The reasons for my "guess" are...
1. 600k property is pretty much out of hands for FHB, even if you saved like 30-40k cash most of it will be gone for stamp duty + LMI., LVR will be 95%+
Umm.... no it's not. I've encountered plenty of FHB's who have 600K to spend. Remember this is Sydney not Adelaide
There are also many many parents (baby boomers) who are willing and able to assist their kids in going guarantor and loans for those tricky 10% deposits. They are not afraid of 95% lends at all.
2. FHB will probably buy new properties to get the grant + savings on stamp duty. May be because they don't care about the land and impressed with the brand new granite kitchen + German appliances and may not have subjected to strata pain before. as a result there are many new townhouses building up in the Hills area.
New homes sales have just plunged to their lowest levels in 15 yrs
http://www.propertyobserver.com.au/...4e0-October_30_20124_10_2012&utm_medium=email so I doubt this is a valid argument for a demand vs supply situation. The second downside to this is the lack of properties that qualify for the current $15K new grant. After all, it's capped to $650K, with the large majority of new build homes in Sydney costing more than this. Sure, if you want to go further out to places like The Ponds (near Stanhope Gardens) you will find new homes under the cap however this is hardly considered the Hills District.
3. for upgraders (400k prop owner want to upgrade to 600k) they have to sell their existing property, their prosective FHB will have to pay stamp duty + no grants. They also need to pay agents comms + fund for stamp duty + LMI if they do not have enough equity in their 400k PPOR.
Upgraders in the Hills (and I'm referring to Castle Hill/B'Hills/Cherrybrook etc) are selling from minimum high $500K's/$600K's and upgrading to $800K-$1.2m range. There are no $400K houses in these suburbs- but if you do find one (and I'm not talking vacant blocks or demolition jobs on tiny subdivided blocks on Windsor Rd) please let me know ASAP, as I'll buy it
4. for downgraders (800k+ to 600k), I don't know how it works, but if I have 800k+ for PPOR I can buy a house much closer to CBD.
Downgraders in the Hills tend to downsize to newer apartments (eg: The Grand near Castle Towers is a classic example) or smaller newer homes, and believe me when I tell you there is a pent-up demand for newer single level homes in these suburbs in the better locations (walk to shops, transport)- they often fetch a premium when they do come up for sale. You can buy 2 bed units starting from $450K but in my experience, most downgraders still prefer to buy 3x2 apts in this area.
Of course you can buy something closer in for $800K but not everyone wants to necessarily live nearer to the cbd, believe it or not
Some of us are very happy to reside in the Hills with decent tracts of land, a roomy well-maintained house and a neighbourhood that feels secure. Horses for courses really.
I guess each sale is a bit different, at the moment, generally speaking renting in the hills is 1/2 price of owning... you get $0 tax deduction for PPOR.
And so is the case in many parts of Sydney- it's certainly not restricted to the Hills alone. Renting is almost always going to be cheaper. Yields, however, are superior to other suburbs. For example, this week we appraised a property in Concord for $950-1m with a lousy yield of just $580 per week. A similarly priced home in Castle Hill, for example, is closer to $800-900 p/wk.
If the price needs to come down, someone has to make a low ball offer first I guess. a good point is that both myself and partner have low emotion attachments to houses in general.
It's fine to have emotional detachment and I wish you every success in your quest. Don't go lowballing too often, though, as you'll get more results (and attention from sellers) if you pay attention to the market and know what you're talking about with recent sales etc, rather than blindly offering 10% below the asking price. Best of luck with it all.
