Sydney's housing bubble deflates as loans revisit GFC declines

Agree with this.

My 2 cents;
The froth from some of the crazy prices has already been blown off.
Another 5-10% drop in prices will come before a long drawn out flat period will occur.
More in some areas, less in others.
Financial regs will be diluted over time but not back to where it was.
I imagine this will probably result in future booms being less extreme, possibly even removing the Boom-Flat-Boom-Flat nature of the Sydney market.
Which will probably be a positive result anyway.

Continued population growth WILL keep a floor under prices. More people vying for the same in-demand properties DOES have an effect on prices.

Sydney is Australia's number one business centre, arguably the most desirable of Australia's cities due to beaches, harbour, employment, global recognition etc and is majorly geographically constrained. For me this makes inner ring Sydney land a solid long term investment and the short term fluctuations matter not unless you have over leveraged yourself and don't remedy this until it is too late.

 

Yep eg 2003 to 2006'ish' was flat in Sydney.

So if you bought in 2003 people said you were an idiot in 2006 BUT.....by 2016 people wish they bought twice as much.

Anyone selling now in 2018....is going to be thinking the same thing in 2036.

eg....I told myself I'd buy back in before growth kicked off in 2022 but I didn't woe is me....property sucks....its all so unfair and too hard. Meanwhile savers are going to be banking rent checks, cutting corners where they can, paying down LVR for the next few years and be cashed up with oodles of equity when banks are ready to lend again.

 

Interestingly , I have just been reading a report on domain about the bigger than expected rise in rental vacancy rates this month for Sydney.
Lots of apartments being built and a worrying point is the rate of migration out of Sydney, in search of cheaper property with Brisbane being a popular destination.
It will be interesting to see how much extra stock is added in the next 12 months as developers adjust to the changed market conditions, at the same time as more people migrate out of Sydney.
Sounds almost similiar to what happened in Perth when you had quite high levels of new housing stock hitting the market just as the high population growth was starting to slow right down.
By the time the market reacted, there was already high levels of vacant stock and rents took a hammering.

 

Yes, vacancies are higher than I can remember for a long time.

Still a back log of developments to be completed which will further add to the stock.

New developments are slowing though, as would be expected at this stage of the cycle and things like RC and APRA regs would certainly not be encouraging to a developer consider whether or not to commence a new dev.

However there are also circa 100,000 new people in Sydney each year.

So it will take a while, but the excess stock will easily be absorbed in time, this is not news, the overbuilding of apartments around the country has long been discussed as a bigger problem for Brisbane, Perth and to a lesser extent Melbourne CBD than for it is for Sydney. We under built here for decades.

 

Not only is Sydney geographically constrained, it also has an unusual layout with multiple cbd areas and multiple apartment development sites. The developments aren't as centralised as other cities that have oversupply issues (eg Brisbane inner city).

I believe this factor may also help absorb excess stock quicker than a lot of people fear.

 

Remember that the primary job of newspapers is to "sell papers", have you checked yourself?

Rental rates for my IP's seem to have gone up since last year.......

 

I meant Dubai is well planned with great infrastructure.

No QE in Australia?

No major asset purchase?


Start finding out the facts a bit, some of the stuff that the Australian newspapers don’t print.


Why have we got $550 billion of government bonds out there we taxpayers are going to be paying the principal and interest on?

Did you know that several of the big four actually got bailed out?

It’s happened 3 times since 1980.

Step out of utopia for a bit and check out the view on the street behind the wall of news propaganda and reality shows.

 

More like cupboards filled with 2 minute noodles instead of oddles of equity as Sydney property prices are going for a hard landing. As soon as the government can’t afford to sell more bonds for taxpayers to pay for down the line, to blow on overpriced infrastructure. The bonds are quickly becoming junk bonds. Serious money players are looking at Australia’s debt and are looking at the coming crash and looking to buy Australia, which the government is eager to sell as we all know.

 

You should move somewhere quickly before the Armageddon comes.
I highly recommend somewhere off shore .

We can star a kick starter campaign to assist you.

 

Guns and butter baby, come the revolution im prepped and stacked, i'll be just fine

 

Ok everybody let me tell you how we solve the discussion about whether Sydney is in a bubble, please provide fair and reasonable answers to these simple questions? We will do an analysis so that nobody says that my figures are garbage. I am sure that long term economics always reverts to the mean as it finds an equilibrium. This time coming, because the Aussie governments are in huge debt I don’t see them being effectively in a position to do their subsidising of the bubble to stop it deflating.

What is the median Sydney salary?

What is the population of Sydney?

What is the population of Sydney earning the median salary or less?

What is the median Sydney house price?

What is the median Sydney rent?

What is the median Sydney living expenses?

What is the median Sydney savings rate after all expenses?

 

Why the butter?

 

Guns and butter is a saying, that goes back to President LBJ. Guns and butter is "warfare and welfare" government spending, like all good socialists.

 

We can go down the list of the above, but one of the questions would also have to be about debt: ie what is the LVR of the Sydney property market. I know that the LVR of Australian property is under 24%, and that 50% of people own their houses outright (because the baby boomers have generally paid off their houses). This gives me hope that there isn't a bubble, and we are in more of a healthy correction mode, rather than a crash.

The stats say that Sydney property is down -4.5%, most of which is detached houses. We can probably also agree that the real figure is more than this, given the lack of transparency (a surge in auction results withholding the price for example).

So if Sydney property is down around 8% let's say, and with record low unemployment and no recessionary drivers, I see fantastic buying during the next 12 months.

 

GFC was caused by by total of ~4% of all properties that were over leveraged and went into reposession. Only ~10% of all properties were in arrears (aka late in payment). There is a wrong perception that during GFC like all people with the mortgage defaulted. Prices are set at the margin just like with any market.

 

The End Is in Sight for the U.S. Foreclosure Crisis

BTW, it was primarily prime mortgages and not just subprime, you know those with < 80% LVR and borrowers with good credit score.

The subprime mortgage crisis wasn't about subprime mortgages

 

Public Housing Heat Map

 

This needs to take into account overseas money Coming in through relatives and many other ways

 

Wish there was more data in the article.

I think in addition to a more mobile workforce (which I've mentioned before)
and jingle mail (which I've mentioned before)

The main reason "prime mortgages" fell underwater was the USA population was using their homes like an ATM machine pulling cash out for boats, cars, jets ski's etc in the years leading up to 08 GFC.

But I guess we'll never know if people did have 20% buffer would there have been no 08-sub prime crisis.