What are Sydneysiders now doing? (investors and home owners)

Discussion in 'Property Market Economics' started by Gousey, 7th Sep, 2018.

Join Australia's most dynamic and respected property investment community
  1. Gousey

    Gousey Active Member

    Joined:
    6th Apr, 2017
    Posts:
    38
    Location:
    Sydney
    I have noticed a trend in conversations with my friends and family - some being very new investors and new homeowners (some of these having bought something within the last 3 months in Sydney).
    The conversation always steers towards whether it is now better to sell and buy something when Sydney prices have 'bottomed', or whether they should stick it out.

    My wife and I have been investing for approximately 5 years, where we currently hold 4 investment properties - 3 of which are in Sydney. Sydney property details are:
    - 4/2/2 house - Seven Hills, Sydney. Land Purchased in 2013, with new house built in 2017.
    - 2/1/1 apartment - Eastlakes, Sydney. Purchased in 2014.
    - 3/1/2 house - Blacktown, Sydney. Purchased in 2016.

    My stance has always been to be hold these properties and to ride the inevitable wave coming over the next few years until the next cycle begins again. I have always kept my investing simplistic and believe in a solid buy and hold strategy (although I do continue to hear that this is no longer a viable strategy).
    In my position, I don't see the benefit of selling at this stage and then buying after the correction has well and truly taken place. I see this as an opportunity to ride the harder times and hopefully be awarded when the cycle shifts and begins trending back up again.

    Most of the people I speak to are asking themselves what they should do.
    The different variations I have heard to date are:
    - Should I sell my PPOR now and rent for the next few years until prices 'bottom out'? I can just buy something cheaper later and would have saved more money along the way.
    - Should I sell my only investment property (neutral or at a loss) and save more money just to buy back in when the Sydney market has cooled?
    - Should I sell multiple investments to just hold that money and buy back into the Sydney market down the track?

    Interested to hear what everyone's thoughts are in regards to this and what everyone in this forum are currently thinking to do with their Sydney property.

    Cheers,
    Gousey
     
  2. gty12

    gty12 Well-Known Member

    Joined:
    29th Jun, 2018
    Posts:
    243
    Location:
    Melbourne
    Usually I'd say if you are a buy and hold strategist then you must be prepared to ride the negatives, if not then you have changed your strategy & maybe should have bought something different way back in 2016 etc..
    So I would suggest you stick with them.
    But you did pick an okay/great time to buy in Sydney.
    So maybe you could switch your strategy to pure capital growth short term focused markets=bearing in mind though you may have missed the boat to sell your current ones easily.
     
  3. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,604
    Location:
    Sydney
    It might be too late to sell for your 2014 and 2016 purchases....it really depends how much of a profit you want. The best time to get out would have been later 2016 ...early 2017.

    Some people got greed and held on too long....
     
    Whitecat likes this.
  4. Gousey

    Gousey Active Member

    Joined:
    6th Apr, 2017
    Posts:
    38
    Location:
    Sydney
    I do plan to hold through the negative period and therefore will hold over the next number of years to ride it out and hopefully come out on top in the next upwards cycle. It is my friends and family that have been questioning whether they should be selling their properties as they are now hearing doom and gloom (even though this has been fairly clear for a long time coming for Sydney).
     
  5. Gousey

    Gousey Active Member

    Joined:
    6th Apr, 2017
    Posts:
    38
    Location:
    Sydney
    I plan to hold my investments and see this through until the next cycle - I am not looking for a quick buck, but long term gains is what I am after. However in saying that, is my current mindset seen to be a bad one? Especially as I have a few properties is Sydney that will soon dip in value. Perhaps I should have sold, but I have been keen on the idea to hold these properties and get a good ROI in the next cycle.
    It is the people I have been speaking to that are sitting on the fence, not knowing what they should do with something they bought within the last few months.
     
  6. Angel

    Angel Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    5,813
    Location:
    Paradise, Brisbane
    Why did your friends and family buy into Sydney in the last three months? Didn't they realise the market has been cooling since the start of this year and the media is full of articles about deliberately reducing the value of Sydney homes "to make them more affordable".
     
    Travelbug, Archaon, qak and 1 other person like this.
  7. ChrisDim

    ChrisDim Well-Known Member

    Joined:
    13th Jul, 2018
    Posts:
    271
    Location:
    Sydney
    Have you got some buffers and fairly steady work? Can you hold them @Gousey? You have done great with your properties so far... They are all well positioned and they will do great in the long run. But you need to let time do it's thing. Just don't listen to news... Forget about your properties. Pick a hobby or something :)
     
  8. Phar Lap

    Phar Lap Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,060
    Location:
    NSW
    Stamp duty alone will kill any gains over the short term, let alone any maint. and agent fees etc.
    Property is long term unless you can value add in a big way to offset these costs.

    Its Sydney, so hold as long as you can and some. The rewards will be there next cycle or better still the next one depending on how old you are.
     
    Travelbug, Tattler, qak and 3 others like this.
  9. AlexV_Sydney

    AlexV_Sydney Well-Known Member

    Joined:
    12th Mar, 2017
    Posts:
    517
    Location:
    Sydney
    [​IMG]

    My forecast/opinion for Sydney is below. My prev forecast (~1 year ago) was very close to reality (-3.5% YoY vs -5.8%) while others forecasted +5..+10% growth - that was 'Denial' phase.

    Sydney is currently close to "Fear" point. We may see further -5%..-10% decline over the next 1-3 years, but be ready... if policy/regulations are changed, it may revert

    - good opportunity to flip (if required) - first sell, then buy
    - 'no' to buy in 90-95% cases (unless it's unique or with very good yield or suburb is going to be changed significantly or profitable subdivision/development, etc)
    - 'maybe'/likely to hold (depends on suburb / cash buffer / IO vs PI etc)
    - first time / non-experienced investor? - 'NO' - other markets are performing much better now.
     
    Codie, Travelbug, Invest_noob and 3 others like this.
  10. Gousey

    Gousey Active Member

    Joined:
    6th Apr, 2017
    Posts:
    38
    Location:
    Sydney
    Buffer and steady work are definitely there - at the moment, I'm holding them without any issues. It will get more difficult as the interest rates begin to rise, but I am far from being concerned about it. Just hoping for some good gains on the other side of all of this.


    This will be my first cycle going through the trough of the cycle as an investor. Still got a number of years, so time is on my side at the moment.


    Neat pic! A lot of people I talk to at the moment appear to think that Sydney is currently at 'despondency' looking at your image. Some feel the market has already corrected - which is absurd. I personally feel its just ticked past 'denial'.
     
    Silverson and Whitecat like this.
  11. Illusivedreams

    Illusivedreams Well-Known Member

    Joined:
    3rd Oct, 2017
    Posts:
    2,454
    Location:
    Sydney
    In a way Sydney cycle is in Hands of APRA.
     
    Cia, standtall, gty12 and 1 other person like this.
  12. Beano

    Beano Well-Known Member

    Joined:
    7th Apr, 2016
    Posts:
    3,345
    Location:
    Brisbane
    Just keep the houses take it easy , retire and live off the income
     
    Toby, Someguy, Wukong and 3 others like this.
  13. Harry30

    Harry30 Well-Known Member

    Joined:
    4th Aug, 2017
    Posts:
    792
    Location:
    Melbourne
    Think about the transaction costs in doing buying and selling and trying to time the market as your friends are suggesting. You lose 6% in costs when buying and 2% when selling. So, that’s 8%. Unless the market falls by at least 8%, you are worse off having sold and bought back in. Will the market fall by 8% and will you time this perfectly tick to tick? Stick with your current approach I say.
     
    Angel and ChrisDim like this.
  14. ChrisDim

    ChrisDim Well-Known Member

    Joined:
    13th Jul, 2018
    Posts:
    271
    Location:
    Sydney
    ...then you know what will happen, right? in 4-5 years the dust will settle from the royal commissions, the current stock will disappear, and rents will go up. It will be a mini run. Nothing like the last 6 years but enough for you to use your equity to buy another property - maybe 2... Then nothing, but 5-7 years later there will be an even bigger rise... and you'll use your equity and rent to buy another 3-4 properties as rents continue to climb, investors come back in and while developers try to get their projects off the ground.

    Projections are for Sydney population to go to 10 million by 2035 so what I am describing is pure maths. Of course, during the quiet times it will be as exciting as watching paint dry, but imagine where you'll be in 17 years from now when Sydney continues to expand West where some of your properties are at ;)
     
    Codie likes this.
  15. Whitecat

    Whitecat Well-Known Member

    Joined:
    3rd Jul, 2015
    Posts:
    4,358
    Location:
    Sydney
    Yes I think at denial still for many
     
  16. Whitecat

    Whitecat Well-Known Member

    Joined:
    3rd Jul, 2015
    Posts:
    4,358
    Location:
    Sydney
    I would say more than 8% is more than likely
     
  17. Whitecat

    Whitecat Well-Known Member

    Joined:
    3rd Jul, 2015
    Posts:
    4,358
    Location:
    Sydney
    It depends on transaction costs. Selling is expensive AND what is your alternative plan. Are there better opportunities? I think you probably could get out and get back in later for a net 'profit' but if you are going to do that, the sooner the better. Perhaps to manage the risk do it with one or 2, not the lot.
    I don't see holding through a bad period an 'opportunity' as you describe it if you can get a quick clean sale. But certainly if selling is going to be a headache then holding through will be what a lot will do/are doing Just don't convince yourself taking pain is necessarily strategic.
    Have you done your research about cost of sale and what you can realistically get for the properties
     
  18. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,604
    Location:
    Sydney
    OK ...that is what I am doing...that was one of the reasons why I spread my risk in properties to 3 in Sydney.....2 Central Coast...1 in Wollongong...I plan to sell one near Newcastle/Maitland....already sold 1 in Albury.

    I plan to buy more in Sydney but not till the correction cycle has come through...which is 2...maybe 3 years from now...lots of people had a go at me and said I should have bought more...but you have to be careful....the way things are going we might see prices come back down to 2015. Still have have a 50% increase to median but median would have come off 15-20% off the peak. I can see the median settle in the 900s in Sydney. People don't believe this but it will happen as a lot of people can afford to hold their home when a small cycle of rates rises come through and the mini credit crunch is going to hit Sydney and Melbourne in particular.
     
    Gousey likes this.
  19. radson

    radson Well-Known Member

    Joined:
    4th Jul, 2015
    Posts:
    1,563
    Location:
    Upper Blue Mountains
    hmm...Sydney or perhaps NSW?
     
    ChrisDim likes this.
  20. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,604
    Location:
    Sydney
    That would be NSW. Sydney will be at around 6.5m by 2035 and close to 8m by 2050.

    Melbourne is expected to be bigger than Sydney in 2030.
     
    ChrisDim likes this.

Price Accounting are a leading tax service for your property + tax issues. Contact Paul@PFI for property focussed tax services using our client portal access, digital signing and checklist based approach for best pricing. Free client pack included.