anyone buying in sydney at the moment?

[alpina]

just wondering if people are taking the cautious approach or still buying at the moment in the sydney market? if you are, are you looking at units or houses?

personally, we are looking at the inner city and eastern suburbs and would be comfortable purchasing in the $400-450k price pt. anyone have a view on this? is there potential on those older syle studio layouts or should we concentrate on 2 bedders?

I know its important to find one with a pt of difference but sadly most the developments in the city all look the same and all share the same advantages.

following a previous thread, i hope im not asking for too much disclosure?

boyfriend and i keen to move on to property #2 as our salary situation has improved unexpectedly but want to do it for the right reasons

julie

 

[Jamie]

Hi alpina,

Have you considered purchasing outside of Sydney?

Remember, there are different property cycles operating in different cities, and the fact (or perception) that one particular market is softening/weakening/(insert appropriate verb here) does not mean that this is the case nationally. Just because you may be reticent to invest in Sydney at the moment doesnt mean this should put you off investing in the near future in general. Some people, including many on the forum, are making great returns in other capital cities and regional centres.

Remember, when most media commentators speak about "the property market", they are essentially referring to "the Sydney property market". There are many other areas to invest your money should you feel uncomfortable with the Sydney market right now.

Best Wishes,

Jamie.

 

[lawsjs]

Conventional wisdom says sell. Probably therefore a very good time to buy. Though potentially even better in a year or so.

 

[Lotana]

I think most people would feel more comfortable buying their first IP or two in the area they know best.

Investing for growth? Then Sydney market is a buyers market at the moment, good time to buy. Plenty of RE passed in at end-of-year auctions reduced to make really attractive buys.

Units? $500K should buy you a nice new 2 br in city fringe areas. Rental for new units is about 5% at the moment. With a little help from our friends at ATO (depreciation) these units are cashflow-positive after tax with a good prospect of capital growth.

For the same money you can buy a townhouse in Matraville (beach-side suburb to the east of the city) or a terrace in Redfern (city fringe lower socio-economic area). If you are prepared to wait - on my opinion a terrace in Redfern will do the best out of 3 options mentioned above.

Say cheese

Lotana

 

[geoffw]

Alpina,

"Buying in Sydney" is a huge question. That ranges from 1BR units in WoopWoop to mansions in the North Shore.

There are opinions that some classes of property will do well, some will not do very well- no matter what the city.

Michael Yarney (a Melbourne property developer and a contributor to the forum) offers good advice in his newletter. I don't know if past copies are on the web- but you can get a copy of the newsletter by subscribing to [email protected]

Peter Spann, who gives Wealth seimanrs, gave some opinions in a recent "Property Update" seminar- I've summarised some of that in the thread http://www.somersoft.com/forums/showthread.php?s=&threadid=744

That's just some ideas- I am not a Sydney investor.

 

[Rolf Latham]

Hiya

Still plenty of my clients buying, BUT a little more fussy than 6 months ago. Many of the near CBD units that were in demand a few months back are less popular.

More and more Im seeing land content deals, townhouses, or small block old established units in beachside or near water suburbs.

I feel the market has become negotiable again.

Ta

Rolf

 

[alpina]

Lotana,

Interesting you should mention redfern?

what does everyone think of the long term prospects of redfern and newtown?

julie

 

[Lotana]

Hi Alpina,

I think it is really simple. For those who are prepared to wait inner city "dump" suburbs will bring significant rewards. Location is the king. It is extremely unlikely that the CBD will move away Newtown though has already gone through the roof. I buy in Redfern and in Waterloo. These suburbs have height limits for new developments and it is unlikely there will be an oversupply of units in the medium term run. I especially like "discounted" projects in the area - something that is next to a really ugly pub, to high-rise housing commission buildings etc. I think people tend to overestimate negative factors (same phenomenon is well known to share market investors). Can you imagine how much these units will gain when a pub side will be bought by a developer or when the government decides that state housing ghettoes shall be replaced with community housing?

Terraces in these areas are good for redevelopment. Figures at a glance: purchase price $350, construction cost $200, interest $30, sell price $680, profit $100.

Say cheese

Lotana

 

[investor]

Hi alpina

I'm on a similar wavelength with lotana however I consider buying next to commision houses or an ugly pub and waiting for circumstances to change more speculation and gambling rather than investing, sorry lotana.

At the moment I would not be considering units in the city at all, maybe in a couple of years but not now. The market is still strong and only just softening a bit. This softening i believe will continue especially in the inner city unit market.

If you were to buy now I would consider a terrace in the following areas :
Newtown
Erskinville
Surry Hills
Darlinhurst
Darlington
Chippendale and maybe just maybe
East Redfern

Again buy with potential to renovate so you can get an immediate cap gain and make sure it has parking or at least potential for offstreet parking that's important.

Regards

PS. I think u are mistaken about new developments in waterloo lotana. Have u checked out the new developments going up in victoria park and also the massive meriton complex in waterloo there are more units going up there than there are people.

 

[Lotana]

Hi Investor,

"I'm on a similar wavelength with lotana however I consider buying next to commision houses or an ugly pub and waiting for circumstances to change more speculation and gambling rather than investing, sorry lotana."

I think there is no gamble at all. To me it is clear that with being such close to the CBD and land prices going up, Redfern and Waterloo will undertake a significant change within the next 5-10 years. "The ugly pub" will be sold to a property developer, housing commission towers will be demolished (well give it a bit more than 10 years perhaps). I think I buy on fundamentals (location).

"f you were to buy now I would consider a terrace"

100% on your side. I missed one in Zetland a few months ago.

"PS. I think u are mistaken about new developments in waterloo lotana. Have u checked out the new developments going up in victoria park and also the massive meriton complex in waterloo there are more units going up there than there are people."

There are other developments in Waterloo by less known vendors (Meriton and other large players charge a premium for their brand). As a guide, a 2br 2bath 2 storey unit may cost $540 in Meriton's development, but only $380 in a smaller development (same suburb). Its a HUGE difference!

P.S. Investor, I enjoy reading your posts. Please keep pointing out my mistakes as you see them - we are all learning, and that's the most important outcome.

Say cheese

Lotana

 

[investor]

Hi Lotana

I had a feeling you were going to reply to my post

I agree with u.

Alexandria is not too bad either

Regards

 

[lawsjs]

The rental return is going to awful in redfern in the next couple of years. Moore Park is going to be scary. I just let my $1.05m redfern terrace for 660/week. Not the best return in the world and its only going to get worse!

 

[summertime]

Hope u havnt got too many of these Jeremy.
Quite a low yield.Are the USA investments(returns) going a long way toward holding these Sydney properties?

Steve

 

[lawsjs]

No, my US properties are the only things that are keeping my restaurant alive, my aussie properties are all basically neutral.

 

[Ajax]

Must be a large terrace for $1.05m in Redfern Lawsj. What street is it in?

I bought in East Redfern in 1993 for 155k now worth about 500k. Rental is $350/week (had to reduce this from $400/week about a year ago).

I can't tell you the number of derogatory comments I got when I bought here...ie I don't know any one of our uni friends who would buy here...nice place for an axe murderer to live...great if the aboriginals would move out.

Every time I look (about once every 3 months) the suburb looks better. I have housing commission flats on the next block to my property. That hasn't detracted too much from any capital gains.

There are some very large terraces in George and Pitt Street that I have always liked. Standard 3 storey terraces-drawing room, dining room, fireplaces, ceiling rosettas, unpolished kauri floorboards, wooden staircases with fancy wooden railings, five or six bedrooms. I looked at one in Pitt Street in 1995 (which sold for 309k). Done up would sell for 900k+ now.

I'm anticipating further substantial gains for Redfern because of its proximity to the city and land value. Not sure how all the new apartments will affect prices. I suspect there are two distinct markets (units and houses) and the land value with terrace houses will differentiate them from units.

Ajax

 

[lawsjs]

Pitt St properties done up (last one anyway) got 1.5, and that was some time ago. Those are MASSIVE. Mine is in Marriott St. Bought it when I was looking for a light shop and got lost!I liked the street!

My terrace was trashed in the hail storm and it took 2 years to reno. Nearly busted me. Still in court with builder over that one. Its now quite nice and was Mcgraths 'property of the month' last month. Chicks dig it anyway

Recently bought a warehouse apt in redfern, which I am sort of slowly moving into. I have been told that the TNT towers are going to be units as well. Whole area is going gangbusters as you said. I even like the eveliegh side - where _very_ scary terraces are selling for $500k+

This area (ersko and waterloo also) are my particular favourites in Sydney. Hang in there and we will all be well rewarded.

On an historical level, the area has gone full circle. In the mid 1800's Redfern was THE place for the wealthy merchants to live. The scars in the golf course at Moore Park are there because the 'plain' at redfern was a swamp, and soil was removed to fill in the lake/swamp areas. Hugely expensive earthworks and equally huge properties. For example and to explain Pitt St to people: My mother and I (as is our want) wandered past a property being reno'd in Pitt st and asked to go and have a look. A VERY good exercise - most people are sooo happy to 'show off'. This 5 storey paddo terrace style property had a full size billiard room in the roof, and that was the 'small' room. The 'stables' at the back (fronting George St.) where being converted into 4 (nice) 3br townhouses. Now THAT is a dual occ par excellence! The nice part of that story is that the builders(owners) were what once would have been very 'low' class east european immigrants and they are now very, very wealthy. They were so happy it was amazing!

I have just bought in the 'Watertower' block in Redfern. Its a 160sqm 2br in the original (and apparantly it is quite 'famous') warehouse conversion (1983) in Sydney. It has some drawbacks, but interestingly people in there like it but have had so little CG in the last 5 years in comparison to anywhere else, that they are selling now to get 'some' CG. I bought Marriott St in 97 for 390k (set a record for the street, as it was considered a 'bad' area) and after spending 200k on the reno its worth as I said 1.05m. Good CG there, not the best I've had but I did over capitalise. These units on the other hand - and they are no where near a meriton job, were about 300k in 97. I just paid 480k. Agents (except the guy selling it of course) think I bought in an awful area and that is why the price is so 'bad.'

Now, to ask a rhetorical question, why is it that I think the area is soooo good???? Particularly any bit of it with 'character' I am totally convinced we will take a bit of a hit in the short term because of all these 'spam can' properties. 5 years time though, ours (the 'interesting' ones) will be very highly sort after. MB thinks I am gifted at picking good suburbs, I don't think I am and even if I am I don't think its rocket science after all, but I have yet to be proved wrong.....

It would be a very brave person who would say you are wrong Ajax! And if they do, ask if they have anything in Redfern that they would like to sell to you, just to help them cash in before the market crashes

 

[investor]

Originally posted by Ajax

I can't tell you the number of derogatory comments I got when I bought here...ie I don't know any one of our uni friends who would buy here...nice place for an axe murderer to live...great if the aboriginals would move out.

Every time I look (about once every 3 months) the suburb looks better. I have housing commission flats on the next block to my property. That hasn't detracted too much from any capital gains.

Hi Ajax

You have to ask yourself why such an area has gained so much.

The answer is that woollahra and paddington have gained even more forcing owner occupiers and investors to purchase in the less desirable areas namingly surry hills and even worse redfern.

Redfern had, has and will always have the housing commission stigma there will always be riots in the waterloo redfern area, and you know what riots I am talking about. The agents deceptively have created a new suburb out of nowhere and called it East Redfern to try and say that it is away from those notorious streets however don't be fooled would u like to live in Redfern ?

I for one wouldn't, even taxi drivers don't like driving through that suburb at night and refuse to take fares.

Also don't expect the situation to change, those hundreds and hundreds of housing commission units and houses are not going to go anywhere.

Now I have to admit that Redfern has seen good growth but where is it all going to go once Paddington, Darlinghurst and even Woollahra become more affordable. The first suburb to loose it's lusture if it had any at all will be Redfern.

As an investor u have to still think as an owner occupier. Why should I live in Redfern and not in say Paddington ?
Why should I pay $450 a week rent in redfern when I can get the same terrace for $500 in Paddington, hence the rentals of Redfern decrease and as soon as investors wake up to this so will the prices. It's not like u are getting 10% returns for buying in a less desirable area the returs in Redfern are only 3.5%.

U have to ask yourself this.

Would u pay 600 THOUSAND DOLLARS to buy and LIVE in a TERRACE in REDFERN ?

Would u pay 600 THOUSAND DOLLARS to buy and rent a TERRACE in REDFERN with 3.5% returns when u can get those returns in almost any and more desirable suburb in Sydney ?

If your answer is NO and if u are truthful about it, it should be, then why are u still looking at the area. Wait for the prices to stabilise and even fall. For u to buy in this notorious suburb shouldn't you get at least an 8% return ?

Just something to think about. Just like the dogs in the share market boom were the first to suffer so will those in the property boom and if you have bought too high or overcapitalized in those less desirable suburbs it will be some time before u see your money back. If I was u I would stay away from Redfern for now. Besides there is a bloody good chance that u will get mugged.


Regards

 

[investor]

Originally posted by lawsjs


It would be a very brave person who would say you are wrong Ajax! And if they do, ask if they have anything in Redfern that they would like to sell to you, just to help them cash in before the market crashes

Hi lawsjs

It would be a brave person who will buy a 1.05M terrace in Redfern in 2 or 3 years time with only 2.5% net return.

Regards

 

[Ajax]

Hello Lawsj and Investor,

GIO insurance paid out 18k to me replacing roof and ceilings and reimbursing tenants for rental following that hailstorm.

I have lived in the East Redfern property (on and off) for about 4 years. Never mugged. House never broken into. New car parked in the street never touched. Its a large suburb with many relatively safe areas (probably more chance of breakins in Paddington). Redfern's not just Eveleigh Street (I wouldn't ride a bike down Eveleigh Street atm unless I wanted to end up walking).

There was a house for sale in Eveleigh Street recently for $300k.
Buying that property would be a test of faith.

South Sydney Coucil administrative offfices will be moving into one of the TNT Towers. Their presence so close to "the block" should help to clean this area up. After all no councillor wants his employees mugged whilst walking to work.




Ajax

 

[alpina]

when i first started this post, i didnt think its was going to be a for and against debate for redfern. not that i mind though, as we have always viewed redfern as a potential hotspot in years to come.

saw a fantastic new 3 level terrace there about 3 months ago (low $500s) - great design but poor location so we ended up giving it a miss

really enjoy threads that talk about specific locations and peoples views of them.

julie