Sydney drops 4.7% over last six months - what do you think is happening?

Ditto...when rates rise.

Me thinks there will be quite few under pressure...in the Sydney market.

A lot of investors and OO have not thought through this well and most have not anticipated the impacts.

Have seem a few on this forum go to list and think they will get 2015 prices...and then pull back. The real issue is due they pull the trigger now or wait it out. Hope they did their Cash Flow projections correctly.

 

I can't see rates rising quickly, sharply or in the near future however. But for anybody who might feel stressed about it, now is a good time to do something about it though. Plenty of time before any rates will rise in a meaningful manner.

 

While this IO to PI switch is going to be a massive problem for OOs (and investors) who overstretched themselves, we are talking year 2023-2025 as the endpoint of the 10 year IO loan for many. If the next cycle is a repeat of previous cycles, Sydney should be gearing up for a take off again by then, so if new PI loans cannot be serviced, prices should be on the way up again if these people have to sell.

But for 5 year IO only loans that due to APRA changes cannot be extended as IO in say 3 years time, that could give a headache or two to some.

 

Wow that is insanity. When you consider most the older mortgages would be P&I loans before IO popularity took off, the proportion of loans under 5 years old that are IO would be a lot higher, over 50%. Then there are all the investors on IO...
Recipe for disaster.

 

The issue is most people would not have considered past a 5 IO period...so yes it should get very interesting.

Yes....interesting...indeed......

 

ive been out of that particular market once I determined as it being too hot

so whats the market sentiment like??

are the agens haveing to actually do some sales work?

are the sellers those who bought recently and have to sell?

 

I know my area is still strong. Market is still buzzing along.
And no. The sellers are not people who bought recently, at least where I am.

 

Yep this is data for the April quarter... so out by a few weeks. Also wouldn't capture things necessarily with long settlement times etc ? I'd have to double check that though. And it obviously doesn't capture the homes that are NOT selling

 

What!! Why??

 

But IO loan is not a true reflection of the burden on loan owner as most IO loans would go with an offset account nowadays.

Wouldn't it be wiser to access IO loan together with the offset account attached to the loan itself? Surely this can be easily done for statistics purposes.

 

Now that is hilarious.......that is why I don't use stats only...

 

My approach is to use the price series as a long-term trend. Our economist suggests auction clearance rates are the best leading indicator (in hindsight, he's correct), as well as obviously personal observations on the ground of what you're seeing selling. ACRs are more volatile, but tend to give a good week to week trend.

Even though I work at Domain, independently I think the median price stats we provide are among the best. They're sent out later than other non-govt data sets to ensure they capture as many of the sales in that period of time as possible and use valuer general data. The latest ABS stats have found Domain data among the most in line with this official data set. I personally find that comforting.

As always, the best way to view any market is with a mix of stats and anecdotes.

 

I often find what isn't selling in an area is the most revealing piece of information overall

 

This is just the start. Interesting to watch it from the sidelines.

 

My neighbour is selling hers for 1.45m. I don't think she will get that but with R3... Maybe? I hope she sells soon and leave us in peace.

 

Someone who bought one of those median price million dollar homes six months ago might be hurting... possibly $47,000 down. If they put down 10% they've already done nearly half their deposit. That would have to sting.

 

Please share the link! I may have a buyer.

 

I think you need to read the article very carefully and in it you will find that there is no price drop or crash that may be imminent.

There is a very good reason for the price drop that we have seen (albeit it is only limited to certain suburbs that had huge growth) and this sort of drop will happen everywhere guaranteed!

Tighter lending. Banks are no longer lending money like before, there is far more restrictions on serviceability and valuation of housing.

There is definitely appetite to buy in Sydney and it will continue to lead the market in keeping it's prices intact but clearly we are not going to have banks that just lend as they used to, so people can continue bidding higher and higher.

Obviously the growth in Sydney was unprecedented and we could not just have houses go up and up and up. There had to be a stop. But if there is any safe place for property investment in Australia, it is Sydney followed by Melbourne.

 

That may now be challenged.........lots happening in the banking sector which is going to put pressure on the Sydney market in particular.

If there is no demand due to finance or other issues...the market will correct......watch this space...the other is jobs..massive change on that front for Sydney also....mostly due to the banks now looking to outsourcing even more roles out...

 

Thats interesting. Where did you get that information from?