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

When these units are finished, it will be at the time that the downturn will be picking up strength.
http://www.realestate.com.au/property-unit-nsw-kellyville-119942025
Could be a good price in 2019....
Or these - 1 bedders starting at 650k...
http://www.realestate.com.au/property-apartment-nsw-kellyville-119075547
David

 

Time to start saving and be ready to start shopping by 2018-2019.

What are the usual terms for OTP purchases?

 

Wow. That pricing is ridiculous! I don't get why they're priced so high. Rouse Hill has one bedders starting at 475k next to Cudgegong station and I thought they were expensive too!

 

I don't think the OTP market will become an attractive proposition even if the expected scenarios play out.

If a buyer can't settle, wouldn't the deposit just get forfeited? The developer can then just resell it. Even if they have to discount the property that loss is offset by the poor sucker who lost their 10% already.

Lets say this leads to OTP prices dropping in value by 10% across the board. Does it then make them attractive to investors?

Value-add - Nope, it's brand new
Short term CG - Nope, correction and long period of flatness expected
Good yield - Nope, oversupply in some pockets
Land component - Nope, it's still an apartment
Low risk - Nope, uncertainty of build quality etc

The reasons why most here don't like about OTP will still remain.

There may be the odd opportunistic bargain though (The buyer may just manage to settle but then can't service the loan and therefore decides to cut his/her losses and sell up), but one swallow does not a summer make.

 

Thanks for the link.
Ouch, 1.5% vacancy rate for the whole of Sydney in 2011? Imagine trying to get a place in the tight suburbs then.

 

But is there no opportunity for instant equity? E.g 80% of the complex settles at 600k 2 years after buying for 400k, then 20% fall through on finance and have to sell before settlement and then simultaneous settlement occurs and they sell it at 450k and get their money back? 150k difference between those settled and those didn't?
Is that possible or not really?

 

The scenario you highlighted is what's been happening (to a lesser extent) for the last couple of years (ie: a rising market). There is very little reason not to be able to settle in a rising market. You sign the contract at 400k and buy at 400k. If it's worth 600k by the time you settle, then financing shouldn't be a problem because valuations are above purchase price and LVRs are lower. Even if you really can't settle you can just resale to someone else and take the profit.

 

Ahh ok yeah I forgot about the valuation thing.. Not sure OTP apartments would be good purchases anyway considering they all have ridiculous strata..

 

There is more people looking for work but at the same time more people have been employed.

http://www.abs.gov.au/ausstats/[email protected]/latestProducts/6202.0Media Release1Jul 2015

Summary;

Australia's estimated seasonally adjusted unemployment rate for July 2015 was 6.3 per cent, an increase of 0.3

The ABS reported the number of people employed increased by 38,500 to 11,810,700 in July 2015.

 

I think the auction clearance rates just point towards a possible price stabilisation.

If you have a look at the auctions that were passed in, majority just didn't hit the price they wanted.
This is most likely because vendors are continually expecting higher prices which just won't go on forever.

https://www.realestate.com.au/auction-results/nsw

This would be certain for high density OTP areas but only at the initial completion and occupation.
When those initial levels come down you would see prices adjust, so the impact should be short term assuming economic conditions are not in any extreme circumstances.

 

This would only be the case for people that bought OTP before 2013 and settled this year.
Many people bought this year (at the peak) and won't settle for a few years. So it is likely that the value will be lower on completion. That is what is meant by getting some deals on OTP in a few years time. It happened in the last boom. There was a mad rush to start building OTP and getting deposits before the craze died. There were some bargains to be had.

 

That part of Kellyville is quite isolated. The 'bus route' mentioned in the ad is certainly not express - perhaps around 1 hr 10 to 1 hr 20 minutes depending on traffic.

Also I think the advertising photos are quite misleading ( yes granted they are concepts ), however REs and developers are really pushing the boundaries.

 

They just approved 209 units at the other end of Hezlett, shopping centre, grocery store, restaurants including a "drive through".

 

Sydney in 2018-2019 is certainly on my radar.

 

Great question...have no idea..till you see the adds like "vendor must sell" or something to that regard!

The smarter agents will be more coy....

 

10% deposit and 2-4 weeks to settle upon notification of completion. They will usually extend settlement if they are a reputable developer....

 

True...what happens next is the 64k question.

 

For the mortgage brokers here, are banks still ok with 10% deposit for OTP settlements? Any indication they will require more yet?

 

Was thinking the same thing.
These properties are not really attractive to an investor at any price, IMO.

 

Yes I understand and agree with you. @Travelbug as a seasoned investor, how much in terms of discounting was there last time this happened? Personally I think the discounting would have to be ~20% to entice me to reconsider Sydney, simply because of Sydney property prices relative to other states...