NSW Sydney property prices falling

That's spot on..

For me it reeks of arrogance.. If it is easy to say "oh its just part of the cycle" - ie declining prices, well then what happens next? Pls talk us through the next year or two.

I just can't see where the demand boost is going to come from to restore price strength.

In the last 10 yrs (of sydney boom) we have seen

1) 5000 yr interest rate lows with massive credit growth (how does this turn around)?
2) tail end of female participation in workforce (increasing borrowing power in households) - this has peaked
3) Massive growth in foreign investment (taxes imposed and macroprudential controls have been imposed)
4) Australian economy hits new record highs in last decade of 35yr boom (now at full employment)

Very interested if anyone can advise where the next boost of demand will come from, all of the above have massive downside risk. IE interest rates increase, U/e increases, economy slows, china / or stockmarket trips up etc etc

 

'will likely', 'maybe', but not 'will be'.

...and the question is if it is 'higher' enough to be
1) profitable (considering expenses)
2) higher than other types of investments

 

Sydney homes listed at huge discounts

 

Yes, investors in Australia believe property cliches as if they were the laws of physics.

I dont know about arrogance, but there is definitely an alarming amount of ignorance.

Here is a very well explained video on the Japan asset bubble and the "lost decade". Are there differences here, yes but there are also many similarities.

 

Worth reading up on. Sound familiar?

"Between 1955 and 1990, land prices in Japan appreciated by 70 times and stocks increased 100 times over. Trading became the national sport, and the Japanese jumped into the market with more blind confidence than that of the Americans of the 1920s. During the eighties, large Tokyo firms were worth more individually than all their American counterparts combined, and Japanese golf courses were worth more than the value of all the stocks on the Australian exchange. "
Market Crashes: The Asian Crisis

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Not really. It’s cited as an example of a classic bubble but unique in its causes and demographic context.

 

I'm not sure i agree with the pessimism about the economy in general. Public sector infrastructure investment in NSW is set to boost demand here over the next few years. Specifically:
- West-Connex
- NSW Metro
- Sydney's new airport
- North-Connex
- Bunch of smaller projects (CBD light rail, highway upgrades, F6 potentially, etc).

These are some of the biggest projects in road and rail in decades. They will also take YEARS to play out with the biggest investment coming over the next 24-36 months (for now at least). They are also massive investments that create loads of jobs, income, spilloffs, future construction, etc. Some of the biggest multipliers.

The countries biggest economy is humming along. VIC is doing very well too.

I don't think it'll be long till this translates into wage growth. In simple terms, wage pressures will just hit when people can swap jobs inside 30 days and move around freely knowing that the person next door is desperate for workers and there's not enough of them around.

May mean some of the downside risks arise and that could test the resilience of the property market (i.e. rate rises).

Pete Wargent Daily Blog: Gizza job!

 

To give a boost government can still
1) drop interest rates further
2) increase infrastructure spending (gov debt will of course increase but does anyone care? lol)
3) Increase immigration.

But it seems a more likely short to mid term picture is that a stable/flat economy with low GDP growth (like most OECD nations) with increasing debt. A lot depends on how things go in China as well.

 

^ This article you need to becareful how to interpret that. There are many many sellers who are still inflating prices hoping to get 2-300k above what their property is worth. So when you are already advertising above what the house is worth and hoping to find an owner occupier to purchase it because they fall in love and then reducing the price by that amount well its kind of misleading.

Its like a big retail shop when I used to work there many many many years ago on the sales we used to increase the list price by 30% and then reduce by 40% advertising a MASSIVE price drop and saving but in reality your only saving 10% of the initial price.

Smoke and mirrors makes the consumer feel better that they got a good deal when in fact they are paying market rates anyway.

Plenty of gullible people around that these articles will fool.

 

Don't underestimate buyers' intelligence. That may work in retail somewhere (it worked 10-15 years ago in many places for sure, w/o internet access), but unlikely it works in RE. Everyone can check the prices of (comparable) recently sold properties.

There is another strategy - guide price is below real price to attract more people and to let buyers compete

So why don't you consider that their initial price was below expected price?

It's better to go to the inspections and see what discount you can get now rather than just guess

 

Ummmm did you read the article? If not read it again

 

where exactly? they mentioned just original price and discounted. How do you know the original price is not below their expectations in hope buyers would start compete and make offers above original price?

 

meanwhile, it's -0.40% drop for 25 days of Oct (accelerating) (src: corelogic)

 

Like it was mentioned before -0.4% of 1 million is equal to $4000. Not going to affect affordability at all.

 

QBE: No growth till 2020 (at least). Their forecast is 4-7% drop for Sydney units over next 3 years.

Apartment prices set to fall, signalling good news for first-home buyers

 

That's hardly a crash, and the article says houses to drop 0.2% over the same period. Before growing again

 

this topic is not about crash, but about 'falling prices'

anyway, if it's going to be flat over the next 3 years or up to 10% correction, why not to sell and invest money into other markets? And then buy again if debt is recovered and wages are up. It's worth it even if we pay stamp duty / RE agent fees. At least, for many who doesn't like their property for some reason, that's good option.

 

Fair point

In regards to selling if you expect a few flat years or a 10% drop, entry/exit costs can be 7%. And if you don't time the exit and entry perfectly that could easily erode the remaining 3% (and then some)

 

Quick sell up sell up!!!