When Crazy Becomes the new High

That is pretty crazy. Someone will buy it I suppose, good for the economy, not good for the buyers.
These ones are from $710k for a 1 bed in Summer Hill:
Flour Mill of Summer Hill in Summer Hill

 

These numbers are bat-poo crazy! Good for you if you already own in Sydney.

Must be one helluva battle though for First home buyers.....

 

There's going to be some really good buys for them if they can wait a couple of years.
Some of these people are going to be way over-extended and get stuck.

 

Here is how builders are luring the first home buyers.

Stocklands in marsden park do not release there blocks to everyone. Buyers font get much choice and are told that the block will not even last for a week.

A friend of mine went to an estate adjascent to stockland and he was shown a picture that with every 2 people went in, 1 block was getting sold.

He quickly gave 1k deposit and later repent at his decision. The problem is he will only get 500 back. I feel FHB are getting crazy over sydney and hence the fake demand (to some extent).

I know Sydney has a lot of potential, scarcity of land, huge growth and what not. But it is up for a loooong pause. Enjoy the boom till the hungry FHB lasts (no offense to anyone.

 

I think I bailed out of Sydney too early, last year, I did not expect this market to continue to rise.

Still in Melb market and will bail later this year.

I would say the interest rates have been keeping these markets bouncing along

 

Better to get out a bit early than too late.
Especially if you're able to put your money to work somewhere else with less stress.

 

That's my philosophy as well

 

In the market we are in now there is no limit how high a ucv on a property can rise,or as a result what the investor can experience,but as Warren Buffett famously tell who ever will listen,Only when the tide goes out you discover who's been swimming naked"..

 

I reckon it will go higher in Melbourne, especially if rates drop again, then tumble down eventually. But I wanna get out before it turns. I'll know in a week wether I sell one off in Melbourne. Rather money in my pocket than waiting years for it to get back to the levels it's at. Gfc taught me lots.

 

Willair

There will also be those who say if you are cash flow positive debt wont matter, perhaps, but it wont necessary help the performance of the asset base. I think building capital first is critical if you want to create income streams

Me too, I want to offload my development which has fat profits today.
Comes back to buying the land at the early stages of the rise which is what we did right???

 

Cashflow is important which helps but debt is debt. Over leveraged and you will see difficulty in tuff times.

If this was 2 years ago I would have gone ahead with the build in Essendon, 6 townhouse development site in prime location and 3.6m end product. Sell now or build it which will take 2 years at least, for another 300k clear profit....I am fighting myself on this as I know deep down things are not right, but I am greedy.
Do I risk and go ahead with the build for 300k or get out now? I hate how property has become so rediculiously expensive even though I've profitted from it.

 

End values is what you need to consider, the high the end value then more risk, smaller pool of people
Also, if you can not sell will rent cover interest payments.

My gut tells me less risk when you are building in the FHB/lower end market

 

If the capital base is running well then you hit a potential cash flow crunch,which sometimes happen at the most inconvenient times and a plummeting equity value would expose investors to a large loss,and a capital value base of zero..

 

sell down along the way, while building capital and cash flow??

 

That worked for us for the first 20 years just buy and sell,then once the asset base is there sometimes you don't have to do anything with the way some inner brisbane soutside pockets have gone value wise..

 

If it was me, I would sell. But I tend to sell a bit earlier when I know the market is still doing well. I sold out of Melbourne in November last year and I have already put that money to good use. Personally, I don't think it's a good time to be greedy.

 

Yeah I'm hearing you and tend to agree. What area did you sell off in Melb? Wonder how it's performed since selling?

 

With completion 2 years away that would be quite a risk. If there is an option to sell OTP whilst demand is high like now then it may be a good option to go for that extra $300k but cover your butt in case the market starts to drop or supply picks up by everyone joining in developing.
With a 600k end product I imagine it would be quite popular.
How sure are you on construction costs though. I bet every builder is ratcheting them up at the moment due to demand. Just import all your tradies in from Perth - we have plenty Having said that tradies often do move for the work. Perth was inundated with NZ, Irish and Eastern States tradies 2-5yrs ago - now they all have to go to where the next boom is. Tradies are like gypsies

 

Off the plan would be how I would go about selling if plans were approved, that can easily take a year if best case scenario. Just got out of another meeting with a building company, they are asking 1550-1600 for a med-upper build quality. That price is now consistant with 2 others I've had through builders.
Lol if Perth crew can build for less then it would be worth waiting and building, that way if the market changes it wouldn't make much of a difference to the end results. Will get a few more quotes, back to the accountant to see what works best.

 

We sold for close to $1,000 /sqm. Initially, comparable properties were selling for slightly less than that but it seems like they might have picked up again. The most recent comparable sold for just over $1,000/sqm. But that is a better property (bigger block, nicer house, DA approval for 3 townhouses).

There have not been any direct comparables since June, so its a bit hard to tell.

A very similar property sold in April for $906/sqm. That's a significant drop to me.

Another similar property but a bigger block and better street sold for $979/sqm. That's in Porter Road, which traditionally has achieved over $1,000/sqm for development sites. That's not a particularly good price for a development site in that street.

Based on that I would say that at least until June, prices had come off. I don't know what they have done since then until there are comparable properties. I don't regret selling when I did.