Panic Setting in Sydney

Any similar graph for Melbourne?

 

Free country doesnt mean you throw things at the wall and hope they will stick.

You have been posting this view for a few years that I have seen, probably even longer because I dont visit as often and guess what, you have been wrong. Do you know why you have been wrong? because there is absolutely, unequivocally no factual information behind your claim.

As I said, you can hedge your bets all you like but if Sydney crashes, properties elsewhere will be worthless.

Because the only reason Sydney goes into a recession is if people cannot pay back their loan and if that happens in a state that is responsible for a huge portion of the national economy, places like Brisbane that are already struggling with employment will go under many folds more than Sydney would because regardless of how cheapER they are, there is no economy to support them. When you are jobless due to a recession whether your repayment is $2000 per month or $6000 per month, it wont make much of a difference.

I hope I am starting to make sense here.

Regardless, there is still massive investments in private sector in Sydney and billions of dollars worth of infrastructure being built. Melbourne and Sydney are super stars of the employment market at present. Sell all of your 30 properties and use the money to buy one property in Sydney. Trust me you will be buying me a drink thanking me I gave you this advise.

 

I don't disagree with employment being strong in Sydney and billions of dollars of infrastructure being built, but NSW being responsible for a huge portion of the national economy? Are you serious... everywhere knows WA runs this country. I would like to see NSW live off 30% of their revenue, I highly doubt the same amount of infrastructure projects would be happening still if that was the case.

My thoughts are that property in Sydney will start to unravel soon, a bit the same way Perth did even when we had billions of projects still on the go. I am an Engineer from Perth by the way, and our prices were not even high when property started slowing up, hence why it didn't drop much. Sydney on the otherhand, you are well overpriced and have a fair bit of falling to do. If Perth has done 10% fall which bottomed 2nd half of last year, then I think Sydney is doing 20% fall with another decent plateau of the mid 2000 years. Property investors all realise that once these infrastructure projects are complete (2020-2022) that there will be a huge cliff on infrastructure spending and there will no longer be as many jobs, and Sydney will be filled with all these people... and quality of life will be worse, and the property investors realise this now and will get out before the jobs dissapear, not once it happens.

I will be going to Sydney to work on these infrastructure projects for a year or two and will be milking the fees the same was everyone from eastern states did the same in my state.

 

A little bit of a personal view from you and sorry if we milked you before but No WA is not running this country.

WA would be lucky to run itself. Who is hiring there? BankWest, Crown Limited and the local cafe and thats how Australia is being run? Look into taxes collected from NSW at federal and state level and then compare that to WA.

I am a fan of Perth btw and if I was to invest anywhere outside of Sydney it would probably be Perth. I believe they will revamp their economy long-term and thats when property will pick back up.

 

It's the nature of the cycle. Sydney has seen massive growth supported by a strong employment market, new/existing infrastructure spending and an increasing population. Combine this with years of relaxed lending rules and cheap money, it's no wonder Sydney has experienced this enormous growth.

Its been a long long cycle... Maybe peoples memories are alittle hazy as its been so long? But markets don't rise forever. We need to remember the downturns, the plateaus.. They tend to last alot longer than booms.

With interest rates now starting to rise, money is getting more expensive. APRA is tightening lending regulations and banks are beginning to put the brakes on investor lending. While the effects of this aren't immediate on a market, they are coming. IMO if you've made money in the Sydney market, it's probably not a bad idea to take it sooner rather than later.

Are you buying in Sydney at the moment?

 

Sure.

 

Maybe the peak should have happened 2 years ago or will happen 2 years from now. @sash may have been off on the exact time but the matter of the fact is - it's still a cycle whether anyone likes it or not.

No such thing as a perpetually rising market. Never underestimate the stupidity of an emotional buyer. The very same emotion that makes them pay crazy prices will also make them sell for a substantial loss or not buy at all. Double edged sword this human emotion.

Take profit than taking hope.

 

I would agree with this. Agreed also that Sydney and Mel are the superstars of employment at the moment...due to their position on the cycle. Was there a time when Sydney and Mel.were not superstars of.employment? Yep...was there a time when Brisbane and Perth were superstars of employment? Yes...all based on cycles and the resources cycle is near opposite to non resources cycle.

 

The lowest unemployment rate is in the ACT and NT with 3.7% and 4.0%. NSW is 5.1%.

6202.0 - Labour Force, Australia, Jan 2017

Scroll down to the bottom of the page for the table with state stats.

 

It is very interesting to see what will happen

How long does the gravy train last and what policies are the government and banks putting in place to prevent the market from panicking

Sentiment can be a fickle thing

 

Darwin/NT tend to have low unemployment rates - when the project work dries up, people leave

 

And the ACT? Sydney house prices are the result of hype and the herd mentality. Prices go up because everyone says they're going up and soon everyone wants a piece of the pie. It goes round in circles with people upgrading or buying more properties with their increasing equity and available credit. The higher it goes, the more it's discussed and this continues to fuel the behaviour. There's no economic rationalisation for it - not wages, net worth, unemployment rate, etc. It can all be disproven. Sydney is pretty much at or just below the national average on all of these indicators.

 

You are not wrong in that everything has a cycle and I am not saying Sydney will rise forever. But to say panic is setting in and houses are going backwards and OMG sell everything, lets run for cover is just pure stupidity.

Sydney has gone up for a number of reasons. Biggest reasons are interest rates + Foreign investment, smaller reasons are much better weather, universities, infrastructure and lifestyle. But thats only half the story. You should buy in an area that is not just growing but there is continued prospect of good employment. People have to live somewhere at the end of the day.

The story of Sydney is that it is not just growing but it is warranted. So even if it does re-adjust there is still employment for people to be able to afford their repayment or rent.

But take Brisbane or South Australia or Tasmania. At our company, we dont go by a week without many calls from these places (in particular Brisbane) from people seeking a job in Sydney, wanting to relocate because they cant find anything. There is not a lot of employment.

Investors have bought in these places because Sydney was too expensive and they "thought" that due to this mentality of cycles, by default these places will have to catch up and will stay up. The sole reason you see the growth in those states is that A) money is cheap and people want to invest but in most cases thats the only place where most investors can afford to buy and B) Investors think that these places will have to "somehow" go up. So the growth that you see is due to investor activity but the foundation of it is held together by sticky tapes and chewing gums. In other words it doesnt have the second part which Sydney has.

I dont see interest rates go up by that much. It will be many years before we see interests at 6% and above. If they do raise interest rates too fast it will cause a huge crash and they know it. The rise of the interest rate itself will cause a lot of people to jump into the market to buy and fix which means another boom. Not to mention if they start playing up with negative gearing.


To answer your question, yes I am buying in Sydney. I have purchased my latest project very close to the land that I mentioned earlier which just sold to a major investment company for 160 million. I watch these companies and follow them because they are the ones that have far better research capabilities than the average person. Its a very similar concept to watching top stock brokers and looking at what stock they are buying. They have the experience and the capability to analyze the market and make better decisions.

 

You only have to watch an old episode of Selling Houses Australia to see what short memories people have. So many episodes shot in Sydney pre-2012 talk about the terrible state of the market and depressed prices. But now that we've had this extended period of growth that is all forgotten. It astounds me the amount of people now saying Sydney property will only ever go up. That, to me, is a major warning sign.

 

Bigger companies research well but they also abandon huge projects if the need arises.

 

I must be old. I remember watching the boom in Sydney that ended in 2003. Shows like Hot Property showed auctions where prices went so high that people were in shock. Then year after year of gloom in Selling Houses Australia. The only question is how long the correction will last this time? Last one was 9 years. I feel like the market will bounce back quicker this time around.

 

Look at the export revenue for the country, last time i checked WA contributed 41% of the national revenue. A lot of resource companies have started hiring by the way, don't under estimate the big mining companies contribution and influence to the country, at least WA's revenue is real and not artificial, like foreign stamp duty and paper wealth.

 

from SA and don't think i have ever heard anyone say "I'm thinking of moving to sydney" why would I want to increase my mortgage by 80% to buy an equivalent house, in a state with comparable wages?

 

Egg Zac Lee.

I remember as a kid in the early 90s riding on the monorail and seeing massive craters around the city from left over projects that never took off after the late 80s. By the early 2000's I was working in the building game, same thing again a few years later as builders and developers were going to the wall after the previous boom. Of course, all those projects that never happened have all been built now. You just don't want to be the one holding a lemon when the music stops cause you'll be holding that lemon from a decade.

 

Very accurate portrayal of how north of Blacktown station looked for the last ten to fifteen years

Many plots of land sitting empty from speculative buying, land that was intended for high rise but the music stopped

And now some of those blocks have begun being developed but quite a few still sit empty.

Tho I think this potential crash will be much briefer and less intense than the one post 03. In fact I'll bank on no crash at all, just a stall where demand drops off a cliff.