NSW Property NOT selling in Sydney - Clearance rates below 50%!

in theory, when prices are not growing, rental returns should 100% cover ALL investors expenses + some earnings (greater or equal to bank deposit rates). Otherwise, no one will invest and there won't be any properties available for rent.

we currently have very low yield. That is because most investors invest for capital gain... but game has been changed... so for flat market the rental return should match expected yield. And outcome depends on possibility for properties to grow slowly: if rent can't grow because of low wages and high living expenses, that mean property prices will fall till the point when rental yield is appropriate.

this is in general. There is always a segment of high-earning individuals who can pay for rent any amount, so for many suburbs / properties rent can go up when investor requests the increase to cover expenses at flat market.

another issue is a segment of investors who invests only to save the money. They don't care about capital gain, or expenses... they don't have debts and want to save money by investing into different assets.

 

Yes - once ppl realise there might not be capital gains for at least another 5 years, would expect even more selling pressure for Sydney

 

It'll take longer than that I reckon because 'the cycle' has always kicked back up within a decade over the last 60 years. IMO, it would take about 10-15 years of neglible capital growth before the spell was broken.

 

Only the last 60 years? What about all the other times?

 

No argument there in regards gains recently, however it is quite easy to leverage with shares, called margin lending. Can get up to 80% finance. Gets a bit tricky when he market falls (unlike your property, the share market is priced daily, and the this can cause margin calls). Pick the right stock(s), and the potential gains exceed property's wildest expectations, unfortunately this works in reverse too! Although I've seen a few loooong property downturns, and high interest rates, that made property investment (during that timeframe) an absolute loss leader.

 

Me too
Timing the market is everything, get this wrong and leveraging you could certsinly lose your shirt

 

Indeed. Like investing in a falling market like Sydney now.. so much downside risk.

 

Lower north shore Sydney still achieving boom time prices

 

For how long..I am hearing only properties which are good value, excellent locations, and unique are going over reserve.

The market in Sydney will cool over the next 2 years.....a lot faster than people think. The amount of supply that will hit the market next year will be a lot more than people would have thought for a long time.

By 2019-2020....you should see some real bargain compared to today...the party is over in Sydney....Melbourne won't be far behind....give it another 12 months.....the new stars will be Canberra, Hobart and Brissie...

 

'the cycle' I am talking about is the double every 7-10 years, pause then go at it again cycle that has broadly happened over the last 60 year. For centuries before that, booms and busts seem to have been much more spread out and house prices basically tracked with inflation. What we have experienced with massive capital growth in our lifetimes seems to be anything but normal, but people treat it as though it is.

 

Very true.

 

Properties with demolish rebuild potential on level blocks/with views/walking distance to train line
Sales in $3 -6m category in past 4 wks that have me surprised at those results. Thought they would come in 10% lower than what they achieved given all the negativity recently.

 

Its no different to previous cycles , when everybody wants to get in is the time to get out .Unless the fundamentals are correct the "Johnny come lately" are going to get burnt as well as those that are overstretched.

 

No as previously discussed... prestige $3mn plus still strong due to foreign demand mainly Chinese.

Normal properties for normal Australians like under $2mn where there are big discounts popping up.

 

All 3 properties that sold for 3, 4.5 and 5.7 were bought by domestic buyers in the peninsular suburbs along greenwich to lane cove.

I was expecting 2.8, 3.8 and 5.4 as final sale prices.

 

I doubt it, already too high IMO, which means returns are even poorer than poor if there is no largish drop.

 

Are there really signs of slowdown in Sydney which could potentially bring down prices by about 10% or result in sideways movement for at least 2-3 years?

 

Not unusual....people will keep doing this the smart money has moved ine...

 

Well, Sydney is a big place, but for anyone who was actively watching certain areas, they may have seen what I seen, a very distinct change in the way ads are run online, that told you something, but if you had been going to opens, you could clearly see how much has changed.

So I think it is past tense already, and will continue for some time.

 

Yes. Prices have fallen for September and October and look to also fall for November: The weakness in Sydney's housing market is spreading across Australia. As for falling 10% or going sideways for 2-3 years it's definitely possible. It is a bit early to tell currently though.