drops that the Cities on the East Coast are for the most part, done for a while, and that yield needs to be higher up the priority list if you want to build a portfolio in the new credit era . Forget QLD regionals... its the new apartment market by stealth. Within a few years it will be saturated with dual occ's under one roof, all clustered in the same 2-3 LGA's by the thousands...cannibalising the yields.

 

Cash flow is already becoming king... and will only become emperor, tsar and the omniscient one as the next few years unfold...

Maybe bitcoins are more up your alley

 

благодаря comrade.

I hear Roubles are not a stable currency.

 

I expect we will find that a rise in interest rates affects consumers / property investment so much that it leads to spike in unemployment...

Interest rates are at 5000yr lows... what could possible go wrong?

 

Mt Druitt was suppose to crash by now. It's still going strong.

I was just talking to the proprietor of a takeaway and he reckons the sale of orchy drinks has never been better. Imported ciggies are also going strong.

 

I've been casually enquiring about units and townhouses in Sydney over the last few months without seriously taking steps and I hadn't talked to real estate agents until this week.

This week, I've been contacted non-stop by various real state agents around Sydney wanting to sell off the plan apartments due to be completed in the coming years (not the market I'm after) and offering discounts of $30k - $40k!

Seems like developers may be starting to get nervous about their un-sold stock.

 

you are not wrong there mate

 

I think young people are more likely to move than old people. Why would someone who is retired and has a paid off property in Sydney bother with moving regionally/interstate unless they were extremely cash poor? Young people are the ones who would see a massive difference in quality of life by moving. Sure, you might get a pay cut but it would probably even out as housing would be way cheaper plus you'd likely get a shorter commute, etc. There are cities in Australia with higher wages and lower unemployment than Sydney too. Most people in Sydney aren't investment bankers and the like despite what many on here seem to think.

 

Most baby boomers have not paid off their homes and they have Small superannuation balances due it coming in later in their working life.

For a lot of them in Sydney they actually need the equity to fund their retirement... So as the market has turned down recently by 5-10% it starts stressing out their retirement plans...

For them they need that $1mn in equity gains, if that suddenly looks like becoming $500K they will start selling en masse, as several on here have indicated they are seeing already..

 

Generally in property and in life . . . better to be early than late!

 

Where is this statistic from? I highly doubt that is the case.

 

Would expect these numbers to be significantly higher in Sydney / Melbourne...

Australians entering twilight years with $150,000 of mortgage debt

 

Nowhere in this article is there data supporting you statement that

Most baby boomers have not paid off their homes.

 

Whther it is 45% or 75% in Sydney . . . it's going to have an impact.

Probably another reason why regionals will hold up better... more BB'ers will have paid off property due to smaller loan sizes / less upgrade pressure.

 

You mention 45% to 70%, just another figure plucked out of the air, you claim you want to discuss data, put up a confirmed figure with the source and we can have a discussion.

Guarantee we wont see a confirmed figure and source.

 

This data is a little old, but you get the point... It will be the majority of retirees shortly, and this is nationalised data !



The number of homeowners heading into retirement that still have a mortgage has tripled since 1996 to 45 per cent

Nocookies

 

I wonder how much of this is kids drawing from bank of mum and dad?

 

this is crazy.......or stupid....... or smart?