NSW Sydney 2020 "Megaboom"

Anyone catch Lending figures today from the ABS? Lending to investors have surged:
5601.0 - Lending to households and businesses, Australia, Aug 2019

Investment Dwellings excluding refinancing, Value of commitments, Seasonally adjusted - Monthly percentage change


Sadly, first home buyers probably only have this weekend to outbid buyers, or be priced out of the market forever.

 

can you clarify why you think so? Are you referring to standalone houses only?
Because for apartments, I can see a massive oversupply and struggle to sell

 

what do you mean?

 

Yeah - I'm dubious about this talk of a second sustained boom.

When seasoned investors, with large deposits, are struggling to obtain finance - when discretionary spending is cut due to increasing basic expenses - when wages growth has been flat for several years with no relief in sight - when the banks are not passing on the reserve bank cuts - when our major trading partners are heading into (if not already in) recession ... I'm dubious and will be (pleasantly) surprised if Australia isn't in recession by the end of 2020

Suspect the current upturn is simply a supply/demand factor as people are sitting tight rather than upshifting

 

@Lizzie - I noticed that a nearby duplex is up for sale (after 4 years), it'll be interesting to see whether they achieve much above what they paid (after stamp duty, refurbishment costs and rent equivalent).

 

This one is interesting

Sold in July 2019
https://www.onthehouse.com.au/prope...eetName=Lindwall&streetType=PL&streetNumber=4

Sold in Oct 2019 again
https://www.realestate.com.au/sold/property-house-nsw-rouse+hill-131433550

 

I agree, I think it’s just a build up of people sitting on the sidelines purchasing now that lending is relaxed a little. Anyone thinking this will lead to a boom doesn’t understand the lending environment or is just kidding themselves.

 

Wonder why the quick turnaround ... so some calcs with some assumptions

Stamp duty paid on purchase - $46,100
Guesstimate sale agent fees - $40,000
Instant loss of $56,000

 

How did you get profit?

Purchase $1.1m July 2019
Sold $1.13m Oct 2019

Am I looking at same link?

 

oops - put the .03 in the wrong spot (was thinking .3) ... will correct

 

+/- 3 months , invest in some hydro gear & black plastic, 2 month growing period under lights. Instant profit $$ (all cash).

@datto - what are the numbers?

 

I'd like to answer this query but it would be incriminating to do so.

Prosecutor : " Your Honour, datto's denial of having absolutely no knowledge of the indoor cultivation of the contraband is a total fabrication. Have a read of this explicit post. No, not those nonsensical posts he made but this one here on 14 October".

 

Australia's population grows 350k ppl per year? Last I read for previous year was 190k?

I looked at the last two booms in Sydney & Melbourne and both had roughly 7 years before next boom phase. In that 7yrs there was actual wage growth, immigration each year which mostly came to Sydney & Melbourne, less accommodation getting built and rents went up after 5yrs in most areas, and RBA dropped interest rates. So 2003 last boom finished plus 7yrs takes us to 2010 and actual boom started 2012 in most areas.

I fail to see how what happened in the last two booms that took several years to happen, to see a 2020 boom in Sydney just after 3 years just by interest rates dropping today with some immigration that's actually been cut and actively trying to move them to different states with incentives

 

Population grew by 388k in 2017. 60% immigration.

Regarding the next boom, we'll see. Nothing moves in a straight line, but signs of asset inflation are promising.

 

So 232800 immigration and 155200k births? If so roughly 30% of immigration come to Sydney so roughly 70k and well be conservative at 2 per dwelling so we required 35k dwellings in 2017. According to links below 38,759k were built in 2017. My understanding is most ppl that have a new child tend to stay put for a while then move to accommodation that they require, and the accomadation they moved from gets absorbed by immigration/local born. I'm not here to prove you wrong I'm trying to understand your perspective and evidence to support it just incase im missing something.

https://www.finder.com.au/record-number-homes-built-in-sydney-in-2017

 

Mate typical BS from buyers agents.....the rents in Sydney are headed down. I know a couple of people renting in Ryde and Parra who are now paying well under 390pw for good 2 brm units. The prices of these are also dropping. Things have firmed a little but still down from 2 years ago.

Lots of people who are recent immigrants are driving up prices in the Hills....but this is certainly not sustainable. Too many people think that Sydney is going to boom again...it is simply catching up from the 15% drop ...it will settle....

If anything...the number of immigration/internal migration to Melbourne and Brisbane is increasing. The support for that is the firming of rents there. It just goes to show some of the BAs cannot see past a dollar.

I am looking at Sydney now but only at wholesale prices...and believe me it ain't cheap. There are much better investments out there from a CGT and return point of view. Let alone the vacancy rates.

 

Happy to be proven wrong here
Looking at the number of oversupply with apartments, I cannot see the apartment prices going up by much. There is a massive oversupply where I live and there are few constructions still on the way.
Houses could be a different story

 

Sash, you were about as wrong as you can be on the latest price movements in the Sydney property market. Prices would move lower for another 5 years, I distinctly remember you saying.

I have acknowledged that there is a temporary over supply in Sydney units. My point is that it will be absorbed extremely quickly. We can already see vacancy rates starting to move down. And as investors, we want to move just before the turning point confirmation is in.

Construction waning, population growing extremely quickly. Plus, the developers are building the wrong types of dwellings. Lower interest rates. So it is not particularly controversial to see a continuation of the bull market for the next few years.

By the way, I see none of this as healthy. This is the boom and bust that comes from central banks deciding interest rates, rather than the market. But it is what it is, and Sash, you should have known better that policy makers would not have intervened with a new batch of currency debasement 2 years into a property market correction.

 

Apparently the banks & the industry expects shortage of apartments given high growth rate and reduced supply owing to the last downturn..

CBA tips apartment shortage by 2020


"The construction downturn would bottom out by mid next year and there could be a shortage of apartments by 2020, the Commonwealth Bank has forecasted..."

and

"...Mirvac chief executive Ms Lloyd-Hurwitz told The Australian Financial Review Property Summit that without credit flowing again, Australia could find itself with a housing shortage within a year, echoing concerns from the Reserve Bank.

"Very soon we are going to be in a supply shortage situation," she said.

and

"The chief executive of Australia's biggest developer Stockland's Mark Steinert agreed.

We need 180,000 dwellings a year to keep up with demand, and it's not going to happen."

 

180k per year and what's the break down per state is the real question?