When will Sydney property market going to crash ?

That's true. If you look at the last 3 booms, conditions have been very different. Particularly the late 80's boom where it was high interest rates and high inflation. This time round we have low interest rates and low inflation. Very different.

I blame super partly for this. Many people had the bulk of their savings in super pre-GFC. After they lost 20% to 60% of their value during the crisis they started looking around for a more "secure" investment. I believe that really boosted interest in resi property, which was already strong anyway. Allowing SMSFs to invest in resi property has only added fuel to the fire.

But its all business as usual really. There will be a correction after this boom and a boom after the correction.

 

When will Sydney property market going to crash ?

Never, cos there is no 'Sydney Market', only hundreds of different markets within Sydney.

And I've been hearing the 'Sydney Market' is going to crash almost forever now. That has stopped so many people from making many millions of dollars because they saw (and still see) Sydney as 1 market, and of course if Sydney 'crashes' then all properties are doomed.


All comes back to a thorough education. Its the most underrated aspect of investing which keeps the poor poor, the average average and the rich rich imo. The poor don't know it, the average have heard something about it and the rich swim in it whilst enjoying the benefits of the other 2 categories' ignorance.

My 1.5 cents.

 

The only thing I assert is that a man with an experience will beat a man with an argument every time. If I had listened to people with graphs like this as a reason "it is all going to be different this time" and "growth is unsustainable" and others with various bubble and crash theories, I would not have made a 7 figure sum, and rising, out of my own personal property holdings.

 

That is fine, you have made a lot of money from this boom, and of course do not want to entertain the possibility that things will ever change.

The same kinds of warnings have been made during other booms and asset bubbles, and almost always turn out to be accurate. The timing is near impossible to predict with these things - someone like steve keen obviously called it way too early.

Take the mining boom in Australia for example, there were many who started to believe it would not end, and that 'this time it's different'. China will push demand and prices higher for the next 50 years, these are finite resources, this is a new higher, sustainable level for prices etc. etc.

We saw what happened, the same thing which happens to all booms one way or another - it ended and prices reverted towards long term mean.

Other examples are property in many parts of the US in 2008, property in Japan in the 80s and $150/barrel oil.

It is the same with credit growth and median property prices in this country. This boom/bubble will end, there is no question about it, the million-dollar question is when and how.

It may not seem like a bubble for us here living in the midst of it, as it has gone on for so long, and prices have only experienced modest corrections for the past 20 years before charging higher. That does not mean it will never end, it means this is a long cycle - and my personal understanding is that this boom has been fuelled by (amongst other things): 1. falling interest rates 2. banks willingness to lend 3. persistent population growth and immigration 4. foreign buyers 5. negative gearing

For sure, land is finite, and demand for property in capital cities will always be high, but on the whole prices are on an unsustainable path.

 

I agree. There have been bubble predictions for Australia for at least 10 years. Imagine if 10 years ago you stopped investing, waiting for the impending crash of 40%, 50%, 120% or whatever the doomsayers were predicting. How much money would you have lost? Personally I have invested in properties in the last 10 years and one of those was sold for a very nice profit. My losses would be over $500k if I had listened to the bubble-predictors.

Hype about the crash heated up in 2013 and 2014. Example: Here’s how the housing bubble bursts Here’s how the housing bubble bursts

Imagine if Sydney investors stopped buying in 2013, waiting for the burst? They would have lost so much money. It's all a bit ridiculous really.

 

Somewhat of an oxymoron.

And also property is not bought by many savvy investors 'on a whole' basis but rather on the unique merits of each deal which is not necessarily joined to how property 'as a whole' will perform.


What is a lot more accurate to say in my opinion is that while many punters may end up with less than great property purchases over the next few years, there is another segment of investors who would have done very well for themselves and changes to market conditions will be negligible for them.

 

If prices go up by 3% that's $27,000 on 900k. Sounds very hard to save hard enough (for most incomes)to keep up.

 

and the boom before that, and the one before that....

No of course, as a property owner I have an interest in the market being sustained BUT I am quite happy to listen to and entertain a reasoned argument that has a contrary view.

There are times when it was not the right time to be buying RE. I stopped when IRs were 18% for a couple of years.

Booms never last just like busts never last - it is just the same ole same ole cycle.

That's because it is not a bubble. 40-50% CG over last 3 years for Sydney is not a bubble - it is just normal behavior. It is nothing new. It has happened before accompanied by the same dire warnings from the D&Gers.

Anyway, you go back to your graphs and charts and I'll go back to making money.

 

I agree and that's the upside for bne

 

There hasn't been a bust in 20 years, this is the point! And this is the appropriate thread to discuss it.

At no point have I said, don't invest, sit on the sidelines or anything like that. I'm just looking at the facts.

If your investment philosophy is to ignore all facts and just go all in, that's fine. Perhaps we have a different approach to recognising and managing risk.

I invest in shares and property - as I'm not keen on 2.5% return on cash, but I also see the massive excesses which have built up in the property market. So I'll have a plan in place for if and when prices do fall substantially

 

I call 'bust' for the long flat period in SYD from the peak in 2003 until the GFC in 2008 when the government introduced stimulus into the market with FHB grants, SD relief etc.

Bear in mind the peak in 2003 only occurred after 13 years of unprecedented CG beginning in the early 1990's.

 

@Junior Yes, that's what I mean, finally someone post the right indicator from trusted & official source.

Too much debt is dangerous for the financial future, who is going to bail-out the big 4 banks in Australia when people cannot afford to pay the mortgage anymore ?

 

Yes i remember living in Cairns in 2007/8 reading about the long stagnation of the sydney market.
That's a more likely scenario than a decline imo.

 

Stagnation of property prices would be a good outcome.

Coupled with some inflation and slightly higher rates.....inflate our way to lower debt levels.

 

And this is why so many are looking at Brisbane, they expect that Sydney will slow down for a while after this recent boom.
That's the usual cycle.

 

That's fine. I have made money doing this too. I cashed up for the Perth property collapse and snapped up an absolute bargain. Reval should be December, so we will see how I went

I wouldn't put too much stock in a big crash though. As a plan b, consider preparing for a soft landing. Personally for Sydney, I will be watching for years of low growth with an aim to be ready to jump in when the market shows some signs of life. In the meantime I will be playing in other markets. There is more to property investing than Sydney

If the forces that drove these area’s rents and prices down are anything to go by, Sydney’s housing boom is better positioned to end in a soft landing, rather than a hard one.
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http://www.dailytelegraph.com.au/re...t/news-story/3d6492972780d3fb40df9ec813289d07

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from the RBA announcement;

"Growth in lending for housing has slowed over the past year. Turnover in the housing market has declined. The rate of increase in housing prices is lower than it was a year ago, although some markets have strengthened recently. Considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in rents is the slowest for some decades."

 

I notice the irrational exuberance with some of the Sydney posters on this forum. Some of them genuinely believe that 595k for 1 bedroom apartments are examples of affordability. The Sydney market will eventually slow down...just don't know when!

 

That 595k appartment wont go down much if at all, if its in a hugely in demand location, long term in demand stock, and close enough to the Sydney CBD. That's my opinion. Just wont happen.

You can take any 2bed unit in North Bondi for example, where the average is around 850k or more now. You put that same unit on the market for 700k now, tomorrow, next month or whenever and it will be snapped up faster than you can say 'what happened!'. The demand at the price point of 700k would be just way too strong for it to stay at that level, regardless of what the market is doing (barring some ww3 type event). Its an in demand area, in demand stock with very strong fundamentals.

Australia is becoming a wealthier and wealthier nation drawing the hard working, the wealthy and the educated here. They are more than willing to buy our properties. Of course there will be dips and plateaus and all the rest, but for areas with very high demand and strong fundamentals, I don't see massive drops in value there.

The 'problem' is Australia is just too dam great a country where everyone wants to come and live. And Sydney is on many people's radar. Those who can afford it, will come and buy. Personally I prefer Brisbane.

Just my opinion.

 

And if you'd lived and invested in Ireland leading up to 2007 you'd be bankrupt or in serious trouble still...

And if you'd lived and invested in the US... you could have been wiped out.

Property in Australia is the ultimate in "past performance does not guarantee future results".

Being born at the right time in history to have equity at the right time and be able to borrow money on the cheap during the greatest bubble in housing prices in our country isn't the same as being a savvy investor...

It's weird how people don't understand the past. When Howard cut CGT it kicked off a massive bubble as money flowed into property. The combination of NG and CGT discount was too lucrative to ignore.

This is the reality... yet people who happened to own back then or bought while the bubble was still growing seem to think they actually did something clever. They took a risk. They did the hard yards.

It's a particular kind of madness to think this is a repeatable phenomenon... as though starting *now* would yield the same results. That $100K property going to $700K will somehow be repeated so buy that $700K property and it'll be worth $4.9 million!

And of course, at that point if you're starting your "investment journey" you should buy that $4.9 million dollar property because it'll be worth $34.3 million before long.

Crazy.