Sydney price growth to drop or prices to drop?

Thx for the run through, u could probably moonlight as a representative for phone bidders ROFL.

 

Yup, personally I'm very grateful to APRA. They limit the corrections, slowing the markets to avoid any major catastrophe, which ultimately protects our investments. Until the next bursts of growth/deals come on line. Good stuff.

 

@jins13
We aint unique at all in any way mate compared to other countries. Our finance system is exactly the same as the cowboys in the US.. Nothing to see here folks, Move along now

 

Not sure what that means. Every market is 'unique'.

 

Post 2003 sydney,
#. Post 2003: salary kept growing due to massive Mining FDI strengthening Gov/Banks/Corporate books,
#. Post 2003: Immigration was on uptrend, and more or less was welcomed due to abundance of jobs.
# Post 2003: Credit was available and IO was not the new black.


Post 2017 Sydney
#. Post 2017: salary growth has been stagnant and will likely continue to remain stagnant due to lack of fresh FDI coming? Automation.?
#. Post 2017: There has been jobless growth and due to lack jobs Immigration will no longer be cool and will rather be targetted by the likes of pauline and her comrades.
#. Post 2017: Credit is getting squeezed, IO is the new black.
#. Post 2017: Rental yields is all time low
#. Post 2017: Upcoming IO to PI headwinds
#. Post 2017: Property price to house price is at all time high.

I don't know how it will turn out to be but the factors which resulted in price stagnation post 2003 were much different to what it is now.

 

Wow. You must have made a fortune in Sydney post 2003.

 

post 2003 to now has been 14 years, you have 3 pts.

post 2017 to now is 6 months and 26 days, yet you have 5 pts?

 

If what you are saying is correct then prices should have kept rising post 2003. Instead prices stagnated for 10 years. It would be interesting to know why because those economic conditions are not indicative of stagnant growth.

 

Things which kept price rising are...

• Easy availability of credit
• Generous serviceability.
• Ability to get IO loans at will.
• Ever increasing immigration
  All of the above are under threat now.

I am not sure if sydney prices will implode or not but I think it can't continue north given the credit headwinds ahead.

What do you think about Sydney/Melbourne? What will support the current price or its journey upwards?

 

Theres a pretty big difference between Sydney pricing imploding or 'not', such as prices stagnating for 10 years, as it did before.

 

The only thing I am very sure in your list is that wages will have next yo zero growth in Sydney, and most of the country. the only jobs that will see assured growth are unionised government jobs. It's not because of low FDI..it's more that costs (which include wages) are way too high for what you get (quality and quantity) in comparison to other countries. This makes it uncompetitive.
Only protected and minimal competition industries (eg government) will see stable wage growth.

 

I think certain areas in Sydney will go back, sideways and eventually forward again. Just depends where. But make no mistake, forward motion will continue long term.

Supply and demand. A lot of wealthy people in this country. Don't get me wrong, I agree there will definitely be markets behaving in all different ways. Many of the OTP units with massive supply could easy see up to 50% risk of going backwards. The prestige markets could also see a 25-30 % backwards movement. Also people who bought at the peak of the boom will be at much higher risk than those who bought at much more calculated timing .

Someone who bought a unit in rose bay nsw for 500k which is now valued at 1mil plus wont be affected much if it goes back to 800k, whereas the same unit in rose bay if purchased at the peak could see the 'investor' have negative equity of 200k. . At the same time, I don't see a 2 bedroom $1.1m unit in North Bondi going back to 700k. Aint gonna happen when the demand is so hungry for that type of stock in the area from many wealthy people. Also, don't see a 650k home 4km from the Brisbane CBD going back to 400k. Demand is too strong with limited supply.

I can go on and on with examples of what is likely to happen and what simply wont happen due to supply and demand. I have followed my S/D fundamentals since I started investing 16 years ago and I am still alive and kicking.

Ultimately all investing carries risk. No decent investor will argue with that. It's all about gauging the opportunity vs risk and managing it accordingly.

 

Price stagnation is not a good place to be given that a Sydney property on high LVR has a ongoing holding cost due to low rental yield and other rising costs, so it needs at least 3 to 4% increase/yr just to be in money.

 

Pretty stupid to buy in Sydney now anyway. On the other hand, I plan on living a long life, so I dont insist on making a profit every year, as long as the return is good when I sell. If you bought 5 years ago, stagnation would be disappointing, but life goes on. Experienced investors will have the resources to hold. The 2003 crash created the opportunities in the later 2000s.

 

Not cycles or clocks....its conditions that cause markets to go up or down
Low/high interest rates, under/over supply, growth/no growth in industries, demand/no demand, and foreign investors (ie Chinese) pushing markets to unrealistic heights (Sydney, Melbourne, Auckland, Vancouver, Hong Kong, Singapore etc etc), and then domestic house owners suddenly sitting on a heap of equity (Sydney & Melbourne home owners) jumping on the band wagon buying "cheap" (compared to Syd/Mel) property interstate

 

Too much overanalysing sometimes. It's pretty simple sometimes markets go up, sometimes they go down. Normally when markets go up for too long, they stop doing so. History always repeats itself.

 

My take is Sydney Prices peaked around 2004 and it was pricey then yield wise, the later years salary increase was revert to mean scenario I guess.

What is your take on Sydney/Melbourne? price wise for next five yrs?

 

Moving into a correction cycle after the boom I can see prices easing then flattening out. So price drops followed by flat. I do have a gut feeling that Sydney won't stagnate for 10 years this time though. That was an unusually long time for little growth and I think one of the reasons this boom was so severe.

 

This is all true but I feel like it is missing something. How is this different to 2004/2005 in Sydney, prices should have been rising but they were not. Why? We are not seeing the bigger picture. Also, to let you know, I don't know what caused the stagnation in Sydney from 2004 to 2013. The market should not have been flat for so long, but it was. Then there was a boom and there must be a correction.

I think we kind of understand a boom. But I have never seen a solid explanation of 10 years of stagnation in Sydney.

 

Stop being a party popper, none of us have a clue as to what happens tomorrow

Trigger for boom post 2012 could be outflows from mainland china?
They started the momentum and rest all joined the party? Now that momentum is curbed by outflow restrictions.
PS:I am not talking about local money from locals of Asian origin.