NSW The definitive Sydney 2022 Q3 and Q4 market analysis and conclusions

Discussion in 'Property Market Economics' started by Sackie, 12th Jun, 2022.

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  1. Sackie

    Sackie Well-Known Member

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    Almost time for the next 6 months.

    Post away (pertaining to q3 and 4 only) your hard data, wishful thinking data, analysis, commentary, boom/bust/bonkers predictions and everything else in between! May the markets be with you!!
     
  2. dabbler

    dabbler Well-Known Member

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    The chatter on PC is going to have the public see sense in supporting the market values as is in perpetuity, after all the great minds here believe enough people have cash and wealth to carry any slack.
     
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  3. Tofubiscuit

    Tofubiscuit Well-Known Member

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    I would like to hear people who are actually selling and those actually buying.

    or those with large investment portfolios and how they are managing the rate increases.

    I’m a small timer with a couple of IPs all bought 5 or more years ago. Rate increase not much impact.
     
  4. Sackie

    Sackie Well-Known Member

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    Completed my last sale in brissy about a month ago. Now on the hunt for buying. More like sniper watching. I have my areas and stock type locked in and watching (my own metrics) very carefully. I want to be buying when fear is at it's peak, or near abouts. Probably pull the trigger in 6-12 months give or take. Intending to invest 5-6mil for the next cycle.

    I want prices of the stock I'm watching to drop another 10-15% or so. That would offer me great value while keeping most of my gains from property held and utilising sales proceeds from 2021-2022 prices. It's my sweetspot for property held and property sold.

    Overall lvr is very low so IR has no bearing for me. Cf from business is strong too. Most of my friends are just waiting for some value in the markets (according to their individual situations) to redeploy capital long term. Wealth isnt built overnight for most people.
     
    Last edited: 12th Jun, 2022
  5. KingCantona7

    KingCantona7 Well-Known Member

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    Spoke to my lender regarding my pre approval. He is anticipating more rate rises and hence a potential 10% drop in my maximum pre approval amount by September
    Thankfully I was not planning to buy at my max capacity , so my buying plans are not impacted.

    As to Q3 Q4, I am guessing there will be atleast 10% drop in Sydney by end of the year.
     
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  6. Tofubiscuit

    Tofubiscuit Well-Known Member

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    Would you say you are waiting for 25% fall from peak for the properties you are watching?

    interesting that there are many like yourself with good cashflow, balance sheet and ready to go. Suggest that even if rates increasing to 3.50%, there will likely be good demand setting a floor.
     
  7. Sackie

    Sackie Well-Known Member

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    That's another factor which will lock people out from buying or limit their buying, even after prices correct. Then the sidewards drift will begin. It will be an absolute buyers market for those with capacity.
     
  8. Sackie

    Sackie Well-Known Member

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    I think 25% from absolute peak is close enough. Keep in mind, no one can mechanically plan to sell at peak prices (all the time, not that they have to sell at all), nor are peak values imo even real (well real for a brief moment) . They are way overshot . So a 25% from peak is a great outcome after a killer boom if prices stop there. A 25% from 5-10% below the maximum peak isn't too great. Many people actually have seen values double or close to it over the last few years. The folks who will be under most pressure are those who stretched themselves too much and bought in the last 6 months.

    Re CF, I know many folks who have booming businesses. Many people assume RE is mostly bought by PAYE income. Not the case imo.
     
    Last edited: 12th Jun, 2022
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  9. Lacrim

    Lacrim Well-Known Member

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    Rates mostly fixed till mid next year. At that point, I guess I'll cop it.

    I've been on P&I since 2016. That hurts a lot more than rate rises - it doesn't ebb and flow with the cycle. It's an ever present financial intrusion.
     
    Last edited: 12th Jun, 2022
  10. Arthurark

    Arthurark Well-Known Member

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    I am a potential buyer in Sydney but one thing that has always been hard to reconcile in this market is the markets sentiment versus my actual purchasing power. The Sydney market is very greedy at the moment.
     
  11. JTF

    JTF Well-Known Member

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    I reckon we'll close off the year with a 12% decline IF RBA lifts rates at 0.5% next meeting and 0.25 incremental increases until October.

    Holding PPOR and IPs (2 in SW Sydney) no matter what, I don't believe in selling well located property ever especially as I'm of the belief that cash will continue to debase in perpetuity while we have central banks issue currency. If prices in Sydney retrace 15%, that will be my tripwire to enter the market, looking at end of 2023 at this pace.
     
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  12. Sackie

    Sackie Well-Known Member

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    My 2c not advice, regardless of your capacity, wait another 6 months before looking to buy. The probability of getting better value then vs now is easily worth the risks, imo.
     
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  13. Tofubiscuit

    Tofubiscuit Well-Known Member

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    agree with this.

    It maybe Battle Royale of PC bargain hunters in 6 months time.
     
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  14. Sackie

    Sackie Well-Known Member

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    happy-dancing.gif
     
    Last edited: 12th Jun, 2022
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  15. Redom

    Redom Mortgage Broker Business Plus Member

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    I expect a big price fall. Theres potential for a double digit 6 month data fall. I.e two quarters of above 5% falls or thereabouts. MoM falls above 2% for some months.

    Where the RBA stops will be key for the broader peak to trough fall.

    If they pause at 1.5-1.6% and watch, it may do OK. If they get there, baulk at OLD inflation data that doesn’t incorporate their significant monetary tightening, and go harder, then falls will eclipse the largest Sydney housing correction in 30 years (15% in 2018).

    May play on both sell and buy side if it makes sense. Much of this is short term turbulence to our broader career/property goals.
     
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  16. dabbler

    dabbler Well-Known Member

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    No, there will be no battle as there will not be anywhere near enough takers to even make a dent.

    Been through this so many times, credit will get real hard too, so even if you want to a lot with housing and loans already will not be able to.
     
  17. Harris

    Harris Well-Known Member

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    Always long on my resi portfolio and no sells and no intention of selling any for a minimum of another full prop cycle.

    High inflation number will see my commercial rents go up significantly (4% or CPI whichever is higher ..per lease!) so that will be good. An 8% increase end this year will be awesome.

    Portfolio is a mix of resi (dev blocks, stand alone houses, individual units and blocks of units) and commercial (retirement home, rooming houses) in metro and regional.

    Focussed on yield alone and all recent buys for blocks of units are with c6% net yield.

    I have been topped up cash wise for a while with a couple of exits, so will only be looking at acquiring unfinished dev projects in Mel/ Syd/ Bris with steep discounts (expecting a lot of developers going under) and coming in as funder and equity partner, resi blocks of units with net yields in excess of 6% and with sufficient room for adding more inventory, commercial (industrial) with value add potential etc.

    My problem will be to know when to enter the market! I can get excited quickly and do quick acquisitions, so will have to be very disciplined and aiming to not pull the pin on anything until at-least nov/ dec this year.

    I will not be buying stand alone resi homes irrespective of the discounts/ deal str anymore.
     
  18. Sackie

    Sackie Well-Known Member

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    Agree with dabbler. Won't be much of a battle as not enough competition. Hence, a real buyers market opportunity.
     
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  19. Sackie

    Sackie Well-Known Member

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    That's my biggest risk factor. Wifey (the level headed one) has already told me don't waste my time even looking at real estate as no matter what she won't allow a purchase before 6 months. This way the decision making process bypasses the whole psychological 'excitement buy' factor and its a hard NO.
     
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  20. Harris

    Harris Well-Known Member

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    Experience tells me that the sweetest deals always present themselves during the initial state of complete uncertainty and therefore they could all land in the next quarter... Those that don't have the nerve to hold will be most amiable to steep discounting if there is a cash settlement and with a very tight timeline! Those deals are generally the juiciest!

    Once the horizon is clearer in terms of quantifying damages, it gives those in strife clarity to plan and therefore whilst they might be looking at going under, there will be an orderly planning process before they agree to a low ball offer.

    Irrespective of how things pan out, my main goal is to acquire projects that provide an instant equity in the project and significant net yield or a clear path to exit (dev projects requiring 6-12 months to finish) and the capacity to hold them until the next cycle whilst cf positive. They are great for cap increase and also excellent yield wise.
     
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