Watching the Druie Drop in Slow Motion

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.

 

I think it will be slow at first, then a bigger rate of drop before eventually flattening. 280-350k sounds about right...

 

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.

 

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.

 

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?

 

Nope...risk has to be priced in for these suburbs...thus the yield needs to be higher.

 

that's right. Risk has got be proportional to potential reward.

 

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.

 

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.

 

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.

 

why.. why sash why? Why pick on Mt Druitt all the time?
(I do agree with you though)

 

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.

 

Can't argue with that.

 

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

 

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

 

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.

 

If it drops back to 180-200k again bring it on, more bargains again 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.

 

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.

 

It certainly has changed! Just wish I had a crystal ball.

 

If anyone finds it useful