NSW Sydney appartment price crashing may be bigger than I thought !

Well, I watched those units all climb, they have not pulled back at all it seems, so selling is as good as 6 months ago it seems on the surface, I have been waiting to see them drop.

I could see if there are too many units, people will leave the old to take up new as renters, this has to have an effect if no one fills the old ones.

Will be interesting to watch what happens with all these units everywhere.

 

where is that again ?

 

With new plans re rail it will boost the prices in the area.

 

I would consider that if selling was part of my portfolio plan, which it isn't. It may well work for others though (I do think prices have plateaued in the area, and dropping a bit).
I have enough equity to continue to buy at my conservative pace and it's worked well for me so far.
I don't see why I'd change tack when it's worked for me the past 5 years.
I will get equity out and buy in Brisbane and elsewhere later this year.
As I've said before I foresee Liverpool and SW Sydney continuing to grow in the long term with the population and jobs growth (one big driver being Badgery's Creek airport). This is a 15-20 year plan. I plan on buying more in Liverpool in the next 5 years or so. Definitely not buying in the next 1-2 years.

 

I haven't read all the comments but total agree with the first post, I am seeing in Homebush/ Homebush West, Parramatta/North Parramatta and around Hurstville area units are selling for a much much cheaper price than 6 months ago.....

 

There continues to be an ongoing assumption on these forums that equity means borrowing capacity. But the more important consideration now is; do you have the borrowing capacity to make use of the equity ? That would be one area where the things that have worked for you for the past 5 years may not work for you moving forward.

Provided you still have capacity, then the equity gains will be tools you can take advantage of. But without capacity, that equity can only be accessed by sale.

If you intend to keep and reap (which I think is smart) be sure to understand the implications of the APRA servicing changes, and plan around them. Stress test your borrowing capacity for your current debt levels at 7.5% and assuming 0% rental inflation and wage growth for the next 3-5 years... and that will give you a good idea of what you can do with the equity gains you've made. You may find that some debt reduction may be necessary for you to continue to grow and hold things...

 

https://www.google.com.au/url?sa=t&...Ob7xVpYlA&sig2=FXGOcT_RXWglL8EnwLINnwEnwLINnw


@sash you're getting some mainstream support for your Western Sydney theory.

 

Re Homebush west - I'm not so sure. There MAY be a slight decrease but I watch this area quite closely and don't think so. A lot of the cheaper 2 bedders on Marlborough side are cheaper buildings, you can see a price disparity of 50k+ depending on the building. But you're still looking at approx 550-600k for a 2/2/1 which was the same 6 months ago.

 

Nope....the great unwashed...think they are bullet proof..in terms of the Sydney market.

However....there is real evidence the market is heading down....if there is a hint of IR rise and the talk of Neg gearing changes come to fruition it will hit the Sydney market harder than other markets. Time will tell.....

 

In the article,

<begin quote>
..... Prices in Mount Druitt and Rooty Hill have also doubled since 2012.
<end quote>

You believe what you want to believe. Does those Rooty Hill look "doubled since 2012" to you?

Rooty Hill House Median 2012-1015


<begin quote>
....Blacktown's median prices are now $640,000 and are up over 50 per cent since December 2012.
<end quote>

50% increase in last 3 years....isn't this in-align with wider Sydney growth?
If you look at a longer median price, Blacktown is just doubling in price since last boom.
Blacktown fell about 11-12% over a 3 year period in 2005-2006. I purchased and lived in the 2004 boom/bust cycle. A total of median drop of 10-15% was felt in Blacktown at that time. Then you will see doomsayer and the media pulling out of line or one off transaction property comparison to proof their point that the sky has fallen..

Some people make it that they are the only one knowing Sydney will fall, and seemingly the whole world is against them.

Sydney will fall in this cycle. No question about it. How much and how long is the question

Blacktown House Median 2003-2015

 

Interesting to me that rate rises = lower growth. Rate drops = accelerated growth.

During the 90's, the advent of much lower rates, double income families and higher LVR's created the first massive boom. But by the early noughties, those levers had pretty much been exhausted, and prices began fluctuating almost in perfect unison with borrowing capacity.

03 and 04.. very large rate cuts across 2001 and 2002 had brought rates to a very low point, and as actuals /unsensitised assessment rates were being used, borrowing capacity improved and prices surged during that period.

05 - 07... as rates increased, and assessment rates rose, the market corrected.

08 - 10 Post GFC there was a series of very large RBA rate cuts in very quick succession , but ( but no APRA intervention on assessment rate sensitivity, so we saw borrowing capacity supercharged, and some very strong growth again.

11-12 RBA increases took all the momentum out of markets as assessment rates rose, and growth slowed dramatically

13 and beyond - Large RBA cuts and off to the races went prices again.... except this time it only happened in Sydney to any large degree

Mid 2015 and beyond. APRA has effectively imposed a 7.5% - 8% rate on all of us for borrowing purposes.... or looked at another way, if the banks still assessed at "actuals" but rates were actually 7.5% or 8%, what conclusions do you draw?

 

There is no doubt it is tied to interest rates.

I have thought for a while, how the next boom will work, unless the rates rise a lot and economy really starts moving, but seems less scope for up and down now, wage growth does not seem like it is likely to grown much, but then other expensive capitals round the world continue, just lot are excluded from playing in those markets.

 

From my experience, the Asian community are buyers rather renters in Campsie. I like this suburb and its surrounds. It has always held up during property downfalls. It's in demand by both buyers and renters because it has access to a great transport system and is easily accessible to major city/job hubs - CBD, Bankstown and Parramatta.

I am old enough to remember 18% interest rates and over development of apartments with low occupancy rates.....and during the recession Australia had to have. During those periods, I owned apartments in Canterbury, Campsie and Dulwich Hill. None where vacant for very long.

 

Re too many units etc, well it all sorts itself out in the wash, time will fix as they all stop developing .

 

Good tips, thanks Euro.
I agree that it's not something considered or discussed often here on the forums.

In short, yes, I do have the capacity to borrow to continue to build my portfolio so will continue to do what works for me.
It's not for everyone but for a low maintenance and low time commitment portfolio whilst career takes priority, this works perfectly for me.

I do, however, agree that it's not a plan that will work forever as there will be a threshold that will be reached eventually.

 

I'm wanting to buy an inner city apartment in 3 years. Am watching this insane building of apartments with interest.

Wolli Creek is another little pocket with LOTS AND LOTS of low quality apartments jammed into a small area with only one way in and out. So crowded, and so much new building happening.

 

Looking at the Liverpool via Bankstown train line, this is what is happening to 2 bed apartments. Areas closer to the CBD appear to have peaked, but (at least based on the realestate.com.au data), suburbs further out are still travelling quite nicely, no apartment price crash as yet

 

There is a buttload being build near the light rail station in Lewisham West.
Probably be some good buys there in about 3 years as well.

 

At what stage would the prices reflect the light rail station?

 

Interesting! I think it's due to their lower starting prices. People have much less problems with buying a 2 br unit well under 500k than >500k