NSW Sydney Update Please

Yes them too....where I sit....the Sydney market is going to hell in hand basket quickly..and it is not only in the poorer suburbs.

Have a look at Oatley....the supply ridiculous...incredible in fact...my broker pointed this out. Normally only a handful of houses...now....just have a look...not boding well....

 

How the "Sydney market" goes overall depends on how the bastions of the city, east, inner west and lower north shore hold up. I think they'll be chugging along slowly while there's pain elsewhere.

Time will tell though.

Watching people buy OTP has been painful this year..

 

I have my home in the Epping area... but of course, for anybody in the area who bought a long time ago... No need to panic! Even if my home could have possibly fetched over 1.6mill at peak due to stupid crazy buyers and would now get something over 1.3mill, it doesn't really bother me since I bought in 2008 for under 700k! I think the location will stay popular and hold this price even without the Chinese dollar. The debt on it is minuscule as well. Sitting pretty!

 

I feel most of the apartments will be finished in 2016, some in 2017.

Wait for 12 months and see what happens. I suspect the market will be a bloodbath.

 

I can say that in some places, things are still running and prices do not seem to be down, we will see if they are getting the dollars months from now, that is generally the cheaper unit market, I notice a house close to me going up now and the agency is renowned for pushing the envelope, they put a price 30k under what I would expect them to start at, so it is a pull back for sure, but the proof will be in what someone pays.

I think you can only say the drunken sods at the party have left, the loud music has gone, but still plenty of people wanting to buy, move etc, so too early to call it I say, instead of falling off a cliff, I would expect a drop off somewhat and then a leveling out. That's the other problem, Sydney is many markets, I think six months time will give a better picture.

 

Exactly. Certain areas with high owner occupier type properties could fair better for the time being but investor type areas/stock are already being hit. Buyers are scarce and price drops are happening such as that Parramatta one you mentioned because most of the prospective buyers would have been investors.

Perhaps the media will re-hype the Sydney market over the coming months because that's probably the only chance Sydney has.

 

Hi Nick, the media are all over the place, they do not know whether they are Arthur or Martha, they just create noise mostly, also can't overcome APRA and that is all that has slowed things.

 

Green square is full of unit development. Scary. More to come in Harold park. Too many units.

 

prices only crash if people have to sell .

OTP's where people don't have funds to settle being the exception .

The reality is that only a small percentage of people paid top dollar for properties and the majority of those would have bought for a long term , so unless they loose their jobs they won't be taking a big hit anytime soon . The vast majority of owners will still be sitting on lots of equity .

On the North shore , some of the properties that have come onto the market are people looking to sell to down size . They don't have to sell . If they can't get what they want they'll just hold .

Cliff

 

It's not even the number that's the issue (though it's staggering - I can't recall how many thousand new apartments are still to come there) but the prices. People are paying $800k+ for 1 bedders and $1mil plus for 2 bedders that won't settle until there are another thousand OTPs for sale in the same suburb.

Pain coming.

Rename to Crimson Square in 2017.

 

Agree. Buyers were fighting over apartments in the ovo project thinking prices will go up. I'm sure some were hoping to flip after completion because it is the tallest residential building and what not.... When time for valuation comes...lending policies... And personal situations... Pain may be inflicted on some. Of course there are those who can afford the drop in value but will still feel the pain. Others will be severely punished.

 

Only winners from OVO will be the developer and sales agents who would have taken home 7-figures each on the day in sales comms.

 

Dabbler Nick has a real estate background. Agreeing that APRA is one key reason...

Yes...I see this Nick....I see exactly what you are seeing.

Would be great if you can share some of details if you have any.

 

Agree...the only point to note is that this time they are no only against vals not stacking up but also bank policies...ie. some have changed policies on locations as well as the minimum deposit required some want 30% on OTP in certain part of Sydney.

Bear in mind quite a few were overseas people with Australian residency...a lot of banks have tightened this sector of lending...including the largest Westpac. Interesting times indeed....

 

@sash let's just assume there are OTP fails and buyers cannot finance them will the prices necessarily lower? Personally I still won't touch these apartments. You?

 

Great question.....typically the developer will issue a notice to settle. If this fails the buyer is in default.

At this stage depending the contract....the developer will look to sell the unit to someone else. They will also try to claw back any loses they suffer via whatever is in their contract. This is one scenario...if you can't buy technically they can bankrupt you.

Here is another thing to think about...I believe some developments in play...the developers may go under either by choice or forced. That is when it will get really interesting..

 

You couldn't be more wrong. Just as prices boom due to greed, so can prices crash due to fear (of further price falls as people try and exit the market).

 

For all these overseas people who are buying into these OTPs, there are two categories.

For the younger generations who actually wants to live in them, even if valuation comes below purchase price and bank lending becomes restricted, people who can afford to buy $1m 2 bedders will likely have the funds to settle if they wanted to do so.

For those who are investing internationally, it can be spare funds and if valuation at settlement is really under, they can opt to forgo the 10% deposit as take it up as a loss. International investors might not have sufficient knowledge and make a bad investment, but the amount invested might be 'funds for risky investing'. i.e. high rises in GC with a lot of international investors, GFC hit and most of them just decided to forgo the 10%

 

If the numbers work, the numbers work.
If the thing is neutrally geared after all expenses, but before depreciation, then i would consider it.