Sydney

but some areas/suburbs are actually pulling back, in Melb and Syd.

It could take another 6 months before people realise this, the media is pumping good stories at the moment

 

Keeping it simple...no demand, to much supply, cut off credit or raise rates to high unaffordable levels.
And I agree with the opposite to this, thanks to @Perthguy

@See Change and mtr,
I understand previous cycles but why should the next cycle follow what we have seen in the past if things are different now.
Population in Queensland is declining over the last 5 years, Adelaide population increases are tiny compared to Sydney and Melbourne.

But the part that I need clarification on is land supply. If Sydney has limited supply and population is increasing then that should mean more demand for either ppor, or at least places to rent. Why have Sydney's rents dropped?

Also please note, I'm an amuture that likes to question what I don't understand what people keep repeating.

 

Yes some areas in the outer ring went too hard and are coming off.
If the inner ring keeps going up then this may result in a similar situation.

Just an observation, everywhere I go lately (Inner Sydney) people are spending. You rarely see old cars, everyone is eating out, shops are busy, everyone seems flat out with work (both small business owners and employees) life is good in Sydney right now and people are spending.

 

just pointing out what has happened in the past, not every cycle in terms of time frame will be identical. But one thing for certain booms don't last forever

I am making my decisions purely on what I see is happening on the ground, I did this with Perth, Syd and Melb. Forum is a bouncing board for me, some good info but you can not believe everything you read,

 

opposite of Perth, no jobs, property prices falling and rents falling, pretty depressing, I better come to Syd

 

Sydney's growth has to slow or stop at some time or another. Not sure when it will happen though. Last time was a flat period of a few years, outer areas dropped significantly. Then it all started growing again. This time though, interest rates are really low. There's no mortgage stress. So if it was to do a big fallback, it would have to be mass unemployment, terrible Australian economy or Sydney not being desirable. Or too many cheap apartments, but not everybody wants to live in an apartment.

The desire to own land in Sydney is very strong... people in units often want to move into something bigger.
I can see Sydney becoming like HK over time... everybody's going to live in apartments or higher density dwellings except for the rich folk who can afford a freestanding house.... land is too valuable.

 

I listened to Domain's Andrew Wilson (senior economist APM) speak at REBAA's recent AGM for a presentation on all Aussie markets and, according to him, Sydney and Melb had the most optimistic long term growth forecasts.

Sure, the boom may be over for this cycle but the markets in both our biggest and favoured cap cities have sufficient drivers to keep demand going and CG steady. Combine that with the lowest IRs we've seen for 40+ years, increasing population figures to both cities (much more than other capitals) stable-enough economies and job markets, demand/supply imbalance and limited dvpt opportunities all point to steadiness rather than market falls. Of course none of us have a crystal ball (Dr Wilson included ) but it was a positive overview rather than a "doom and gloom" scenario for Sydney and Melbourne.

My thoughts have always been, and especially in regards to a popular and increasing city like Sydney, to buy when you can afford. Lock in fixed IRs if necessary, buy around the median price 10+ if possible in the particular suburb/area, buy close to public transport and attempt to find value-add properties if budget allows. Of course, you also need to buy well and ensure you're not overpaying so knowing your patch and prices is vital.

Don't listen to the herd. Get good advice and set up a plan. Be realistic about what your $$$ can buy. Don't get caught up in the whole "I must only buy a house" mentality either as the facts speak for themselves: 25% of Australians now live in medium to high density housing. In Syd and Melb alone, 2 in 3 new housing approvals are for med to high density builds, so we're starting to get more "dense" and that’s where we are clearly headed in the future. Sure, there may be areas of over-supply where developers are playing catch-up currently (good for tenants though ) but Sydney is a big market, so don't dump it into one category and assess all suburbs as being the same here. Research, research, research and then hit the streets. That's really the single best way to get to know a market within a big city.

 

Guessing. In Perth, when rents became overpriced, we saw more sharing, kids returning to live with parents etc. With structural changes to the way people live, you can accommodate more people within the same number of houses. This is a way of reducing demand while the population increases.

The other thing is there can be supply but it depends on the type of supply. This article explains it well.

A rental experiment: Sydney housing demand is strong as ever

In the end, prices just get to the point where people stop buying or stop renting at those prices. I was on the ground in Perth when prices for development sites in my area peaked. I was at auctions where bidding reached record prices but were still being passed in. People walked away shaking their heads in disbelief. You know at the point the market has peaked and a correction is inevitable. Although, the correction was also driven in Perth by falling demand. The same thing happens with rents. Prices can get to the point where people simply walk away. There might be demand on the market, but not for that product at that price. There are limits.

So you should. When I bought 50% of an IP in Melbourne, people told me I was crazy. It was the top of the market and I paid too much. When I sold in Melbourne, people told me I was crazy. The market had not peaked and I had done my dough. Reality: I didn't buy at the top of the market but I did sell at very close the peak of the market for that product in that area.

People keep saying this time is different. Have a look at the late 80's boom: very high inflation, very high interest rates, real wages falling, economy expanding out of control. Contrast to this boom: very low inflation, very low interest rates, wages?, economy limping along. These two booms could not be more different. So, will the correction look different? I don't know. The last Sydney boom was never supposed to end... until it did. Then prices stagnated for years before the next boom.

 

I have been watching Auction clearance rates for Months now in Sydney. Hasn't dropped below 70%. In fact, it went up to 80% last weekend. I think things will ramp up even more come spring.

 

The TV says it's going to be 23°C tomorrow in Sydney.
There's only one conclusion.... Boom inevitable!!

 

Rents are stagnating because people can't afford more .....

IMHO the only reason why there are still very low interest rates with expectations of possibly more cuts .

I'm not sure what's happening out west . The only market I'm following at the moment is Manly . It's an expensive , sought after area . Well positioned so lots of people want to live there because it's got lots going for it . People who are buying there included downsizers , selling the family home on the north shore for 2-3 mill and buying the down sizer unit with water views for 1.7 . They can afford that . People are moving there from the eastern suburbs for the same reason . It's even more expensive over there . At the moment there is hardly anything on the market so that's the reason why units in Manly went up 30 % last year .

When we bought there in 2011 there were lots of places for sale and the market had been going sideways for a number of years including times when prices had fallen .

It will end . I've lived through several booms and they all end and then the market goes sideways for a number of years . It's a generational thing . Each time each new generation has to learn first hand the lessons that the previous generation learnt first hand . We had to do the same . Bought our first PPOR in Concord west in the 80's and watched it go sideways for seven years . The underlying driver behind ALL markets is the same . Fear and greed . Human emotion .... and the herd react illogically at both ends of the cycle , it goes up too far and drops down to far . It's not a straight line , though it usually oscillates around a straight line , though you have to look at graphs with an exponential vertical axis which gives a true reflection of relative change of vales , not the standard linear graphs all the papers like to uses which always seem to show a boom at the right hand side of the graph .....

Buy now and you'll learn the same lesson .

Every time there are always people who say " it's different this time " , but I'm still waiting for it to change .

Cliff

 

I am not sure I should cry or laugh if Sydney continues to rise.

I have higher portion of IP in Sydney, yet am waiting patiently to upgrade my PPoR when it does stagnate.

 

^^^ this! Some of the posters on this forum really underestimate the psychology of markets. I am a big believer in this because I have seen it happen on the ground and I make money from selling when prices are high and buying when prices are low. Buy low/sell high. Boring but effective. But to do this you have to run pretty much the opposite of the herd. To do this you need to understand herd behaviour.

 

I think you should laugh and access more equity if you can

 

my gut tells me we are now running on greed, but we wont know for sure until the last person is holding the baby.

Sure we may still see some further growth but the idea is not to be the last person standing, if the market does crash/correct those profits will vanish.

The point is you can never time the market exactly going in and going out, however the indicators are clear when markets are changing, the idea is to take advantage of the signs and make the most of it

MTR

 

cant...
why? because its going to be 24 in Brisbane tomorrow. Brisbane will take the cake over sydney because of that.

 

good point, hehe

 

I agree. Not that it makes any difference to me though because I don't feel like now is a good time to take on additional debt. I am saving Sydney for the next cycle.

Definitely! IMO you don't have to be exact, just close enough.

 

OMG the next cycle Sydney where the median house price will be $2M, keep saving that deposit

 

What's a deposit?

I haven't paid a deposit since my first PPoR 12 years ago