NSW Sydney 2020 "Megaboom"

I don't have a crystal ball on whether it will be a Mega Boom but I look at the facts and IMHO I have not seen in past history times like today or what is happening say within the next year or so:
- Heading towards 0.5% to 0% interest rates
(may enable cash-flow from refinance, possible low 2.5% interest rates, maybe end of next year being able to lock such low IO rates for investors, especially if QE will be introduced)
- Baby Boomers
(retiring each year in greater numbers {300K/year?}, looking for investments to offset such low interest rates earnings, hence property or shares may become more attractive as investment classes)
- Industry and job creations
(Health and education - 1 of 5 employed in these industries, properties in close such proximity may be attractive investments)
- Record job growth
(RBA mentioned it wishes to bring down unemployment levels to 4.5%, considering QE)
- Record population growth
(from immigration and births 400K+, but minus the baby boomers exiting the workforce, turning over 65)
I must say interesting times ahead, so some will see these times as glass half full and half empty.
To me personally the glass in half full, I see many opportunities/benefits/gains whereas some will see threats/losses/challenges.
I certainly would not be selling, I would rather draw out the extra equity permitting and consolidate my cash-flow (Many forget say if you have a $1M loan and working on APRA's 7.5%, imagine it will get to 4.5% so your earning required can get to $145K from say $250K requirements - cash-flow is so improved).
Let's see what the next year brings?

 

Jesse, that is a really interesting observation. What assumptions do demographers make about the number of people per dwelling, and whether that differs for migrants vs citizens? Not sure.

 

Patience Sash my mate ... some of us have seen multiple severe downturns and recessions and crashes, which make us cynical when the young 'uns come in guns blazing and bull heads after they have witnessed nothing more than 26 years of growth.

Us old farts will quietly sit in the corner with our decades of experience and say nothing

 

Thanks Lizzie, I don't think anyone is claiming property will go to the moon. Nor that property never goes down.

However, there are structural factors within banking and our monetary system, as well as our immigration system that puts real estate prices on a general inflationary trajectory.

I think the direction of this thread, was whether or not there was an apartment surplus or shortage around the corner. Good and informed people can disagree on this point.

 

Sash, what exactly is your position here?

Without attacking me, can I please clarify your position and your outlook?

Are you saying that this is a dead cat bounce and property prices will come down in Sydney? If so, when?

Are you saying to stay out of the market and wait for another correction? Or invest now? Please keep your response to the Sydney/Melbourne market, because yes, yes, we all know that there are multiple markets in Australia, but let's keep it to the biggies for this conversation.

If you feel there will be another leg down, what will be the catalyst for this?

 

I thought the thread was about a megaboom coming over the next 12-24 months.

A boom is not simply reliant on supply/demand but moreso on financing ability - and despite interest rates going down (with very little passed on via banks) people are finding their available cash to be depleting

 

House rents in Sydney have dropped below the level they were 5 years ago and are down over 10% from their peak. House rents have grown at slower than the rate of inflation over the last 10 years. I'd say that's a pretty strong sign that demand hasn't kept up with supply.

SQM Research - Property - Weekly Rents - Sydney

 

CBA is perhaps the business most exposed to Australian property in Australia. Their opinion needs to be taken with an absolute truck-load of salt.

If we look at the data rents for both units and houses are still dropping with no sign of a turn around, the vacancy rate is growing fast on a year on year basis and developers are offering massive discounts and deals to try and sell stock. So do we believe the company with a massive vested interest in improving sentiment around property or the raw data that is screaming of a current excess of supply?

 

Thanks Woodjdja,

I didn't endorse the article, I just posted it.

I think the CBA would have a fairly interesting insight into the property market being one of Australia's biggest lenders. I agree, it has a vested interest to see prices go up, but so do many institutions and many people. And vested interests don't invalidate an opinion.

You are assigning motive to a position that you don't agree with. Better to just make the argument why they are wrong rather than attributing motive so you don't have to argue the counter-point.

No one has quibbled that there is a lot of brand new stock out there at the moment. But it is crazy to take a present situation and extrapolate that into the future. The point of the article isn't about present supply anyway - it is making a case for shortages emerging next year.

 

It's back!! Megaboom is here!!

‘Broad optimism’: House prices will soon be growing at double-digit rates

Sydney and Melbourne house prices will be growing at more than 12 per cent per annum by the middle of next year, one of the nation's largest banks has forecast as the Reserve Bank talks up the chances of the economy recovering in 2020.

 

Well....it is good to be ole skool these days.....I just got a fantastic price on one of my properties.

Yes...it is worrying when some of the young ones think....its time to get into places like Sydney....something will give....

 

Buongiorno amico John

Its all Shakespeare....."The world is a theatre!"

Now back to market. In response to the Sydney and Melbourne market....people are rushing in due to interest rate cuts. This has opened up the markets..but bear also in mind lending is getting harder NOT easier. In particular investors. People also forget that Sydney came off 15%...it has recovered some of that. In some areas it has recovered all of it.

I feel that at some point people in these markets will worry about job security in the economy..at this point it will get interesting.

Don't get me wrong..I too are looking at some areas in Sydney...but these areas are a long terms play with some value add. It is not a simple buy and hold.

So in most parts of Sydney I feel it will reveal a dead cat bounce in the next 12 months...another reason below....gamoto...note it is in your neck of the woods...

How renters are saving $150 per week

 

Thanks Sash,

What would drive the dead cat bounce in the next 12 months?

Fom a technical perspective, the second leg lower in a dead cat bounce is always bigger than the first leg down. So are you suggesting, say 20% lower in another 12 months?

Cheers,
John

 

John.....lets say sentiment John......what evidence can you provide...some have asked for this...and it was crickets?

The predominate affect is that investors will not find Sydney attractive due to low returns...the Chinese investors have also disappeared. So that leaves flaky first home buyers .....capiche?

 

What exactly have you asked from me that I haven't provided in the past?

 

Touche...that is what I have provided.....

 

Well - that didn't last long

Majority of new apartments worth less than purchase price, data shows

 

No one argues about new apartments/ OTP sector being under pressure now due to cladding, funding and excess-supply issues. Even bulls have mentioned that repeatedly in this forum since the recent turnaround.

The debate is more around when this excess supply dries up and adds pressure on the values mid next year owing to demand outstripping supply in another c12 months. That was the sole point made last week by RBA, CBA, ANZ, Stockland & Mirvac. All of those agreed that the significant growth is likely to materialise when the current supply is soaked up. But they have been wrong in the past.. lets see what the next year brings..

 

Would overseas migration fill that multi billion dollar void?

 

No chance in hell.....