Sydney - the coming correction 2018-2022

I saw that.

But remember Liverpool houses are generally prices $650,000-$900,000 same as OTP apartments in the area (almost).

This is my take on it.

Liverpool's interesting thing is the changing landscape its becoming a much better area. Their is a lot more amenities and 2 uni campuses over the next few years. This may change apartment demand in the area as the 2 campuses are in the Liverpool CBD.

 

Well Core logic doesn't agree in some way/

2.98% growth for the year and loss for the months -0.03 %

So unless you are looking at a month data in isolation well maybe.

the forecast is for apartments to also do Ok in a lot of parts of town. I have read Sydneys east and city areas to take a bit of a hit.

All opinions really.

 

Thing to note with 2.98% yoy growth is that number slowing from previous month?

In any case, a downward trend in either units or houses will eventually have effects on each other and both will be affected by negative sentiment. Pretty sure Liverpool prices have been fuelled by investors who are now turning negative on sydney

 

Liverpool is growing quickly and cleaning up.
Time will tell.

I don't have data on OO vs investors.

But the population growth rate is one of the largest in Sydney. Will add 70% by 2036 according to ABS DATA. taking it to almost 380,000

 

I do not believe what most of these data places put out verbatim. You must dig into it all and make many considerations and know what they are using too.

I was active a few years ago and was going to get in, I know what the competition was like and they were selling first open, I decided to hold off as was too mad, many people had not even looked prior, had no idea of strata, no idea that buying a place with a troublesome tenant meant buying trouble, etc etc, after APRA and for a bit of time after, I attended many opens, some places no one else at the open, or one or two parties & I also saw some were taking a month or more to sell, I also note now that the prices for similar things I was looking at are already back to the pre APRA pricing,

So I am going on actually being active, the data can say what it wants, some were including increases in build cost to say things were still going up.

To use data, you need to know some specific similar properties and that they were sold on open market for actual prices claimed. It can be a guide if area has pretty much same properties, say like an existing new estate that were all similar.

Go somewhere where land has been sold off for dev etc, or something else wrong & data can be very poor indicator.

While I am not active in the market looking for last 5 months, one thing I know for sure now, is if I wanted to buy, there is choice and no need to rush,

 

Liverpool area has, like many places, vastly different areas, streets etc.

but even in demand tight held places have way less demand, simple as that, no one escapes the APRA changes - no one.

 

Hi Sash,

I have always completely ignored the much hyped median price that is widely publicized in the press. Reason is simple: one month you have 10 large houses sold, the next you have 10 regular apartment sold, and median dives by 70%, what's the point of doing this stupid comparison? it's just useless.

Just look at those fancy graphs showing median prices by suburbs provided by so many agents, and everyone can see how silly it is. I don't know who they are trying to fool. Even a 9-year old knows to compare apples to apples.

Now with regard to the statement that "you can see a correction as high as 30-40%", I think this is possible in outer suburbs where demand is low, but for suburbs within 25km of the CBD, my impression is that it's highly unlikely to see price for the exact same (or very similar) property to drop by more than 20%.

Does anyone have any example (from realestate.com.au or domain's property price history) in the last 20 years showing that a normal property sold at X in one year is then re-sold at < 0.8X subsequently? Not talking about unique properties such as 5+ mil mansions or those affected by special adverse events, just regular properties you see around major suburbs such as the CBD, eastern suburbs, or along major train lines such as the inner west or north shore.

It's also OK if the example involves two apartments in the same building of the exact same size and layout and on comparable levels.

I have asked a few agents and none of them could recall any, and told me that kind of radical crash is unlikely to happen unless we see another Lehman Brother event. They do have ample examples with a fall of 10-15% though.

 

There has been record low rates, there has been untold amounts of money created in other countries, while we did not do this, low rates have inflated assets in many places to a sky high amount including some parts of Aus IMO.

If the global economy has problems, with inflation or a crash, it will do things that no one has seen or expecting, is that simple, if the status quo continues, then there will be no large and rapid plummet, but prices have to come back and stay flat.

The larger problem I see, is that the pressure for wages etc is down in the lower paid areas, and there could be other unforeseen radical changes, or war.

So is about risk and likelihood of many scenarios, but there has to be a bunch of people from say 15 on who jumped in and relying on continued large CG, without it, they could fail, or dump on market just to offload the debt.

The sentiment is only now turning in the public, it will take time for most to catch on or be where they face the fact that they must do something, and just because we have not had a crash before, would seem to be an ignorant position to rule it out, but anything is possible....

 

Love the flurry of potential projects in Sydney though. We were in the dark ages for so long but the work turned a few years ago and continues to.

Will soften the landing somewhat (from a price drop perspective), give the economy a bit of a kicker and in the long term, give the likes of Paris, London etc a run for its money.

 

Thanks mate. It's a goal but will take lots of hard work and a few years. 40% lvr on my portfolio is nothing compared to what you have done!

 

Went for 4 auctions yesterday day. Three passed without a single bid. Other one had couple of bids less than the buying guide, and vendor let it pass. All these were 1.4ish houses in the Hills.

 

Hills houses are usually in large blocks. We’re these on big blocks?

 

What are people's thoughs on older style two bedroom units in Parramatta/North Parramatta with reno potential.

I know market has softened and prices have come off a bit, but there is so much infrastructure being built in these area such as Western Sydney Stadium, Parramatta light Rail, Parramatta Square, Powerhouse Museum, lots of new residential and commercial buildings being built.

I would like to buy an older style (1970's) 2br unit in a well mantained block in a good location for a long term buy and hold investment..

Not sure if prices will fall further for this type of property? Or if all the infrastructure going in will keep prices stable even though prices fall across Sydney... confused.

You think prices will fall further?

 

The radical 3-40% will happen on some of the OTP.

But prices are already down 10-15%...a lot of people are in denial about what is happening in Sydney....now it is spreading to Melbourne.

By late 2019....the change will clear.

Already the Hills district one of the best performing areas is now turning...you are seeing lots of houses well under $950k in the Ponds last year they would have hit $1m....and houses in Castle Hill/Cherrybrook will go down to just over the $1m median mark.

Houses For Sale in Castle Hill, NSW 2154 (Page 1) - realestate.com.au

If that is happening to those areas ...then areas like Marsden Park, Scofields, Box Hill will be under 800k when this cycle finishes completely.

The real reason is affordability caps....when credit scoring sharing of info is implemented most of those dodgy loans will be closed off mostly.....

 

The Govt can build whatever they want, it comes down to how much people can borrow, supply and demand.

I aint gonna move to Parra no matter what they build there, in fact I hate much of Sydney now as it is too hard to get around and work, if you do not have to go anywhere, seems to me most places now have ample shop choices and transport links, so no end of choices.

Not saying Parramatta is bad, but I see nothing to draw me to a crowded unit type life. Plenty of other places if you want that. Maybe you can even be right near the city for similar price with all units there.

 

@sash,

Right, i agree otp properties have been priced for perfection, n the developers are still in denial.
i figure their reasoning probably goes like:
if we were to sell now, the price has.to be lowered by at least 15~20%, meaning we need to book an immediate loss. At current interest rates, if we hold out for 2~3 years, the market migt recover, and we could easily turn a profit.

only time can tell if they are right or wrong.

 

They are already discounting. Meriton is offering stamp duty rebates and (5% finance or 4 years yield guarantee).

 

I remember his happening after the last boom (2003).

 

Did it last long? I’m wondering if some of my friends who want to buy in Sydney should take advantage of it. The stamp duty rebate can be over $50K on some apartments.

 

I can't remember....maybe 12 to 24 months??