What will stop the BOOM in Sydney and Melbourne

Depends where and what. Still money to be made imo

 

There's a good interview just posted today on the GC thread discussing outlook for Sydney/Melb Hobart Gold Coast and Perth. I think those comments are spot on. Well worth a listen.

Gold Coast Property News - official thread

 

Yes, read this, so if there are no triggers such as interest rate hikes, economy going pear shaped etc we are all good in Syd and Melb to at least mid 2017 for more growth, perhaps not what we saw in 2016.. watch out for the triggers.....

 

One of our friend bought his ppor in north west Sydney last month, but he was told by the bank that they would loan the same amount that he requested because their household income is pretty high, otherwise bank won't value at the sale price quoting the market volitility.
Question: Does the bank valuation rely on house hold income?? Or loan??
sounds like an instant neg equity to me but my friend said he's just lucky to win the auction..

 

Not necessarily negative equity. Bank value for a loan and market value are very different.

 

Me thinks what will stop the boom will be variable interest rate rises

 

Yep...in Sydney in particular......

 

A number of Melbourne suburbs dropped last year. Asian suburbs I believe.
Melbourne house prices stagnate in some pockets

 

Agree, but tend to think that rates will need to climb to 7 percent or more before it impacts adversely on the boom.

 

Once the government changed/tightened policy then without a doubt it will impact on property values because sales volume will drop off and then there are more properties available.

 

no way, the fact that they start going UP is enough to change market sentiment. Many investors have continued buying, using equity from recent booms, interest rates rises causes fear and when this sets in people don't buy, in particular the investors who have over committed/over exposed. More stock comes onto the market.... that old chestnut........ Supply vs Demand..... Boom/Bust

 

Sure, I think a small increase will scare off some of the more naive investors, but i think it will take much more than one or two small increases to scare off the majority of investors, which will be required to bring the current Syd boom to a grinding holt.

 

Agreed, 100 basis points and things should change but not sure that will happen in 1 year. Maybe half that from what many have said.
I still think Melbourne and Syd will do well in 2017 and will still be the best markets to be in. Not buy in, to be in.

 

Yup 100 basis points will see the market slow down for sure. The economy as a whole is still very sluggish and it is unlikely to pick up in 2017 so can't see any major increases in the offical rate happening in the next 12 months.

 

Asian suburbs are too roller coaster rides if you ask me. you got one going for 1.4 million then another 990K sometimes in space of 1 month. (both similar bed config ) diff location but in the school zone. FIRB restrictions wiped out a lot of the million + buyers with those land certificates etc which kicked in dec last year. a lot of times among Asian buyers (it is about face or image) winning so you only need 2 individuals with these attitudes to achieve a ridiculous price.

 

I think you are probably right.

 

Maybe in Sydney and Melbourne where there a lot of Asian suburbs some fall in and out of popularity but here in Brisbane we only have one Asian suburb and it just never stops pumping. The land next to the market square there is like gold and it's actually quite far away and not a very attractive suburb in terms of natural features (no disrespect) just has great restaurants and is culturally interesting and happens to be the spot where lots of Asians like to live next to each other and with family.

 

None taken - I don't live in an Asian suburb and would not want to live in there though I would buy there if there are opportunities

You're talking about sunnybank. in Melbourne, their fav are mainly schools related areas.

 

I would buy in Sunnybank. I've come to the conclusion it's pretty much bulletproof stock walking distance to market square. It's not subject to the same market forces as the rest of bne.
I would live there too for a while as I like the food and culture but i like walking into the cbd and that's the dealbreaker.

 

I have not research development sites in Brissy, however what I do know is building costs/infrastructure costs are the most expensive in Australia.

If its a development site for land banking then I guess you cant really go wrong if you buy in areas that tick the boxes and you understand what you can do to the land in terms of how many dwellings etc can be built.
Problem with this is you may need deep pockets to hold.

If you are building/developing today then it may be a different story.
I would never target the high end stuff (end values) as there will be greater risk in any State IMO.

I am not at all convinced that this market is moving so I personally would not be buying today.

Developing is much safer when markets are rising because by the time you put your DA together the land has risen and you have many options, ie sell with DA, sell land do nothing, build, build and sell OTP, build and hold, build sell a couple and keep for cash flow.