Join Australia's most dynamic and respected property investment community

NSW Sydney..down turn is beginning..2018-2019 will present opportunities..

Discussion in 'Where to Buy' started by sash, 14th Aug, 2015.

  1. sash

    sash Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,214
    Location:
    Sydney
    Hi All

    The Sydney down turn is just starting. Articles like these and more properties passing in are ominous signs....

    http://www.smh.com.au/business/prop...digit-house-price-growth-20150813-giyg3q.html

    What next?

    1. I believe whilst rates are low the market will be stable and maybe even come off a little bit
    2. Over a period of 2-3 years if interest rates rise...then the market will take a more pronounced fall.
    3. Will be even more pronounced if unemployment rises over 7%

    I still believe 2018-2019 will present excellent buying opportunities especially in the off the plan market. I feel that with changed lending conditions...a lot of people may not be able to settle.

    As always time will tell....
     
    Mick C, Leo2413, Tekoz and 5 others like this.
  2. Chris White

    Chris White BUYERS AGENTS & PROPERTY MANAGERS Business Member

    Joined:
    7th Aug, 2015
    Posts:
    118
    Location:
    BRISBANE | SYDNEY
    And rents will start their upward cycle probably from next year as supply slows and as more people delay their purchases and revert back to renting. We saw this a few years ago in Sydney, and the headlines were all about "renters being squeezed".

    Not a good time to be speculating with an investment property in Sydney though, especially at a sub 4.25% yield.
     
    Tekoz likes this.
  3. Chilliblue

    Chilliblue Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,579
    Location:
    Australia
    CBA in part of their results announcement highlighted that personal arrears (ie credit cards and personal borrowings) were in rapid increase in WA and QLD especially over the 90 days and that this could be a sign of things to come if unemployment continues to rise in the states.
     
  4. skater

    skater Capitalist Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,422
    Location:
    Sydney
    Yes, Sash I agree. Got out of that Tregear property just in time.:D
     
    MTR and beachgurl like this.
  5. devank

    devank Look, lets just get on with this, ok? Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    731
    Location:
    Inner West - Sydney
    How do you find those deals? Do you need to be connected to those promoters?

    Do you expect any growth after 2019 for those properties? I was going to wait around for 7 or 8 years.
     
  6. spludgey

    spludgey Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    694
    Location:
    Sydney
    I personally wouldn't be surprised that if other markets didn't follow their regular cycles once Sydney starts going down a little bit. While confidence is still high at the time being, I can just imagine it dropping like a rock across Australia. This confidence seems to only be propped up by Sydney, Melbourne and possibly Brisbane, apart from that, the fundamentals are pretty shot: China's economy isn't doing that great and their devaluation of the yuan means that it's going to be more expensive for them to purchase internationally, unemployment is on the increase, the current government doesn't have a great deal of support, debt levels are reasonably high, the mining boom is over and it's not coming back, manufacturing is moving offshore with no viable alternative in sight, etc.

    I'm not saying we're going to be the next Greece, but I think we're in for a decade (hopefully) of very slow growth for the economy.
     
    Bayview and Esh like this.
  7. MGF

    MGF Well-Known Member

    Joined:
    13th Aug, 2015
    Posts:
    403
    Location:
    QLD
    LMI insurer Genworth went down due to QLD and WA rising delinquencies too.

    There is a time delay between miners (and other industries) losing jobs and when those people finally exhaust their savings. I assume the delinquencies in QLD/WA are probably from job losses earlier in the year or even late last year.

    I'm also assuming the banks know a lot more about what's happening on the coal-face (no pun intended) because they can directly see arrears rising and also can see the monthly income flows. They can look at a bank account and see income flow of $10K a month that has dropped to $6K (lost high-paid mining job, found lower pay new job).

    Job ads are down in WA too I believe.

     
    Chilliblue likes this.
  8. TheSackedWiggle

    TheSackedWiggle Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    152
    Location:
    canberra
    the full extent of new supply in rental market will be felt around 2016/17, RBA recently mentioned new migration adding to unemployment rate, so migration will be capped as there would be very little to offer in terms of work Next election unemployment will be an issue and to increase migration would be suicidal for liberals.
    If construction boom ends unemployment increases much rapidly.

    Rents are consistently falling over last few years in few cities and no I am not mentioning about mining towns, and the new supplies have not fully hit the market yet

    with unemployment high and increasing, migration decreasing, why do you think rents will rise in 2016?
     
    sumterrence likes this.
  9. Big Will

    Big Will Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,570
    Location:
    Melbourne, Australia
    Unemployment % is higher yes but there has also been more employment.

    My work place has put on more people in the last week and this year has put on an additional 20 heads (roughly speaking).
     
  10. Chris White

    Chris White BUYERS AGENTS & PROPERTY MANAGERS Business Member

    Joined:
    7th Aug, 2015
    Posts:
    118
    Location:
    BRISBANE | SYDNEY

    What areas are you referring to with regards to supply and rents falling?
     
  11. qonyx_sydney

    qonyx_sydney Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    135
    Location:
    Sydney
    I've also been receiving unsolicited phone calls from RE agents asking whether i was in the market to 'buy or sell' property.

    Last year and earlier this year this would be unheard of, as the agents would likely be too busy.

    In my mind this is another indicator of a slowing market.
     
  12. beachgurl

    beachgurl Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    455
    Location:
    Sydney
    When the buyer demand decreases, rental demand increases as there are more people looking to rent who were previously prospective buyers. During the GFC a lot of first home buyers sold up and went back to renting too as they either couldn't afford the repayments or just didnt want to pay a mortgage anymore
     
    DazDog, R.B., bob shovel and 2 others like this.
  13. TheSackedWiggle

    TheSackedWiggle Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    152
    Location:
    canberra
    canberra, perth, adelaide all have increasing rental vacancy rates
     
  14. TheSackedWiggle

    TheSackedWiggle Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    152
    Location:
    canberra
    ??
    are you saying you are seeing an overall increase in employment increasing which may not be reflected in unemployment figure?
     
  15. TheSackedWiggle

    TheSackedWiggle Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    152
    Location:
    canberra
    Wont the house they sell increases the rental vacancy rate?
     
  16. TheSackedWiggle

    TheSackedWiggle Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    152
    Location:
    canberra
  17. ej89

    ej89 Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    688
    Location:
    Sydney.
    When you say unemployment increasing do you mean Sydney or Australia? Cause Sydney seems to be creating a crapload of jobs..
     
  18. Chris White

    Chris White BUYERS AGENTS & PROPERTY MANAGERS Business Member

    Joined:
    7th Aug, 2015
    Posts:
    118
    Location:
    BRISBANE | SYDNEY
    Ohh, I was talking about the outlook for Sydney....

    i.e. more people moving back to renting as opposed to buying which will put downward pressure on vacancy rates and upward pressure on rents.
     
  19. sumterrence

    sumterrence Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    172
    Location:
    Sydney
    I believe this is not the case, imagine if those sellers cannot find a buyer and they need to rent the property out to cover repayments while other landlords that are not in a market to sell will need to compete with more competition. This will surely see rent come down in stead of up as more supply on the market.
     
  20. Chris White

    Chris White BUYERS AGENTS & PROPERTY MANAGERS Business Member

    Joined:
    7th Aug, 2015
    Posts:
    118
    Location:
    BRISBANE | SYDNEY
    I believe that this will happen again within 2 years. Its all about supply and demand..
    http://news.domain.com.au/domain/re...eel-the-squeeze-in-sydney-20111222-1p6zg.html

    When new construction slows, excess stock is taken up, less people buy a PPR as they are priced priced out and as lending tightens, this will happen again.....these headlines and situations are cyclical

    We manage properties all over the place so know first hand what rents do and when they do it.