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When will Sydney property market going to crash ?

Discussion in 'Property Market Economics' started by Tekoz, 20th Sep, 2016.

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  1. Tekoz

    Tekoz Well-Known Member

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    OK, I'm posting this thread in the property investor forum which is of course believe that property is always going to be up, sideways and up :D.

    Somehow after watching the Australian property market since 2008 GFC, and then jumping into investing in QLD (Park Ridge) property market since 2015, I always wonder when Sydney market going to be cheaper or crashing down ?

    I've been waiting and watching the news that it will be going down soon, but I guess people is just keep on buying the house & apartment too.

    The property price that I want in Sydney Eastern suburb (Kensington, Kingsford, Maroubra, Randwick, Eastgarden and Matraville) is already went through the roof (more than $1.4m).

    Can anyone please share some insight, comments or explanation as to why Sydney property market is not crashing down into at least half ?

    Is Australia too big to fail ?
    Doe the big 4 banks is financially stable due to APRA keeping them from collapsing like Lehman Bros, Fannie Mae, Freddy-Mac, Deutsche Bank and Banca Monte dei Paschi di Siena S.p.A. (BMPS) etc...

    Thanks in advance.
     
  2. Foxdan

    Foxdan Well-Known Member

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    The Sydney market is like park ridge in qld. Can't fail

    House pricing is a direct result of affordability. People can afford it because they have the cash or the ability to get loans.

    Unless interest rates go up quickly, these prices are the new normal.

    Interest rates have to stay low for a while or people not be able to pay loans, defaults will occur and the banking system will be in trouble because property is the main form of security. No one will want that to happen so I imagine interest rates creeping up will take years and years to go back higher than today.
     
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  3. Leo2413

    Leo2413 Well-Known Member Premium Member

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    First thing is Sydney is thousands of markets so it's highly unlikely all markets will crash down 50%.

    And the demand is just huge for property in many parts of Sydney. If prices dropped down 50% tomorrow, the frenzied buy up by multiple demographics would very, very quickly push prices back up and probably even higher by 'overshooting' due to the fear of missing out.

    It's completely supply and demand imo.
     
  4. See Change

    See Change Timing Lord Premium Member

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    Sydney has never gone down 50 % .

    Even the biggest financial crisis since the Great Depression didn't drop the market 10 % . Less than 5 % .

    So imagine what it would take to drop it 50 % .

    The banks won't be lending , so unless you have cash you can't buy , but you'll be so nervous , you won't want to use your precious cash to buy a house that might drop even further ....

    Individual properties can drop 50 % in severe economic down turns , but you have to be watching , waiting and buying when no one ( or very few ) else is .

    So you need to wait for severe economic down turn . Thats when Sydney will come back .

    Do you know when that's going to happen ?

    I don't , but I'm waiting . That's when I'll be buying in Sydney next .

    Cliff
     
  5. Simon L

    Simon L Investment Property Buyers Agent Business Member

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    When there is a whiff of an interest rate increase the market will stall completely

    When it actually happens a lot of people with massive interest only loans will be in big trouble and nobody will be buying unless they need to. Sellers who are desperate will have no choice.

    Give it 6 - 12 months after that and the market will be ripe for picking :)

    50% is too extreme...most likely 5 - 20% correction across the board depending on which area you're looking at, but if you can find a distressed seller, you'd be able to do much better than that.

    That or pending a major economic downturn/govt. policy change
     
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  6. House

    House Well-Known Member Premium Member

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    Never gonna happen. Disco Stu predicted this more than a decade ago

    image.png

    GFC only caused a slight dent after which it quickly recovered.

    Even during the recession it was pretty meh "According to RP Data CEO Cameron Kusher, Australian capital city house prices peaked in June 1990 at $125,000 and fell 3.2 per cent by the following April, before returning to the peak in July.

    The collapse was far more pronounced in Sydney, Melbourne and Perth. In Sydney, house prices peaked in at a median of $159,000 in June 1990 and fell 8.8 per centto an April 1991 low, before recovering in September.

    Melbourne house prices also peaked in June at $135,000 but took far longer to fall 8.1 per cent, only reaching a low of $124,000 in March 1993, and recovering in December 1996.

    Perth prices fell a whopping 10.3 per cent between a February 1991 high of $92,000 and a December 1991 low, and took a full 12 months to recover."
     
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  7. MTR

    MTR Well-Known Member Premium Member

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    agree, but I don't think we will see interest rate increases in the next 6 months? what makes you think they will rise? curious.
     
  8. MTR

    MTR Well-Known Member Premium Member

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    Its a mistake to look at cycle history/data and expect it to repeat as we are not seeing this happening today.

    MTR:)
     
  9. Simon L

    Simon L Investment Property Buyers Agent Business Member

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    Can't say, don't have a crystal ball :D
    Personally I don't expect rates to rise even in the next 12 months but its naive to assume it won't happen. For those over extended on big IO loans and not paying down any principle, "when" it happens doesn't really make much difference
     
  10. House

    House Well-Known Member Premium Member

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    So it's not going to go down, then up, then down, then up?

    image.jpeg
     
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  11. MTR

    MTR Well-Known Member Premium Member

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    bust after boom, we just don't know when, I would have expected Syd market to have peaked, perhaps it has in various pockets.
     
  12. RetireRich101

    RetireRich101 Well-Known Member

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    ...you've been watch on the side line for that long?
     
  13. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Agreed. Jumped in too late.
     
  14. trinity168

    trinity168 Well-Known Member

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  15. datto

    datto Well-Known Member

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    Sydney will crash when there is a massive earthquake and a great chasm will form on The Great Western Highway at the Mt Druitt turn offs.

    There will be mass confusion till people realise they can enter the Druitt other ways.....which is when prices will start to recover again.
     
  16. Tekoz

    Tekoz Well-Known Member

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    Hm.. yes, mostly the explanations does make sense, It seems in those Eastern Suburbs or Lower North Shore suburbs, it will always in high demand.

    So I guess the most possible suburbs to be in deep trouble are the Southwest, Blacktown, Penrith or somewhere else ?

    I'm open for any advice since I'm having difficulties to find property (house / townhouse) as my PPoR this year under $900 within 20 KM from Sydney CBD.
     
  17. See Change

    See Change Timing Lord Premium Member

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    are you sure about that ??

    In the " recession we had to have " ( I've been around that long ) ,

    Rising interest rates triggered a boom !!!

    Seriously they did .:eek:

    Why you may ask ??

    Well ....

    People were concerned that rates were going to go up higher so everyone was rushing to buy so they could lock their rates in at a " low rate " before they went higher . Given how low rates are at the moment I see no reason why concerns that rates might go higher might not trigger the same effect . BUY NOW , LOCK IN LOW ....

    I'd bought a commercial property ( my practice premises ) and was force to pay 13 % .... YES 13 % .... locked in for three years

    I was laughing when variable commercial rates ended up going up to 18 % around 6 months later ...

    The reality is that until things happen you never really know how the market will react . For every possible action there would be several perfectly logical , but completely contradictory ways the market could react . I mean Sydney peaked a year ago didn't it ?? Sash even started a thread on it so it had to be true ....

    The market always goes past expectations above and below what is logical or reasonable . Accept that and you might get close to predicting what will happen

    If I"d sold in Manly a year ago I'd have 200 K less than I have now . It may well go higher ....

    Cliff
     
    Last edited: 21st Sep, 2016
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  18. datto

    datto Well-Known Member

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    The stock market crash of the late 80s. (which claimed the scalps of Bondy, Skasey ~ cough cough where's my oxygen mask - et al) scared investors outta stocks and into property.

    This contributed to the property boom of the time.

    But it was all short lived. A recession hit hard. The Sydney property market was smashed and crashed taking many years to recover. It must have been a great time for the bargain hunters.
     
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  19. Tekoz

    Tekoz Well-Known Member

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    How big was the drop or the discount rate for the property ?

    I guess expecting for larger than 30% price fall in the well sought after suburbs like in the Sydney Eastern & Lower North Shore is too much ?
     
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  20. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    I don't see Sydney property crashing anytime soon. Reasons:
    1. Cheap credit - lowest IRs ever and not going up in the foreseeable future.
    2. Limited supply - investors over-represented in the market from their usual 30% (OOs being the other 70%) means they buy a property but do not have one to sell like an upgrading OO would.
    3. Volatile share market - conservative investors retreat to the perceived safety of bricks & mortar.
    4. Demand still exceeding supply - so prices continue to rise (9.8% in SYD for 2016 since last year's predictions by many that the boom was over). Under-building approx 50,000 residences in NSW per year.
    5. Aussies' dream of owning their own home still embedded in their culture.
    6. Increasing migrant intake (PM announced today).
    7. Government intervention in the unlikely event that things do start to look bad - governments have a long history of putting stimulus into the property market when they think it necessary - SD relief, FHB grants etc
    ....just to name a few.
     
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