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Discussion in 'Property Market Economics' started by Barny, 16th Aug, 2016.

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  1. Barny

    Barny Well-Known Member

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    So I've added another Sydney thread to the other 100 on here already, it seems most are from Sydney on this site so I'm sure you won't mind. Anyhow need some smart people to educate me on this city.

    Have been hearing that Sydney has peaked and will either fall or stagnate for a long time so don't invest here. Recent data shows otherwise but confusing as its mixed results from what you read. Have heard and can see property prices are crazy now and I'm sure many have made a lot of money over the last few years if you bought in most markets.
    Many property advisors/mentors/everyday investors/people from this site also saying not to buy in Sydney now as the growth cycle has occurred, so better markets to invest in now other than Sydney.

    I have heard over and over again that land is limited(unless this is a myth) and population increase is strong, add in cheap credit and property prices have gone through the roof.

    So to keep this simple, if land is limited, and population is strongly increasing every year, why wouldn't you buy in Sydney? To me, this scenario looks like the perfect recipe to keep buying in Sydney. Is today the day you remember when looking back from 2026 and think, I really should have bought in Sydney.
     
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  2. Depreciator

    Depreciator Moderator Staff Member

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    It's a huge city with lots of submarkets. I would be wary about buying apartments right now - there is a fair bit of supply coming onto the market.
     
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  3. timetoact

    timetoact Well-Known Member

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    Land is limited, just have a look on google maps and it is clear that Melbourne and Brisbane have more room to grow.

    Population growth will vary from time to time but all current forecasts have it growing strongly.

    But property goes in cycles, right now most people think that Sydney property is expensive and this flows through to less people buying which in turn keeps a lid on prices.

    The one thing however that is different about today's cycle is that interest rates are incredibly low and only going lower in the near term and depending on who you ask not going up for a very long time.

    On the flip side you have new APRA regulations limiting serviceability.

    On the supply side you have quite a lot of high density accommodation coming on line. not as much as Melbourne and Brisbane, but still a significant amount. I tend to think this will absorb a fair amount of the population growth over the coming years.

    You also have a huge amount of infrastructure being built which is increasing, or has already increased prices in certain pockets of the City.
    For example would Leichhardt houses be as expensive as they are if the light rail wasn't put through? Same goes with the North West.

    There are so many elements that answering your question is not easy.

    IMO
    If you are prepared to hold for the long term you will do well out of Sydney.
    There are definitely areas that will grow more in the short term.
    There are definitely areas that will not grow more in the short term.
    I am starting to notice more properties coming on the market leading up to Spring. If this increases I expect to see growth halted and clearance rates drop. But if stock levels don't increase substantially then I think we will see more growth through to the end of the year.
    If you are upgrading your PPOR, no reason not to Sell/Buy.
    But I wouldn't recommend buying IPs now.
     
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  4. MTR

    MTR Well-Known Member Premium Member

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    land is only one issue, need to look at the big picture ie economy, cycles, immigration, affordability, interest rates, jobs, market sentiment etc etc

    why wouldn't you buy in Melb 200k lower median than Syd, number 1 immigration, more upside from what I am seeing
     
    Last edited: 16th Aug, 2016
  5. MTR

    MTR Well-Known Member Premium Member

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    BTW why is everyone stuck on Syd, nothing wrong with this especially if you purchased 3 years ago:)
     
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  6. timetoact

    timetoact Well-Known Member

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    Inner Melbourne is a good option and similar to Sydney but for me the outer areas have too much land available for release which will keep a lid on prices even with strong population growth.

    According to CBA State of the States report July 2016 - NSW has the strongest economy and population growth in the nation.
    https://www.commsec.com.au/content/dam/EN/ResearchNews/CommSec_State_of_the_States_July2016.pdf
     
  7. MTR

    MTR Well-Known Member Premium Member

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    yes I agree, I am thinking with my developer hat, finding areas that are in middle ring, good infrastructure, still cheap where you can develop/add value. There are some areas with lots of potential where you can retain house and build new.

    The key is you need to find areas which have high end values, where build cost us much cheaper
     
  8. Barny

    Barny Well-Known Member

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    Population can vary agreed, but currently up there with the best and forecasted to continue as the economy seems strong.
    Lots of apartments that will need to be absorbed, I notice that people don't like apartments so they could sit there until the correct demographics buy em up, or move into em if desperate for housing.

    Was thinking over a period of ten years if land is locked, and population continues, Sydney would have to have the best returns, supply and demand.
     
  9. Barny

    Barny Well-Known Member

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    I have bought in Melbourne as I like the returns. But for the simplest reasons above, limited land space and strong population it's hard to ignore that people would be fighting for properties
     
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  10. MTR

    MTR Well-Known Member Premium Member

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    ...but you still need demand for continued growth regardless, once again there is a bigger picture than just land
     
  11. Barny

    Barny Well-Known Member

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    Also understand APRA tightening rules, so those that need basic housing with decent incomes for a ppor would be able to service, assuming they have good incomes.
     
  12. Barny

    Barny Well-Known Member

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    Yeah but isn't the demand increased population and basic need to live in a house?
     
  13. MTR

    MTR Well-Known Member Premium Member

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    yes, but we don't go boom...boom., we go boom ..bust, check history for all capital cities and cycles over the last 15 years. Syd may be the best city to invest over next 20 years but that's a big call, I can only work on now/today with the information and the evidence available today.

    Why do markets crash, why does property fall out of favour?
     
    Last edited: 16th Aug, 2016
  14. Iamnumber5

    Iamnumber5 Well-Known Member

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    Perhaps correction is a better word to describe it instead of bust
     
  15. MTR

    MTR Well-Known Member Premium Member

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    thanks that sounds better, correction can be 20% fall
     
  16. timetoact

    timetoact Well-Known Member

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    Is Melbourne also not nearing the top of boom?
     
  17. MTR

    MTR Well-Known Member Premium Member

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    yes, of course..I am seriously wondering why Melb and Syd are so strong, my thoughts - we have been temporarily saved by the interest rate cuts?
     
  18. See Change

    See Change Timing Lord Premium Member

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    Lands been limited for a long time and that hasn't stopped Sydney from having long periods where it's gone sideways .

    In the late 2000's everyone was saying how terrible growth had been in Sydney and " why would you buy there "

    If you want to be part of the herd buy in Sydney now . We bought from 2009 to end of 2013 . The property we bought in 2013 has gone up around 70 % . The ones we bought earlier have come close to doubling and we're about to sell one .

    if you want to get ahead of the herd you need to buy counter cyclically in the places that haven't done well in the last ten year ( though not in mining towns or Perth / Darwin )

    Brisbane / Adelaide / Hobart are were I'd be looking and are where we currently hold property , along with launceston ( for yield and getting well ahead of the pack )

    We've maxed out on finance so watching from the sidelines

    Cliff
     
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  19. timetoact

    timetoact Well-Known Member

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    Hard to argue with this. And mirrors my sentiments.
    But with a long term out look there may be better opportunities in the years ahead than right now.

    We have recently upgraded our PPOR but for IPs will be looking for buying opportunities in several years when market is less hot.
     
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  20. timetoact

    timetoact Well-Known Member

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    I agree. Expected it to be done and dusted by now.
    Only thing is, those rates are here to stay...