What will make Sydney slow down for long OR will it?

So, myself and most of us have been hearing that Sydney will slow down or even grow negatively in near future. For me, as a newbie in the investment journey with no PPOR in Sydney, this is apparently a good news and fairly enough it could be a bad news for some. However, when I see the demand-side picture from my eyes, I don't see demand going down anywhere significantly, unfortunately. I just used my thoughts below as a response to another thread but since the topic is interesting and I would love to get different insights, I thought of creating a new thread so that everyone can share their voice. (@sash You have already replied on other thread! Thanks for that.)

~150k skilled immigrants (permanent residents) come to the city every year and there's no plan from govt to curb these numbers (at least not that I am aware of) as the economy 'needs' those skills. Leave alone the ones who were on other random visas (e.g. holiday working visa, student visa, 457 visa, their working partners, etc) who eventually become residents/ citizens every year. I would love to believe that this doesn't impact housing demand in Sydney but unfortunately other cities (barring Melbourne) don't have enough jobs and even the immigrants with state sponsorship from those states end up in Sydney for jobs (though some people call it a 'loophole' in the system as they get away with doing so even when they were supposed to live in the sponsoring state for at least 2 yrs before they could go elsewhere as a condition of the state sponsorship). I am not even counting political refugees in my argument, with the assumption that they might take longer to start riding the housing market, unlike other immigrants who are supposedly skilled and ready for the job market from the day they arrive.

Cutting the long story short, I would love to understand as to how Sydney market will absorb this population increase every year WITHOUT causing a consistently high housing demand. Don't take me wrong, rational or low demand is good for many newbies like myself (spending 40% or more of one's income on housing alone is no fun - be it toward rent or unproductive loan repayment) but I just don't think it will ever be possible in near future due to above reasons unless govt curbs immigration and students inflow that eventually add to the demand by huge numbers. You may say that immigration always existed and Sydney still went through property cycles, BUT I would tend to believe that continuous/ consistent immigration of this volume in all different visa categories is a comparatively recent development (of last 10-15 yrs) only.

Happy to be proven wrong on my thoughts above and I welcome your views.

 

What caused the stagnation for much of the noughties? The recent boom cant be explained only by fundamentals. Part of it is sentiment, and that can turn. If the fundamentals get worse (rising rates, p&i cliff, recession) the balance shifts.

 

Hi Mate,

I can't tell you what you want to hear (it seems like you want to hear it).
Similar views I hear from a lot of people that i talk to. If you are not able to see the drop, it means you are looking in the areas with upcoming infrastructure or rezoning. Those areas will hardly drop in price this cycle.

I do see a drop in prices, marginal in some areas and upto 10% in some.
However, as an investor, I have learnt the key is to find opportunities.

You can find deals in any market. Properties that need major or minor renovation and people tend to ignore. Any other value add that will put you on top of others. Negotiate well and gain immediate 10-15% (not possible.in hot market and competitive areas). Areas where no first home buyer might look at, etcetera etcetera. But you again would not be in a position to do that because it will be your ppor.

You cannot expect to find everything in a property and at a discount.

Also, I checked that during the bust phase the overall median of Sydney stays positive or neutral or marginally negative. This means there will be areas which will positive, neutral and negative at any time.

The key is to look out for opportunities. As I learnt from other pro investors. No area continues to grow and a correction is evident. No one can predict when. Its all speculative.

So, I am also in line with everyone to see Sydney pricess drop in coming years, be it because of sentiment, jobs, population or any reason; I don't care. but one thing i have is time.

Regards

 

Agree. That's why I always focus on buying the highest demand stock type in strong demand areas. When positive sentiment comes back, these areas often tend to be high on the list of continued growth.

 

Sydney is about as safe as it gets when it comes to long-term property investment.

Some luxury areas of Sydney such as eastern and northen suburbs may fluctuate and that can happen in any market but Sydney as a general location will continue to grow even in a stagnant market because it holds a very large portion of Australia's economic activity plus universities, tourism, infrastructure and ports.

If you want quick small wins, there is Hobart and some of the other markets but Sydney and in particular pockets around Parramatta and the new airport IMHO are the golden pockets of property investment for many years to come.