What will stop the BOOM in Sydney and Melbourne

I offloaded Point cook just sub 300sqm for 500kish 2 weeks ago unconditional. waiting on settlement. this is like a basic house with no backyard and really just OK. For those guys who buy in stage 1 or 2 the prices were like less than 100K for that block size, it is crazy,. This sold within 2+ weeks of listing.

Auction wise, I went to this ex-housing comm house in reservoir (not the high end gilbert or regent st) - bang 3 bidders (viet vs Chinese vs indian) - and it went for 772K. those prices were like preston prices 1+ year ago (for a block with a Californian bungalow). and stuff were selling 500kish in reservoir for similar sts.

went to fawkner (huge crowd) bang young guy puts a bid 810K.

hard to know how long this is gonna run as in boom like conditions.

I might go low ball and do another H&L in werribee.

 

I've been following Hadfield (Glenroy too) lately and developers have been going hard for corner blocks paying around 800k for around 600sqm land. Any largish block is going around the mid 700s too

 

I’m thinking the same. Profits won’t be huge but its money for jam.


My olds been in point cook since 2005, and by default so was I, and boy has it changed. Just looking at the cars as indicator of disposable income. 2005 most cars were 5 year old holdens/fords/Toyotas. 2010 brand new holdens/fords/Toyotas. 2015+ mercs/bmws/audis everywhere. Saw a Porsche GT3 couple streets up from my olds. Been hearing of cars being jacked from people’s homes in Point Cook, something that was unheard of 5 years ago as the cars weren’t that great.

 

just something extra to do and turn around is good to structure a H&L to sell when finished. - otherwise you gonna fighting out for bigger blocks (have to diversify as holding a few now)

a lot of Indian Demographics in PC and Werribee - I think agent said of the 25 ppl in the open for the first day (23 were Indians).

 

Nice

 

Haha hilarious my friend is bidding in that area and attended multiple auctions. Wonder if same guy.

 

Who knows -- For the ex-housing comm - the indian guy won.

still if u compare to asia

One-bedroom flats make a return...at more than HK$10m

 

Haha that's a distorted price tho. You can buy mid levels two bedder for around $1.2m

 

With all these townhouses going up...Glenroy, Pascoe Vale etc. in Victoria - after purchasing the existing homes for around 700 - 800k and then selling for 500k each after construction - does anyone see much growth in those townhouses? Or do townhouses generally remain the same in resale value ?

 

It's more an indicator of people withdrawing equity from their house to buy trinkets like cars rather than reflecting an increase in actual income.

 

It will really come down to supply versus demand, while the demand is strong you will continue to see growth.

If you see volume increasing and buyers start to pull back prices will stall.

So that is the million dollar question, hence the thread.... What will stop the BOOM??

 

Pretty much what i've been hearing from local RE agents in the area(getting a few appraisals done on my PPOR). Units and townhouses have started catching up to houses from a CG perspective hence developers jumping in and buying land to put more dwellings on. That's been happening for a good year or so now based on my observations. Issue is that supply will catchup to demand pretty soon i think(next year or so) based on number of big developments happening around and number of finished new town houses i'm seeing so i don't expect a lot of growth moving forward for town houses/units in the area.

The new zoning changes are something to keep an eye on too(size of green areas...) since that would either subdue or increase developer demand in the area.

 

Yeah agree. That’s what I was trying to say I think I just worded it wrong. Not increase in disposable income but an increase in wealth due to rising house prices in the area.

EDIT:
ABC radio had a good discussion on the topic this morning. They weren’t talking about whether it’s a bubble or not, they were talking about whether the landing will be soft or hard. The consensus was hard landing.

Some crazy stats were thrown around. 40% of all loans are IO loans. 1 in 4 households spend more than they earn every month and rely on family to chip in the extra cash. etc etc…

Anyway, I’m off to get my smashed avo

 

I hope that wasn't sensationalised. E.g. 40% of all new loans could be IO loans, but it is worded in a way that makes it sound like 40% of all loans.

Things like 1 in 4 households spending more than they earn every month could have been measured in so many ways and smells like some fresh cherry picked data to suit an agenda.

But of course, I do think the inflated prices are strong and am also wondering if it will be a hard or soft landing.

 

I think whatever measures put in place by federal government or banks will affect all markets within Australia. If the boom ends in Sydney and Melbourne, it doesn't mean Brisbane will boom.

 

Agreed, and I think I have mentioned this before you need jobs, good economy for markets to move.
Just look at the markets that are not moving or worse falling backwards, they have suffered due to job losses, mining boom, I don't believe investors understand the impact of this on QLD overall.

Unfortunately I think investors are caught up with the mantra that Syd booms, Melb booms and then QLD must boom next, well it has not happened yet, thought the market is fragmented, some pockets are doing OK I believe??? Similar to the rational that Adelaide is cheap? right, but how is the economy fairing, jobs, people moving to this State? I think lowest number in Australia?

My point is there must be drivers for a market to boom, not just cos we think its cheap compared to other States.

MTR

 

I think it will be the interest rate increase for more than 0.25% basis point will be enough to stop the boom (let say 1.0 % in one year)

 

Still hearing crazy prices for Melb

Had a quick look at trends for Melb blue chip areas/suburbs, it looks like house prices have gone ballistic and risen rapidly, however not so for apartments/units significantly less in comparison to houses

Anyone confirm this, stats can be hit and miss

 

If confirmed, would this be one of those situations where you get in while it's on its way up?

 

Interest only loans are around 38-39% of all existing home loans: Interest rates: Why the rise in interest-only home loans is a big worry

Australia is screwed.