Sydney prices now in the negative year on year

Definitely a case of over-capitalising when it was first built.

 

True but look at something like 44 Seymour Way Kellyville. Sold 2003 $780K then again for $502K in 2007. 35% fall.

 

Useless reply without understanding circumstance .

but maybe
Because they dont live or want to re-locate the whole family to Melbourne?



Your point is good if>>>

1. Your kids are not at school
2. Your kids are not in childcare
3. Your not in a great job which doesn't have an office in Melbourne
4. You love and want to live in Sydney.
5. Your family and friends live here and you dont want to separate the family.

 

Actually have not made any money until the property sells and they have bought another for less than they sell for. Assuming they pay interest on a mortgage and stamp duty, unlikely they will make much. People who go on about their property going up in value, who then do not sell will forever be richer or poorer but have no material difference to their wealth.

 

A price like that might have been paid for "other reasons" to do with moving money around.

 

If they bought 32 Strathfillan Way, Kellyville, NSW 2155 for $2m in 2003 - well there is nothing I can say.

Clearly an example of someone way overpaying for something of that time.

 

Yes, but the thing is, that 0.06% is a median. What this means is more than half the Sydney market is now making a loss.

It's all well and good when prices are going up, but then that price growth stops there's a risk the positive feedback effect that fed the bubble could turn negative, in a snowball effect that has effected dozens of cities (particularly around 10 years ago). Price growth happens when supply cannot meet demand, and in this country demand has been unusually high for several years, with the proportion of investors entering the market very sharply and unusually increasing to more than 50% of the new buyer market. That is huge, given the historic level has been around 10-25%. It's also one of the very highest proportions anywhere in the OECD, and it is a situation that also occurred in major housing markets that went bust in the mid 2000s.

So half of the demand in the market is investors, and that section of demand is extremely fickle. If that proportion drops even to the high end of the historic range (and it is already dropping due to finance being more difficult to get, and due to a general turn in positivity) then this brings about a very serious problem. Because there's another facet to this. Supply.

When markets boom for an unusually long time, supply ramps up, and suddenly everyone and his dog becomes a "developer". The supply of city fringe and apartment assets explodes. And when supply overtakes demand (especially falling demand) then price growth stalls, or falls. Which means those assets in the works struggle to sell and command increasing prices. When means price growth drops. Which makes recent investors or would be investors shun the market. Which increases oversupply. Which means builders can't sell their assets. Which means they discount, which means buyers can be choosy, which means there's less money in investing and the promise of profits that led unusually high numbers of investors to enter the market turns would-be buyers away. which adds to oversupply. And on it goes.

I'm not saying that's happening, but negative price growth is a big, big problem. How much the market has grown in recent years doesn't matter, because the trouble is, recent buyers and would-be buyers aren't ahead and prices maintaining their current level is completely dependent on being able to sell those assets down the track. It is those future buyers, not past ones, that determine where prices will go now. "The market is up 50%" is meaningless, because an asset is only worth what people will pay for it now. If people can't sell, prices will drop, and that is why Sydney has seen such a sharp, rapid drop in price growth. What happens next remains to be seen, but past growth cannot and will not determine the future.

 

Can anyone provide examples of suburbs at 0% YoY?

Which suburb in Sydney has the greatest YoY loss?

Which suburb in Sydney has the greatest YoY gain?

Just interested. I’m not tracking other suburbs other than my own suburb.

Also it’s a markets in markets situation. Some suburbs will be significantly disproportionate to the trend because of unique suburb factors ( whether it be loss or gain ).

 

Just search most of western sydney and south western sydney. The medians of most those suburbs have been going up slowly throughout the last 12 months (especially suburbs still selling for $800k or less. I usually do a moving median comparison once a month to show how much the medians has grown.

I can tell you that suburbs like St Marys, Colyton, Mt Druitt etc....all have grown YoY even after APRA regulations and continue to do so.

I posted my moving medians last week. Wait until around the 20th of March and I'll do it again. I'll bet 100% it moves up again.

 

These figures are last 12-months and from yourinvestmentpropertymag.com.au which uses Core Logic Data.

Rouse Hill 13.78%

Schofields 17.69%

Riverstone 13.89%

The Ponds 8.29%

Kellyville 10.92%

Glenwood 9.8%

Baulkham Hills 9.34%

Blacktown 8.91%

Cherrybrook 12.14%

The interesting one is Box Hill. Down 21.39%. Lots of acerages have sold for millions. These are being converted to housing estates so the big change there is median is coming down as lots of individual houses are built.

 

Another explaination... In Sydney, the cheaper properties (boosted by FHBs), are selling much more than the more expensive properties and these homes in cheaper suburbs are still going up in price. As the cheaper properties are selling, it brings the city median down. All (or many) Sydney suburbs can be still be going up, but only the cheaper ones are selling in large numbers. Therefore, there can be a fall in the Sydney median price, as the middle purchase price comes down citywide, but we can also see increases in suburb median prices at the same time in all or in the majority of suburbs.

 

Well at least it won't be this bad......hopefully

 

That kind of factor (and many others) makes the rolling medians on the realestate.com website so unreliable, especially for smaller suburbs. But it should not affect the CoreLogic Hedonic Index: if FHB stock is rising, overall declines in Sydney's housing values must reflect pretty steep falls in non-FHB stock. The CoreLogic index for Sydney is dropping at a current, annualised rate of 10% plus.

 

Liverpool 6.67%
Campbelltown 12.04%
Caringbah 17. 41%
Druitt 13.56%

 

Keep posting everyone. More suburbs. Rises and falls.

Get median for last 12 months from yourinvestmentpropertymag.com.au which uses Core Logic Data.

 

^ ^ This

The CoreLogic stats quoted by the OP are hedonic values. They are a completely different beast to medians, which as we all know have glaring flaws, and give results that are more realistic and timely. See here for an explanation of the hedonic approach.

CoreLogic shows a peak in Sydney prices on 11/9/17 and a continual (and accelerating??) drop since then. Price points taken at 1 month’s intervals:

I’m not predicting anything, just trying to use stats correctly and make some sense out of it.

 

It’s going to take some time for the 12 month medians to be effected, we all know there’s a delay in the data and even then it only includes the recent data one month at a time...so the 12 month median is really Dec 16 to Dec 17

The quarterly medians are consistently telling a different story, Oct17-Dec17

You can see the recent trend clearly when you compare 12month/3 month.
Not many 3 month medians x 4 = 12 month median, price growth is consistently falling, the data just needs to catch up.

Baulkham Hills 12.81% / 0.83%
The Ponds 8.29% / 0.57%
Schofields 17.69% / 1.18%
Glenwood 9.8% / 1.74%
Kellyville 10.92% / 1.58%

 

Yes. On top of that, medians are several months behind.

They are also misleading due to being inherently blind to compositional factors and value change caused by renovations/improvements. For refined analysis as is needed when markets are turning, medians should be avoided.

 

FHBs aren't reliable. Many don't have the time nor luxury to sit back and research and monitor the market and the government is putting a lot of pressure on them to jump in.

I'm seeing a few apartments in my area selling for 10% more than last year but I'm still not convinced because I'm also seeing 10% reductions in apartments with liabilities (body corp issues, poor condition) which tells me investors are leaving the market fast.

with over 50% investor activity for the last 5 years that's a huge sum of demand leaving the market.

And rental yields so low theres no benefit for FHBs to enter the market right now.

 

Or 10 nice dinners out.