NSW Who wished they purchased in Sydney

Got my first investment last year in south west had 110 k equity to play with only 6 months after purchase tried to go again in Sydney was too crazy tho got another 2 in Brisbane some good buying imo. I would of preferred to buy in Sydney but its too hot of a market at the moment

 

Perhaps more to the point???

 

Another one to throw my hat into the 'I wish we'd bought in Sydney' ring. I remember reading an article 5 years or so ago, recommending apartments in Sydney. We had two properties in Victoria by then, and my wife had put the fear of land tax into me! I discussed buying in Sydney with her, but she was dead set against buying interstate - it fell into the 'too hard' basket. We've subsequently bought a couple of properties in Brisbane, so go figure! For what it's worth, she wanted to buy in IP a few years after we arrived in Oz, in the early 2000's. Instead I went with managed funds and shares (which took years to recover from when we'd bought them). Many lessons to learn (and I'm clearly a slow learner)!

 

Hi Euro

I've also wondered about the impact of these changes and as i've said many times I tend to ignore fundamentals ( to a large degree ) and it's easy for me to put this into that category , but all of the points you raise are quite valid , so I put my thinking hat on.

Logic says that is if there is less money available Brisbane will move up slower but

Points I'd raise are

• Brisbane is a smaller market than sydney and prices are cheaper so we dont need as much fuel to heat the market up to the same extent that sydney has moved
• Australians are better savers now than they were prior to the GFC so there are more people out there with more cash available to help fund any gaps in LVR funding.
• It is a cycle . The property market in australia doesn't all go up at the same time . Historically Sydney moves up first , then Melbourne , then .....Brisbane .Sydney has boomed , Melbourne is moving up strongly .
• In the last boom most of the investors I knew in Sydney , looked north after sydney boomed .
• Sydney has boomed and there is a wide spread perception that it is getting close to the top . Investors have an appetite to make more money and are looking outside of Sydney . Outside the forum I have friends who want to know where we're investing in Brisbane .
• Most investors only had 1-3 IP's and won't be significantly impacted by the APRA changes . My daughter signed a contract for her first today and is already planning how much more she has to save ( let alone draw down equity ) to buy another assuming this one goes though . She bought a cheapie so she already has some money left over from her savings.
• I may be wrong , but I'd guess that the majority of people don't reach their maximum borrow capacity . I think more will
• Given the publicity about property investing , I expect the momentum around property investing to continue to build up . People will tighten their belts and make sacrifices in-order to be able to afford that IP . If they go in with bigger buffers this is good for long term stability of the market
• there is a large supply of units coming on in Brisbane , but most people I know aren't looking at that market . Where we're looking there are low vacancy rates and the people there couldn't afford to rent an inner city unit , just a 40-50 year old 3/1/1 and there not building too many of those any more . Most people on the forum are buying those sort of properties or more commonly houses closer to the city , which are much cheaper than their Sydney equivalents
• I'd already started reseaching where I was going to buy after Brisbane , talking to agents , checking out suburbs . I was planing on doing this once we'd finished in Brisbane , but with APRA changes I'm probably going to change our approach . Because the changes will limit how much I can buy ( we have multiple properties ) , I'm going to be more selective about where I buy and target the market I think will move next ( I ignore Melbourne ... ) so the end result is that we're probably going to buy more in Brisbane than we otherwise would have . I'll make my ( well , the banks ) money work harder in the short term , take a profit and then move on elsewhere and follow the cycle .
• Since we started buying in Brisbane two months ago I'm seeing the market change . There are still good deals around , but not as many as there were . we've seen properties that were on the market for a while because they were over priced sell as the market has started moving . I know closer to the city it's hotter than that .

Cliff

 

We have 2 in Randwick also IP's in Eastlakes Mascot Rosebery....amazing what has been been happening over the last couple years!

No one wanted to know about Mascot & Eastlakes 8 years ago!

 

And from the same article, check out these medians too... only 3 areas less than 1 mill for houses

 

Yea, the apra changes will affect investor suburbs in Sydney morr than Brisbane.

 

Plenty of the prestige suburbs (but they march to the beat of their own drum).

 

We looked at a couple of properties around 4 years ago in Castle Hill , within 800m of the Showground rd station . Price was around 800k. But we couldnt find anything that suited our family at the time. We both felt quite strongly that a future rezoning may happen and perhaps double the prices - not quadruple !
The same road / area featured in a SMH article yesterday - 21 properties trying to sell to a developer and each hoping to make 3 to 3.5 million.
We bought a block of land instead , its gone up between 150k and 200k...not quite as good!

 

My father's house in Castle Hill (my Mum passed in Jan this year) is a block away from that group of 21 properties listed together. He and his neighbours are already talking about doing something similar but he's not too interested. He says "what would I do with a couple of million dollars anyway"... Nice problem to have...

Cheers,
Michael

 

I dont disagree this is possible- it's why i said one of the consequences of the APRA changes may be a wave of investors who may have planned to invest in Sydney but are now unable to, looking elsewhere. But Brisbane is in many ways like Melbourne - massive amount of oversupply to come online soon - but without the population growth to absorb it. So if it does have a run, it wont be as aggressive or as pronounced as Sydney. I hope it does. I have properties there... but I have been hearing every man and his dog talk up Brisbane for the best part of 2 years in the lowest rate environment ever, and it hasnt moved. With finance being far more difficult now, I struggle to see how it will suddenly pop...unless it's Sydney money looking for a new home .

I think we should also allow for the fact that past "cycles" being relied upon as predictions or indicators of future performance unfolded in periods of unconstrained credit expansion. I'm not convinced the same cycles can occur when such an important ingredient has changed.

But really, this is quite new for everyone so to be honest, while I THINK it should spell the end of big growth for a while, I would concede it very well may also have an unintended consequence of causing Adelaide, Brisbane and Perth to go on a run. Because it's the first serious prudential intervention since the advent of the era /environment that we have all formed our various strategies and assumptions upon - double income households, the introduction of high LVR securitised funding, deregulation, LMI etc... all of which opened up many many many ways of doing things, we dont really know what will happen. Right now it appears the credit taps being choked off will have X impact, but APRA may take even more aggressive steps or these raft of changes may be all that we see.... so I think the next 6-12 months will be telling.

 

I for one am very interested to see how long this Syd boom has to run, started in late 2012, many saying it will tank 2016-2017, if this happens we have a 5 year boom. Same as what happened in Perth during 2001-2006, different scenario we had the mining boom driving this market, where residential and commercial property sky rocketed.

 

I agree, there are too many other negative factors to consider, 1 big one you mentioned.

Brissy cycle wont go anywhere close or as long as the Syd boom, Syd currently been rising for around 3 years?

Brissy was predicted to boom 2 years ago, but perhaps some pockets have risen but not terribly exciting from what I am reading. Lots of talk, if anyone can share double digit gains over the last 6 months I am all ears.

 

That is what you said few years ago... Generally speaking, Sydney properties made lot more than 100k in last few years. Without many strings attached too.

 

Exactly. No one can be sure what will next but I remember hearing the same argument about Sydney a few years ago, there would be a lot more regret if people took that advice.

 

No point regretting about the past.. We have two in Sydney and had funds to buy one more last year... We missed out... But lesson learnt.. When you have the resources and your instinct and research says buy then just buy...

We are now looking to invest in Central Coast, newcastle or brisbane... Just finalising macro level research before selecting one area and going with it.

 

We had a mini boom in certain pockets of Sydney in 2010/2011. I placed my Redfern apartment for auction end of 2011 thinking that was the peak or good time to sell. It was passed in at $520k. I would happy to take $540k off market but that didn't happen, so I kept it.

Fast track 4 years to today, this apartment is now worth $800k...I didn't have a crystal ball or was tuned to guru's at the time, it was my luck that I accidentally kept it.

 

We have one in North Ryde and cannot quite understand what is going on there.

Roseville is the one that really stands out for me - 34% growth to give a median of $2.5M ! That is some serious gains.

I live near Roseville and drive through it every day and like to think that I have my ear to the ground on real estate matters - however, I have not had any indication that something like this was going on.

Wonder if there was some re-zoning near the train station to trigger this.

 

am impressed with your portfolio. we were thinking about buying NRyde in 2008 as ppor. House was about 650k with good plot of land and average interior, but we couldn't afford then.

We can now afford it, however it's gone $1.5M for the same house ...

I am now saving up for the $1.5M house...see you in 7 years

 

That sounds very much like the one got - but not our PPOR) and we put a granny flat in the yard.
Just to make you feel really bad - I'll tell you the story of that property.

When we purchased in June 2008 at the height of the GFC and just before the train line opened and we were the only ones at the open house - the agent told us "I'll sell this for you for over $1M in 5 years time" and we all had a good laugh at the over the top sales speil.

Around 3 years later the house 2 doors up sold for 15% more than ours and we started doing our sums. Given how negatively geared them placed was (around 3.5% gross yield and 8.5% interest rates) it was probably break even and starting to have a "lifestyle impact" given we had just started copping two sets of school fees.

After a long period of pondering we decided to invest further and put a granny flat on it - started as a DIY disaster (where I learnt about "levels" the hard way) but got rescued and finished up with a nice product where the land slope lets the front house look over the top of it - pictures here http://www.grannyflatsydney.com.au/north-ryde/

The granny flat and the lower interest rates stopped the cash drain and allowed us to keep it when we could so easily have sold.

We stayed in touch with the agent (our leasing agent also) and the conversation about the $1M selling price has been recalled a couple of times.

At the start of the year we went to an auction a few doors down - nicely done up and sold for $1.65M and I was in absolute shock, had no idea those type of prices were possible there. We had diverted attention elsewhere and lost touch quickly

After that auction I was talking to the neighbours who had just purchase for $1.3M but had lodged plans for a KDR - again a bit of shock.

I thought - if we can get the $1.3M then we should sell.

So we phone back our agent friend and said - so what do you reckon ? He likes the granny flat, the yield and the general setup and gave as an estimate that sent us into shock - but only if we were to style the place to the max.

Unfortunately we have 2 sets of tennant on a lease until next January - which would stop the styling needed. There is the problem of substantial CGT.

@sash reckons this is why you are better off getting a few cheaper properties so you can manage the CGT by realising it in increments. But first you have to make the CG.