Join Australia's most dynamic and respected property investment community

NSW Watching the Druie Drop in Slow Motion

Discussion in 'Where to Buy' started by sash, 17th Oct, 2015.

  1. sash

    sash Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,214
    Location:
    Sydney
    Hi All,

    I thought it would be interesting exercise to watch how the market in Mt Druitt suburbs correct over the next 2 year. So I have developed this thread...

    I did a quick survey of the Whalan; Tregear; Lethbridge Park; Emerton; Dharruk...it seems most houses sell in the 440-500k range now. Not many over 500k compared to when it peaked.

    I reckon we will see price adjust to 400-440k within the next 6 months.

    As I have said before...I reckon we will see 280-350k as the norm for houses by 2019.
     
    Esh, R377, Taku Ekanayake and 2 others like this.
  2. JDP1

    JDP1 Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    2,838
    Location:
    Brisbane
    I think it will be slow at first, then a bigger rate of drop before eventually flattening. 280-350k sounds about right...
     
    Ardi likes this.
  3. HUGH72

    HUGH72 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,117
    Location:
    FNQ
    If thats the case I will be keen to jump in then, when the markets on the nose, the yields would potentially be above 8%, thats a large correction.
     
    York likes this.
  4. sash

    sash Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,214
    Location:
    Sydney
    Yep....considering in 2010...people were buying at $180k at Dept of Housing Auctions and giving a quick tidy up for less than $8k and putting it on the rental market for $300-320pw. I balanced market for the Druie is a 5-6% yield..and based on a rental average of $330-370...the market value on average is about $300-360k from a sales perspective.
     
  5. RM1827

    RM1827 Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    153
    Location:
    Sydney
    Is it possible that a market changes its balanced market yield rate? Could 4-5% yield be the new norm for that area and therefore prices won't drop that much?
     
  6. sash

    sash Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,214
    Location:
    Sydney
    Nope...risk has to be priced in for these suburbs...thus the yield needs to be higher.
     
    RM1827 likes this.
  7. JDP1

    JDP1 Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    2,838
    Location:
    Brisbane
    that's right. Risk has got be proportional to potential reward.
     
    RM1827 likes this.
  8. MindMaster

    MindMaster Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    73
    Location:
    China
    I have an IP with a GF in Shalvey that I've been thinking of selling for a couple of months.

    Looks like I better be fast if I do go ahead and sell it.
     
  9. York

    York Finance Broker Business Member

    Joined:
    24th Jun, 2015
    Posts:
    1,620
    Location:
    Sydney
    Interesting analysis @sash. That would be a huge fall if that happens. I personally don't think it will go that low. But you can't fight logic. IF they go that low, then I'll get my surf board, hit the surf and ride the wave back up again...but first take advantage of some decent yields as prices climb back up. Interesting times ahead for mounty.
     
    Esh and Whitecat like this.
  10. sash

    sash Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,214
    Location:
    Sydney
    I have seen it before. AS @seachange says it happens over a period of time...the lowest point is usually 2-6 years in...we are now 4-5 months in from the top...so late 2017 to 2019 should offer some stellar purchases..particularly if rates head up.
     
    Esh, Tekoz and Vultures like this.
  11. devank

    devank Look, lets just get on with this, ok? Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    714
    Location:
    Inner West - Sydney
    why.. why sash why? Why pick on Mt Druitt all the time?
    (I do agree with you though)
     
    Esh and datto like this.
  12. sash

    sash Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,214
    Location:
    Sydney
    Not picking on it....it is the one market which a large part of this forum has investment properties. I believe that the Hills will be even harder hit.

    I also think Logan will also experience the same issues as the Druie in an another 2-3 years when it peaks.

    I got in Elizabeth and same thing happened.
     
    Rusty12 likes this.
  13. York

    York Finance Broker Business Member

    Joined:
    24th Jun, 2015
    Posts:
    1,620
    Location:
    Sydney
    Can't argue with that. :)
     
  14. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,318
    Location:
    Perth, Melbourne, USA
    I wonder if the RBA drops the interest rate in November whether it will have an impact, in other words a window of opportunity to those who are selling???

    MTR:)
     
    Xenia likes this.
  15. See Change

    See Change Timing Lord Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    2,140
    Location:
    Sydney
    This is the third cycle I've seen in Mt Druitt .
    First peaked around 120 dropped back to 60 ....
    Next peaked around 240-250 and dropped back to around 160-170
    This one peaked around 480 - 500 .

    In the first trough there was no internet sales , no one put much money into advertising , so unless you went out there you didn't see what was for sale

    Last trough , everything was on the Internet , so any investor , anywhere in the world could see what was for sale . I think that's the reason why things didn't drop as much , so I'd expect a similar drop in current cycle . Bottom 320 - 340 with occasional renovators specials going for less .

    ..... Unless someone keeps talking about all the bargains in Mt Druitt and drives up the awareness and competition for those properties ...... In which case it may not drop as far , so there won't be as good bargains ....:(

    Cliff
     
    Daniel007 likes this.
  16. skater

    skater Capitalist Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,411
    Location:
    Sydney
    Seech is on the money. I'm expecting the new median to be maybe mid 3's, possibly a bit more as the area becomes a little more in demand.

    The internet and multiple buyers agents targeting the area keeps things plugging away nicely.
     
  17. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

    Joined:
    14th Jun, 2015
    Posts:
    2,096
    Location:
    Sydney & Adelaide
    If it drops back to 180-200k again bring it on, more bargains again :D I have gotten my money out of western sydney via topups and the places are rented and paying their own way so no plans to sell anything regardless.
     
  18. Biz

    Biz Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,472
    Location:
    Sydney
    I don't own anything in MD but not expecting big drops there or anywhere in western Sydney. Maybe 10-20% drops for some properties that went for stupid money but thats it.

    I really feel Western Sydney has come of age this cycle. A lot of infrastructure and jobs have come online or are in the pipeline over the next few years. In previous cycles all we got was shiney McMansions and new subdivisons with little else to go with it.
     
    WattleIdo likes this.
  19. skater

    skater Capitalist Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,411
    Location:
    Sydney
    It certainly has changed! Just wish I had a crystal ball.
     
  20. Daniel007

    Daniel007 Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    201
    Location:
    Sydney
    If anyone finds it useful
    [​IMG]
     
    THX and Biz like this.