This Housing Downturn is Over

The most useful stats I find for a specific area is changes in:

1 - Typical value
2 - Days on market (DOM)
3 - Discounting
4 - Auction clearance rate (ACR)
5 - Proportion of renters
6 - Vacancy rate
7 - Stock on market percentage (SOM%)


And then a ton of qualitative research with players actually on the ground in the specific areas I'm investigating.

 

Pardon my ignorance, how do you find these stats?

 

Your property Investment magazine has a ton of these stats at the back of the magazine. I'd also search suburb profiles on Google to find corroborating data (approx) for further reliability. Once you have what you think is a picture of stats for an area, you can always ring a few agents in the area to get their take on those aspects eg vacancy in the area etc. The more corroborating evidence you have of your picture, the more reliable and greater reduction in overall risk.

 

Oh good, I miss the Your Money real estate show on a Saturday morning!!

 

Sad to see that channel go offline. I'd have it continuously playing in the background to keep abreast of what was happening in financial markets. Regarding 'Your Domain', as a nation we generally have a unique mentality and an affinity towards owning real estate. Any show that highlights or promotes investment in real estate assets will contribute towards a continuation of this mentality in my view. I also believe our higher standard of living is partly a result of the natural investment, leverage and compound growth generated through real property. I'm all for it.

 

This just sold this week "off market" for almost $1.6M. Owner claims he will be doing a KNRB on it. A similar block one street away sold for $1.1M only 7 months ago!

Sold 3 Edmondson Street, North Ryde NSW 2113 on 05 Aug 2019 - 2015506979 | Domain

Brand new home also sold just over $2.6M!

Sold 15 Truscott Street, North Ryde NSW 2113 on 10 Aug 2019 - 2015430241 | Domain

Fair to say houses in North Ryde seem to be on the upturn now according to recent sales.

 

Bloody nice house in Truscott St though! It’s a nice area there, lovely primary school too.

 

I accompanied my friend who is trying to buy in Carlingford, he is renting in WPH and cant afford there.

This one had such a huge crowd,almost 100 people with 10-12 bidders.Reserve was 1.2 but sold for 1.38 which i think is almost 2017 price. House was in ordinal condition, no garage, small rooms and needs bit of work.Good primary and high schools and M2 proximity hrlped I think

7 Coral Tree Drive, Carlingford NSW 2118 - House For Sale | Domain

Guide was 1.25 and sold for 1.59.Good land component but again original house with only 1 bathroom

Sold 9 Fleming Street, Carlingford NSW 2118 on 17 Aug 2019 - 2015478139 | Domain

 

Prelim clearance today is 78% Syd, and 73%.

Still low volumes, but impressive.

 

I've been saying all along demand was always there. Aussie RE markets in the main are far from tanking.

Mr Dent should be taking notes from my RE forecasts.

 

AFR's headline article

Sydney leads auctions to two-year high

"..Leading the pack was Sydney, with a preliminary clearance figure of 81.7 per cent from 444 auctions, up from a final 76.2 per cent last week, while Melbourne returned 78.3 per cent from 588 auctions, up from a final 72.3 per cent last week..."

According to the article, the number of auctions doubled from 1111 to 1221 week on week, yet the clearance rate across the nation and especially Mel & Syd remain at its highest in over 2 years.

I second Redom's earlier suggestion to have a new thread on tracking the quantum of this boom instead of discussions around validating the end of the downturn.

Well done @Redom . Bold and early call from you but fully validated.

 

Well done @Redom. I agree the housing downturn may be over and prices have gone up last two months after two rate cuts and apra loosening rules.

I also see lot of current listings are purchases in last 2-3 years.
E.g. Suburb- Brighton east 3187
There are 30 houses for sale and 11 (36% approx) off them have been purchased in last 2-3 years.

Do you or anyone else see supply increasing this spring & demand may not catch up?

There may be lot of investors/home owners who will/want to sell:
- who wanted to sell last year but did not
- people who will sell anyways

Would be great if you/other members can share thoughts/ provide some insights?

Below all 11 up for sale:

1.) 17 Plantation Avenue, Brighton East, VIC 3187
Feb 2018, $2.42m
Property Report for 17 Plantation Avenue, Brighton East VIC 3187

2.) 14 Regent Street, Brighton East VIC 3187
Jul 2018, $3m
Property Report for 14 Regent Street, Brighton East VIC 3187

3.) 62 Glencairn Avenue, Brighton East, -
Aug 2017 $1.7m
https://www.domain.com.au/property-profile/62-glencairn-avenue-brighton-east-vic-3187

4.) 25 Seymour Grove, Brighton, Vic 3186
Apr 2017 $4.45m
Property Report for 25 Seymour Grove, Brighton VIC 3186

5.) 5 Arnot Street, Brighton East, Vic 3187
Jun 2016 $1.23m
Property Report for 5 Arnot Street, Brighton East VIC 3187

6.) 3 Creswick Street, Brighton East Vic 3187
Oct 2016 $1.325m
Property Report for 3 Creswick Street, Brighton East VIC 3187

7.) 32 Letchworth Avenue, Brighton East VIC 3187
Jan 2013 $1.69m
Property Report for 32 Letchworth Avenue, Brighton East VIC 3187

8.) 19 Gleniffer Avenue, Brighton East VIC 3187
Nov 2016 $1.392m
Property Report for 19 Gleniffer Avenue, Brighton East VIC 3187

9.) 646 Hawthorn road brihton east
Sep 2016 $1.6m
Property Report for 646 Hawthorn Road, Brighton East VIC 3187

10.) 241 dendy street brighton east
Jan 2017 $3m
Property Report for 241 Dendy Street, Brighton East VIC 3187

243 denddy street brighton east
Jan 17 $1.4m
Property Report for 243 Dendy Street, Brighton East VIC 3187

11.) 7 Roberts Court, Brighton East VIC 3187
May 2017 $1.34m
Property Report for 7 Roberts Court, Brighton East VIC 3187

 

I would say it’s a dead set certainty.
@Redom surely you see first hand the panic of FOMO that is already starting to build.

People are already starting to do stupid things at auctions. When the sun starts shining and sentiment just continues to grow this is only going to speed up.

I have to say I was very bullish on when and how the downturn would end but I did not predict it swinging so positive so quickly.

 

I can't believe that to property bulls that "panic" and "doing stupid things" is a sign of a market to invest/buy in. Does this sound like a healthy or sustainable market?

 

I can't believe that to property-bears "market sentiment" and "facts on the ground" appear unhealthy or irrational. Every single market, be it equities or property or bond works mainly on sentiment and the sentiment is on bulls side now.

The worm has turned, the data is out, the 8 weeks of high auction clearance rates and now with increasing volumes paint a picture of a strong turnaround in the sentiment.

Cycles are healthy and ignoring the facts on the ground (irrespective of how 'stupid' they appear) is swimming against the tide. Get in early now and enjoy the ride.

 

What data is being ignored? I'm certainly not ignoring the bump, I'm trying to figure out if there momentum to sustain it. No one seems to be able to present any evidence of how this push will be sustained.

 

The problem with subscribing to decades long supercycles is that even if you are right, it might be longer than your lifetime.

 

I don't really subscribe to a super cycle theory. I find it far too nebulous to relate somebody buying a block in Putney in 1940 to selling it for 2.5 mil in 2019, or at very least maths that I don't understand.

I see the equation as a bit more simple.

Upsides (and my arguments against them):
Low Interest rates (far negated by a massive deposit for anyone looking at entering the market)
Pro property government (won't be in power forever)
Lower lending standards (helpful, but just more smoke and mirrors)

Downsides:
Affordability
Debt bubble (second highest in the world)
Weak rental yield
No wage growth
Brexit
Global Weakness (US/Germany/China/UK all on the tipping point of a recession)
No foreign buyers this time around

 

It's because prop investors are not in the 'business' of converting the bears through providing countless reams of evidence. They spend time working with the cycles to create wealth for themselves.

Let me go on a tangent here:

I have seen the very same statement I swear hundreds of times, asked by perma bulls (first in Somersoft forum and now here) from when I started my IP journey back in 2001 buying my first IP in Kew, Vic and kept buying when I could and building a portfolio with a value in 8 digits and below 30% LVR. I have also now commenced building 25 new townhouses (inc 8 apartments) all self-funded, this year. It has been approx 3/4 significant property cycles since then and I have come out wealthier after each one!

Venturing into prop investment off the back of a significant boom already in the rear-view mirror in late 2001 wasn't for the faint hearted but I had to start somewhere and the great somersoft community back then (a lot of members I see here too) helped me greatly and offered the same advice that I have now for others.

Take a start, manage your cf and ride out the cycles. Compounding is a magic, only the believers get to experience and compounding fixes a lot of f*** ups made over the journey too.

There were bears in force starting a new thread on the SS forum every day on how sky was to fall after the every 'last boom' and "wanted evidence and throwing graphs after graphs" on why we were headed for a bust with blood on the streets, and that has been the one constant I have seen across the forums which hasn't changed an iota. It is "never" the right time to jump into the market for them. There would always be a stat, finding, sentiment, a recession somewhere, upheaval, graph, variable that would lend credence to their belief of "univestable proposition" of Aus property market.

I believe that it is a function of a mindset and not an outcome of research.

The risk paid off big time when I needed funds to buy a business and I liquidated half of my prop portfolio to pay for it and grew it like I grew my prop portfolio. That was a much bigger risk than venturing into property however it culminated in I floating my company on London Stock Exchange 4 years ago which I now run as founder & exec chairman.

Finally, this 'push' might not be sustainable and you might be right but I bet based on the evidence I now see on the ground and comparing it with my c20 year observation of property markets, I believe we will see 2-3 years of uninterrupted growth in Aus prop market and I am backing up my conviction by starting the build on my multiple development projects which I expect to finish what I believe will be in midst of this boom cycle, by Dec next year.

 

So dont buy. If you are confident your right, wait for it to fall. Any rebound will just be a dead cat bounce and you can buy even cheaper later on.

The problem with the bear case is that there is no realistic buying point. Because the market is mostly made up of irrational oos, it never really makes sense.

So bears end up watching a market fall, think it will get cheaper, miss the turn and miss the next cycle too. And the next.

Bulls have the opposite problem. Mismanage your cashflow and you get killed.