When will Sydney property market going to crash ?

Outside of regular property cycle ebbs and flows, I've been looking to recession-proof my portfolio. This basically involves opening another tab on my property medga-spreadaheet and running calcs assuming a worst-case scenario. Can I still hold my portfolio through 2 years of this? Yes/no. What if I lose my job and am.unemployed for 6 months? Yes/no. 12 months? Yes/no. Etc.

I do believe recession will be upon Australia in about a year or two. Right when the bulk of thr construction boom ends. But recession doesnt scare me anymore, so long as I can hold down the portfolio 'fort' for a couple years, during one.l

What effect this will have on property markets I have no idea. Was too young when the last recession hit (a whopping 24.5 years ago!) To recall property in any meaningful way. But with excess apartments glutting to market around 2017-18, Chinese money drying up, possible recession, it could be smart to save ones pennies now and go shopping in the bargain basements of some suburbs around this time. Might actually be some good buying. That is, of course, if the banks will gove you a loan at that point!

 

Use your equity for a line of credit now. That way you can still buy when it hits

 

It's classified mate...

 

Exactly. I've done my equity extractions and have it quarantined across/within several offset accounts. Ready to strike when the time comes

 

There's no secrets on this forum @Tekoz

 

Look at Perth. In some areas prices have dropped more than 30% from peak.

We have CGT concessions, record low interest rates, negative gearing and all the other tax lurks, perks and concessions. None of those have saved the Perth property market.

Sorta suggests the "drivers" that are so frequently cited are actually the drivers after all...

 

The fundamentals do drive / change the market , but my observation is that how changing fundamentals affect the market will change over time and over specific markets .

What I'm more interested is technical analysis of the market first up in terms of price movement , yields initially then other factors like diminishing supply , decreasing time on the market etc .

Cliff

 

True. Just as you can't claim that supply/demand drives prices all the time, you can't claim the tax environment is the sole driver of prices (as claimed in the post I was responding to). Markets are driven by supply/demand, tax environment, and irrational behaviour (herd behaviour and fear/greed). Markets are complex and difficult to predict and are not driven by a single factor.

So what do you thing the Sydney "market" will look like as it peaks? This is probably down to individual areas though. I know the area where I sold in Melbourne started declining in price after I sold but the area next to that has boomed over the same timeframe.

 

Perthguy

think it's very hard to predict that fine detail . I had no idea that manly was going to have the strongest growth in Sydney in units last year when I bought two units there five years ago ..... , but I did think it was likely to do well .

The best I think I can do is pick areas that are likely to do well in the medium term . If that means I sit on the side lines for long periods of time , as I have on occasions I'm happy to do that . I don't profess to be able to pick " the best 10 performing suburbs for 2017-18 " . That's a mugs game so I'll leave that to the "experts " , though IMHO , the mugs are the ones who listen to them .

All I want to do is pick good times to buy , and when I pick those times , to pick suburbs that are likely to do well . That and leverage will get me where I want .

Cliff

 

How is that possible ?
Unless you are council member or have some access to property data then yes, you can reveal the owner for the property.

 

I'm

I'm saying you shouldn't hold secrets from us.

 

Perth no longer has cheap credit...

Cheap credit requires access which in most cases requires a job. The end of mining has reduced access.

When you really get down to it, the sole determinate of price is volume of credit. Source is irrelevant - OO loans, I/O loans, SMSFs, legal foreign money, illegal foreign money, whatever.

So long as that credit volume is going up, prices go up in aggregate. When it falls, prices fall.

Perth has falling credit volume. It has sloshed away to other cities or simply left entirely.

Look at Vancouver and their collapse right now.

Every "driver" people said (immigrants, good schools, awesome hot chips, etc) were all b.s.

The only driver that mattered was cheap credit.

Restrict that and their market is crashing.

Australia is the same. And credit restriction can develop naturally - prices outstrip wages and the pool of possible borrowers shrinks. Total credit out bidding on a weekend declines and so do prices.

Things like "global city" and the like are quickly revealed to be lies. It is always credit availability. Cheap credit creates expensive homes.

NG and CGT certainly help it along but they are really second-degree drivers - they ultimately only push demand for credit which then loops back around to the main driver - credit volumes.

 

Nonsense.

Volume of credit is simply a measure of demand.

As long as demand is going up, prices go up in aggregate. When it falls, prices fall. Credit volume is a measure of demand, not a driver of prices.

Perth has falling demand. The demand left when the people left. It went to Melbourne and Sydney which is also where the people went. It is demand that dried up, not cheap credit. The cheap credit is still there, it is just being used on Melbourne, Sydney and to a lesser extent Brisbane. This is what has driven prices down.

 

Poor old Perth. Its still growing at 1.3% per year. There is an incredible oversupply of units but its not the end of the world.

Not sure if many people have noticed but mining has surged this year. No,not to the levels of 2012 but still a big turn around from the start of the year.

Unemployment has seemed to max out at around 6%, wages have dropped and it's not great but not SA levels either.

 

thermal coal prices have almost went up 50% and coking coal prices have more than doubled this year, on the back of China trying to slim down their coal production, introducing a 276day work days a year industry wide ruling, so WA and QLD have enjoyed the economic benefits of that for a bit.
The infrastructure stimulus they did at the start of the year has helped stoke demand too.

But currently strict rules have been placed again to contain their once again booming property market post stimulus which will ultimately translate to a drop in steel demand and hence coal demand and prices. Beijing is also likely to reverse the 276 work day ruling soon to balance out production and supply

So there are still headwinds facing the perth mining based industry and property markets there.

 

Friend's son employed in mining in WA for many years.

FIFO from Brisbane. The plane is half full of miners on the trips to Perth. And many have come from previous flights within Qld.

So even a pick up in mining activity is no guarantee of workers living in Perth, they can come from any part of Australia.
Marg

 

Here are the latest stats, I posted on another thread including all stats for all States, ending September 2016.

The Perth property market is still in its slump phase with a significant oversupply of properties for sale and values still falling.

Similarly the oversupply of rental properties in Perth is causing rents to fall.

There is still some considerable downside to the Perth market as it works its way through the excesses of the mining boom:

 

We used to have 1500 people moving to WA per week, we now have 150 people. Massive difference.

 

I heard that quote but I think its being a bit flippant.

According to ABS, its still around 500 per week...well to March anyways

3101.0 - Australian Demographic Statistics, Mar 2016


...apologies for the super threadjack

 

don't know, just heard it on the news last night