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Sydney to Boom Further as Canada blocks Chinese demand

Discussion in 'General Property Chat' started by standtall, 22nd Aug, 2016.

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  1. standtall

    standtall Well-Known Member

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    It's interesting that the news of Vancouver passing a 15% transaction tax earlier this month didn't get much attention in our media. But this tax is meant for foreign buyers only and they went ahead with this tax after more than 90% of all detached houses in Vancouver crossed the $1 million price mark.

    In comparison, Sydney will have less than half of all detached houses over a million mark (hint - Sydney median price is where half of the houses are priced above or below that price).

    Last time Canada abolished investor visa (pay for passport scheme) in 2014, it helped us in strengthening Chinese demand for our properties and I have a feeling that a similar thing is about to happen again.

    Remember, for Sydney to have similar prices to Vancouver, prices in suburbs like Mount Druitt will have to hit a million dollar entry price.

    So for now, Sydney has once again become the best value destination for Chinese buyers.
     
  2. Stoffo

    Stoffo Well-Known Member

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    Maybe our pollies could organise a junket to Canada to research this:eek:
    And then implement similar to slow all of our assets being sold off shore :mad:
     
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  3. Obsidian

    Obsidian Active Member

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    Rubbish. If anything, it's a sign of what Australia could face, without the Chinese buyer influence. There are many similarities between the Vancouver and Sydney markets.

    Vancouver Housing Market Implodes: Average Home Price Plunges 20% In 1 Month - "The Market Is Devastated" | Zero Hedge
    Vancouver real estate has been hit from two side — the increasing difficulty of moving money from China and the implementation of a 15 per cent property tax for foreign buyers.

    Both Victoria and NSW have imposed property taxes on foreign purchases, not nearly as much as Vancouver, but still (in Sydney it is being levied at 4 per cent of the purchase price).
    There are chinese buyers that have already pulled out of OTP. For now that gap is still filled by other buyers (local chinese, etc). but for how long?
    I'd look at Vancouver as a canary in the coal mine, rather than as Sydney about to boom more.
     
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  4. standtall

    standtall Well-Known Member

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    Canada really let things get out of control there.

    Median house price in Vancouver is $2.6 mil AUD. They have experienced 5% price decline as a result of this policy.

    Median unit prices in Vancouver are around 1.2 to 1.3 million dollars. New unit prices have fallen by same 15% as the tax amount as builders are trying to absorb the tax for their overseas buyers.

    To those who think Sydney is crazy expensive, your prices are just 1/3rd of Canadian prices.
     
  5. standtall

    standtall Well-Known Member

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    I don't think many Sydney investors would mind if their house prices went up by 300% and then fell 20%.
     
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  6. standtall

    standtall Well-Known Member

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    In 2006, Vancouver median house price was $600,000. In 10 years, it has more than quadrupled to around $2.6 million.
    Sydney has underperformed massively in comparison considering there were similar levels of migration to the country.
     
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  7. Obsidian

    Obsidian Active Member

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    What does it matter. Detached house prices in Singapore are pricer as well. Vancouver is expected to fall maybe 40%+.
    Things are starting to turn in Australia with Chinese buyers as well, with buyers pulling out of OTP.
    It's a sign in general of the Chinese crackdown on money moving out of China. It will affect all markets eventually, including Sydney, etc.
     
  8. JohnPropChat

    JohnPropChat Well-Known Member

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    Too much reliance on foreign money is never a good thing in the long term. Sure, one can cash in on stellar short term growth but for every winner there will be many losers which will impact the economy at large.
     
  9. Obsidian

    Obsidian Active Member

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    Most of that is in the last 1-1.5yrs and in detached homes. From 2006 to 2014 - Vancouver had around double growth (100%). Same as Sydney in 2007-2016). Vancouver in bubble territory now, and will fall 40-50% back to those 2014 levels. By years end it will settle back at ~$1.3m. (the graph is older and up to Jan 2016, and only $1.8m at that stage. So ~$0.8m rise in the 6mths from July 2016. Crazy bubble!.

    Sydney has performed normal to a boom phase. We don't want the extreme boom/bust that Vancouver will have.
    [​IMG]
     
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  10. standtall

    standtall Well-Known Member

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    Nobody expected Vancouver to go from 1.1 million in 2013 to 2.6 million in 2016. If this had happened in Sydney, people would have started jumping from harbour bridge, some in excitement and others in protest.

    China's middle class population is growing rapidly and there's no slowing down there.
     
  11. standtall

    standtall Well-Known Member

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    That's an extreme prediction. We should start building quarters for Canadian refugees in that case as the country will collapse in no time with an real estate collapse of this magnitude.

    Hint - Vancouver is NOT the only market which has grown like crazy in last 12 months. I think it's by miracle that Sydney hasn't grown in same proportion but start of summer is suggesting that we might be in some sort of a realestate frenzy like some other cities of the world.
     
  12. Obsidian

    Obsidian Active Member

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    Nothing to do with fundamentals. Just pure market speculation. Like the Chinese share market. Nobody will have expected the FALL in Vancouver from 2.6m in 2016 to 1.3m in 2017 either. This one is purely a large bubble.
     
  13. hash_investor

    hash_investor Well-Known Member

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    I can see that happening. Overseas Chinese money will not end up in the Druitt. It will stay in the inner west or north west at best if it keeps coming. The locals will be pushed out further west then which is very much possible.
     
  14. Obsidian

    Obsidian Active Member

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    Sorry, not extreme when you look at the size of the Vancouver property surge in 1yr. Vancouver was at 1.4million for detached homes this time in 2015. So it's nearly doubled in the space of 1yr to over $2.6m. That is a massive bubble.
    "the City of Vancouver currently has an average home price of $1.1 million, down 20.7% over the last 28 days and down 24.5% over the last three months. The average detached home is $2.6 million, down 7% compared to three months ago. "
     
  15. Lacrim

    Lacrim Well-Known Member

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    Not to mention that the population of the Vancouver greater region is half of Sydney's. I don't think we're going to see any crazy falls in Sydney prices barring an Independence Day type scenario.
     
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  16. Lacrim

    Lacrim Well-Known Member

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    Does anyone know how rents/vacancy rate performed in Vancouver in the last 3 years out of curiosity?
     
  17. standtall

    standtall Well-Known Member

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    Biggest ever fall for a major Western property market was 26% off fall in the US market during GFC but that came as a result of unemployment going over 10% and forcing people out of their jobs.

    Japan had a massive drop but they are not a market driven economy, have no net immigration, a declining older population and nothing else going for the economy.

    The fact that prices went up so fast doesn't guarantee that they will come down quickly and that's pretty much the basis of your argument.

    Unless the Canadian economy takes a major hit or interest rates take a surge, people will hold onto their big mortgages and prices will not decline.

    They are claiming a 7% decline which is because people bought like crazy days before the legislation came into affect and now new buyers are factoring in 15% tax into the purchases.

    Even if all new foreign buyers get banned completely, prices will NOT fall unless triggered by an economic collapse or higher interest rates.
     
  18. barnes

    barnes Well-Known Member

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    It's not right to compare Vancouver to Sydney, population wise it's more like Brisbane.
     
  19. standtall

    standtall Well-Known Member

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    Vancouver hasn't seen any crazy falls either. A 7% correction after 100% increase in 12 months is a statistical anomaly given there was lot of activity days before the new law came into force.
     
  20. standtall

    standtall Well-Known Member

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    Population has no significance here. Vancouver is #1 choice for people moving to Canada and so is Sydney.

    Brisbane isn't going anywhere just like rest of Canada didn't move at all while Vancouver and to some extent Toronto went on this fast ride.