Where are the crashing markets in Sydney?

Discussion in 'Property Market Economics' started by Sackie, 31st Aug, 2018.

Join Australia's most dynamic and respected property investment community
  1. Sackie

    Sackie Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    25,034
    Location:
    Vaucluse, Sydney.
    All this talk about crashing markets on a massive scale, citywide. Sure, I see 5-15% corrections in certain markets, stock types and areas in Sydney. And that's where I see some great opportunities.


    But...
    where (say within 45km of the CBD) are the 30,40,50%ers in corrections? I hear some saying "not yet Leo buddy... but its coming". Perhaps. But keeping the conversation for current times, where are the signs on the wall for entire suburbs... to be completely obliterated? I have been looking sporadically and I haven't seen any yet.

    Surely those who have sold out of the market all their good stock must be somewhat anxious....where is the massive crash? How likely is it? Did we (the liquidating doomers) liquidate prematurely? All the selling/CGT cost.....what have we done?

    I just find it interesting. APRA has already squeezed the life out of a lot of momentum already. Doom and gloom is rife all over the office coolers, tv media, papers and even PC (lol).

    Tick tock, tick tock. Where is the Denty Doom crash so many are eager, hoping, praying, dreaming, salivating to see in Sydney....total markets wiped out... poof!

    is it coming? Just around the corner?

    Perhaps.... don't liquidate your entiiiiire portfolio just yet folks (as some other very clever ppl have).


    Something tells me this cycle is gonna be business as usual folks. Noo....could that really be? Business as usual.....surely not..... Hang on......Now amongst all that..you mean to tell me other places are STILL growing..........OH F***!

    1.JPG


    2.JPG
     
    Last edited: 31st Aug, 2018
    Lions4Eva and Blueskies like this.
  2. Propertunity

    Propertunity Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,476
    Location:
    NSW
    ........and that's all I've seen too. And as you say, I think it creates great opportunities (for buyers), not so much sellers.
     
    Sackie likes this.
  3. Tonibell

    Tonibell Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,107
    Location:
    Sydney
    We sold some - mainly for risk mitigation rather than the expectation of a major crash.

    Still have most of our net worth in Sydney property and still sleeping well at night. That might be because a big crash would not hurt that much now anyway.

    However, agree there is a certain desperation by some for a dramatic wipeout crash to occur.
     
    Dean Collins likes this.
  4. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    6,175
    Location:
    Australia
    I haven't let go of any yet. I will probably need to sell a few to facilitate my transition to early retirement....my problem is working out which ones to let go. They all have diff pros and cons (more pros and hardly any cons).

    Based upon what I'm observing, I too am seeing swings of 5-15% discounts to the peak.
     
    Sackie likes this.
  5. paulF

    paulF Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    2,103
    Location:
    Melbourne
    According to core logic, we've had 11 consecutive month of falls so there is a correction ongoing for sure and as per your post 10-15% is not much but it's only been 11 months so far. This can go on for a very long time...
    PS: I own in Sydney and won't be selling in this cycle for sure
     
    Pete Arendt likes this.
  6. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,125
    Location:
    The beautiful Hills District, Sydney Australia
    We are only 1 year into the IO quota. I dont foresee a crash, but anyone suggesting that lots of borrowers rolling out to P&I wont come under holding cost pressures is kidding themselves... Sydney and Melbourne debt sizes are far larger than elsewhere generally, so I expect both cities to see further effects of the P&I migration for at least 3 - 4 more years.
     
  7. np999

    np999 Well-Known Member

    Joined:
    12th Sep, 2017
    Posts:
    102
    Location:
    sydney
    Another piece of propaganda using the most unreliable invention of statistics called "Median" prices?
    Compare apples with apples.
     
  8. Guest

    Guest Guest

    Even if that is the case, you could easily be looking at another 1-2 years of doom and gloom before the bottom.

    [​IMG]
     
  9. Redom

    Redom Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    4,607
    Location:
    Sydney (Australia Wide)
    I think a large stock of the debt that will need to migrate falls into 2018/2019 and a bit less in 2020. Most loans written post June 2015 would have been under more stringent servicing, so should theoretically have a greater rate of 'options' to maintain IO terms. But yes, more of the 'deleveraging' to come from IO changes in the next couple of years.
     
    Natedog likes this.
  10. Redom

    Redom Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    4,607
    Location:
    Sydney (Australia Wide)
    I'm not sure whether 30-40% predictions are very realistic - its an open forum without names, vested interests, etc. Guest awesome chart generally shows large price falls in Sydney market haven't even come to half the 30-40% figures bandied around. Realistically, that would be chaos and there'd need to be a big economic crash to precipitates that kind of fall to dwelling prices.
     
    Last edited by a moderator: 10th Oct, 2021
    Perthguy likes this.
  11. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,125
    Location:
    The beautiful Hills District, Sydney Australia
    Yes, servicing definitely started becoming more stringent by mid-late 2015, and the new world was in full effect by early 2016 at most lenders, although I think what's often forgotten is that NAB and WBC and CBA held out with reasonably aggressive OFI policies until late 2016/early 2017.

    The effects of that shouldnt be underestimated., given they had a very large chunk of the IO volumes from that period. If you counted out 5 years from those dates we would be looking at 3-4 years from now before that IO volume migrated to P&I. But given CBA and WBC ( but not NAB, who were still using 5 year terms under the Homeside /NAB Broker product suite) wrote a lot of 10 year IO terms right up until late 2016, 10 years from those dates takes us out even further. None of us know how much of CBA and WBC's 2015,16 and 17 volumes were written as 10 year IO terms but I suspect it was decent chunk.... so I'm not as confident as you are that a large % of the migration is complete.

    Best case...2-3 years migration still to come. worst case.... 6,7,8 years for the whole thing to be over with. But it doesnt really matter whether its 2,3 or 5 years because even when it's all done, the average punters ongoing borrowing capacity will remain constrained unless they see large increases in income or start paying down debt, so the completion of the IO to P&I migration isnt really going to herald any changes to the current trend towards corrections in Sydney and Melbourne... In a nutshell, it wont bring any silver bullet solutions to borrowing power or holding power and therefore capital growth cycles.... its just going to bring an end to the correction of Sydney and Melbourne prices and mark the beginning of a long plateau until APRA changes the rules or until debt to income ratios get to where APRA wants them...
     
    Last edited: 31st Aug, 2018
    TheSackedWiggle likes this.
  12. hobartchic

    hobartchic Well-Known Member

    Joined:
    11th Sep, 2017
    Posts:
    1,513
    Location:
    Hobart
    These things take a while to filter through. There is always a lag.

    Job losses added to high debt and interest rates, combined with currency devaluation due to a stronger US economy and dollar are a likely, and dangerous combination. They take a while to hit too.

    Then when things do hit, if people are blissfully ignorant, they seem to happen fast.

    Events in Argentina may lead to a global economic situation that may affect Australia. Though how, I'm not sure.

    Suncorp and Adelaide Bank just announced an increase in interest rates as well.
     
  13. Sackie

    Sackie Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    25,034
    Location:
    Vaucluse, Sydney.
    No arguments from me on that. Just saying so far I don't see any catastrophe .
     
    Last edited by a moderator: 10th Oct, 2021
    craigc, GreyGoat and hobartchic like this.
  14. hobartchic

    hobartchic Well-Known Member

    Joined:
    11th Sep, 2017
    Posts:
    1,513
    Location:
    Hobart
    There's opportunities for people in a financial crisis. Winners and losers whether things continue the way they have, or change.
     
    highlighter, Sackie and GreyGoat like this.
  15. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,125
    Location:
    The beautiful Hills District, Sydney Australia
    I dont see one either, and dont think we will see one. This is just an orderly correction as we see people able to borrow less and speculate less and start to be forced to pay down debt

    The end of Sydney growth cycles as we have become used to them does not mean there will be a catastrophe. It just means the end of Sydney growth cycles as we have become used to them...

    Some people will be caught out, or at least seriously stretched...

    1. Owner occupiers who borrowed 90 or 95% on IO with no B plan when their repayments re-set. If they aren't getting good pay rises and they have been silly enough to furnish the house and the garage with new furniture and appliances and cars and are saddled with lots of debt...they may find the addition of P&I alot to deal with
    2. Investors with immature portfolio's who speculated using IO lending and 3-4% yields.

    Those with mature portfolios or high salaries will feel some pain as their repayments increase, but it will just be some pain..it wont ruin them. They will survive it .

    If people dont start concentrating on paying down debt they will be stuck in investment purgatory for years and years and years...perhaps a decade or more.
     
    Last edited: 31st Aug, 2018
    Sackie, New Town, sumterrence and 2 others like this.
  16. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    6,175
    Location:
    Australia
    What kind of growth rates for the major cap cities do you see from now on? Half of what they've done historically per annum...which is 1-2% above CPI?
     
  17. Gockie

    Gockie Life is good ☺️ Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    14,738
    Location:
    Sydney
    I'm not seeing any job losses.
     
    craigc likes this.
  18. PandS

    PandS Well-Known Member

    Joined:
    14th Feb, 2017
    Posts:
    1,165
    Location:
    NSW
    Hard to predict boom and bust, it turns up whenever it wants when people least expecting it
    once it happened people work backwards to justified their prediction and I told you so and so

    if you can accurately predicting boom and bust you can be very rich but alas not many are getting rich predicting boom and bust so that pretty sum up their reliability :)

    go with the flow and make sure you covered for all kind of scenarios, bust and boom no matter you make money in all market.
     
  19. Silverson

    Silverson Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    1,149
    Location:
    Melbourne
    Fantastic chart mate, thanks for posting, any chart of such for Melbourne?
     
    Last edited by a moderator: 10th Oct, 2021
  20. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,606
    Location:
    Sydney
    This OP is very inexperienced and the same BS is being propagated.

    100% agree...the cycle has just started and the flat lining has just started....there is no floor yet...prices in some parts are selling for for 10-15% less than last year....but then of course the less informed seem to post only past data not current trend data....
    On this I agree but prices can be 20-30% less in some areas...agree about Melbourne and Sydney...if there is not liquidity in those markets things will change.

    Very few people seem to understand the impact of just 4 properties on P&I...
    Lets say each one is I/O at a repayment of 15k per year and from next year they convert to P/I at a rate of 1 per year as a broad brush this what will happen to repayments assuming of course no interest rate increases:

    2018 - 60k
    2019 - 66k
    2020 - 72k
    2021 - 78k
    2022 - 84k

    A increase of 24k in repayments.... :(

    Correct....just amateur hour.....fools and money are parted and fraudster eventually end up getting caught. ;)
     
    berten likes this.