How much puff does Sydney have left?

[DDDKEFather]

Hmmmm....based on your handle.....you are 26 years old correct?

Next question...how many down turns in the Sydney market have you seen play out?

In relation to the posts:

1. Really....you are listening to brokers about banks and APRA...lets say that I have senior level contacts within the banks and they are concerned about a contagion and asset quality....you will see this play it initially in the Big 4 and associated entities (i.e. BW, BoM, BoSA, STG) and then move down to the smaller lenders.

2. Never said the market will stop now. But ask the question....the market is based on psychology...what will happen when the news papers report someone paid 800k for a 2brm apartment based on a IR of 4.5% with a settlement date of say 2017-2018. Repayments on 4.5% will be 40k pa...repayments on 7.5% will be 65k....and then god forbid always what happens if the valuation comes in at 650k for the apartment?? Bankruptcy?...a few stories like this will panic the natives.

3. Yep....lambs to a slaughter....they have no idea of the Australian market fundamentals. Happened with the Japanese in the 80s...sadly looks like it will happen again. The party never goes for ever. The NW is severely over valued...look at what happened to Kellyville in the 2004-2007 down turn.

4. Yes some regions of NSW are okay just now Sydney. Newcastle is ok..so is places like Albury...Wagga Wagga...etc.

5. Pay attention to share market...some opportunities opening up....

Hi Sash,

I agree that you are spot on for point 5. I bought into the Brisbane RE market early this year. I am deciding whether to do the same again or invest what I can into the share market. I think the share market is due for an upswing considering it is still way down from it's peak of late 2007. I think once we have a series of good economic news then away it will go.

 

[ej89]

Hmmmm....based on your handle.....you are 26 years old correct?

Next question...how many down turns in the Sydney market have you seen play out?

In relation to the posts:

1. Really....you are listening to brokers about banks and APRA...lets say that I have senior level contacts within the banks and they are concerned about a contagion and asset quality....you will see this play it initially in the Big 4 and associated entities (i.e. BW, BoM, BoSA, STG) and then move down to the smaller lenders.

2. Never said the market will stop now. But ask the question....the market is based on psychology...what will happen when the news papers report someone paid 800k for a 2brm apartment based on a IR of 4.5% with a settlement date of say 2017-2018. Repayments on 4.5% will be 40k pa...repayments on 7.5% will be 65k....and then god forbid always what happens if the valuation comes in at 650k for the apartment?? Bankruptcy?...a few stories like this will panic the natives.

3. Yep....lambs to a slaughter....they have no idea of the Australian market fundamentals. Happened with the Japanese in the 80s...sadly looks like it will happen again. The party never goes for ever. The NW is severely over valued...look at what happened to Kellyville in the 2004-2007 down turn.

4. Yes some regions of NSW are okay just now Sydney. Newcastle is ok..so is places like Albury...Wagga Wagga...etc.

5. Pay attention to share market...some opportunities opening up....

I value your opinion, I just like testing other peoples opinions especially when they are forecasts.. And especially when the forecast goes off past experience where the economy is in a whole different state than it is now

What determines value when you say true value? Value is what people are willing to pay is it not? You're right in that I wasn't old enough in last boom.. What were the household income to debt of Kellyville in the last boom? Can you show me some statistics please?

Is NW really a worry? I see household monthly repayments of $3200 ($800/week) and household incomes of $2400/week, which is in a safer zone than most suburbs in Sydney where repayments are over 35-40% of weekly income..imo if NW goes down with those numbers then all of Sydney goes down with it.
1. Brokers and a few managers at NAB who deal with whole health departments investment loans.. You'd think brokers would be experiencing first hand the "tightening" of lending for their clients would they not? Unless of course you're saying you're finding things out that none of us know that are yet to play out..

2. That already happens regularly. It just gets people thinking "hmm shouldnt buy off the plan maybe".. I hope rates do go up cause that means inflation's gone up and I get a pay rise which will offset my mortgage repayment increase . Our economy is in transition atm and I cant see rates going up in a long time.. In saying that, you never know

3. They'll be protected by our dollar dropping would they not? They'd make 10% just on our currency going down.. That becomes their 10% buffer doesn't it? I's wanna know a bit more about this tbh.

4. I disagree but yeah you're more experienced so I'm open to your thoughts.

5. Teach me please .

P.s I definitely don't know as much as you and would like to learn off you..

 

[sash]

Enlighten me:

What state do you think the economy is in now?? Last time the economy in 2004 to 2006 was ok not great but ok. Unemployment as similar....but economy was not as bad.

Don't have stats but saw it first hand...believe or not there were repossessions in Kellyville. In some instances houses bought in the peak for 580k odd went for 450-460k odd in mortgagee auctions...

Are you kidding me...$125k gross house hold incomes is probably about 100k net....$3200/mth mortgage payment is about 39k pa so that leaves 60k disposable income pa. If interest rates go to 7.5%....that translates to a mortgage repayment of 60k. So tell me do you think they will be able to live on 40k per annum for a fmaily of 3-4??

As for brokers....it is on its way...my broker is a mainlander and she is already preparing for this.....

The RMB is not a transparent currency...only fools would put their money on it...China might be the largest economy but due to poor transparency everyone is going to old stalwart the US$. The economy in China has been built on a house of cards...look at Japan when that happens watch out...the currency could collapse. Even the Chinese govt invest in US$!

Finally...when the student is open to learning the teacher appears...

I value your opinion, I just like testing other peoples opinions especially when they are forecasts.. And especially when the forecast goes off past experience where the economy is in a whole different state than it is now

What determines value when you say true value? Value is what people are willing to pay is it not? You're right in that I wasn't old enough in last boom.. What were the household income to debt of Kellyville in the last boom? Can you show me some statistics please?

Is NW really a worry? I see household monthly repayments of $3200 ($800/week) and household incomes of $2400/week, which is in a safer zone than most suburbs in Sydney where repayments are over 35-40% of weekly income..imo if NW goes down with those numbers then all of Sydney goes down with it.
1. Brokers and a few managers at NAB who deal with whole health departments investment loans.. You'd think brokers would be experiencing first hand the "tightening" of lending for their clients would they not? Unless of course you're saying you're finding things out that none of us know that are yet to play out..

2. That already happens regularly. It just gets people thinking "hmm shouldnt buy off the plan maybe".. I hope rates do go up cause that means inflation's gone up and I get a pay rise which will offset my mortgage repayment increase . Our economy is in transition atm and I cant see rates going up in a long time.. In saying that, you never know

3. They'll be protected by our dollar dropping would they not? They'd make 10% just on our currency going down.. That becomes their 10% buffer doesn't it? I's wanna know a bit more about this tbh.

4. I disagree but yeah you're more experienced so I'm open to your thoughts.

5. Teach me please .

P.s I definitely don't know as much as you and would like to learn off you..

 

[ej89]

Enlighten me:

What state do you think the economy is in now?? Last time the economy in 2004 to 2006 was ok not great but ok. Unemployment as similar....but economy was not as bad.

Don't have stats but saw it first hand...believe or not there were repossessions in Kellyville. In some instances houses bought in the peak for 580k odd went for 450-460k odd in mortgagee auctions...

Are you kidding me...$125k gross house hold incomes is probably about 100k net....$3200/mth mortgage payment is about 39k pa so that leaves 60k disposable income pa. If interest rates go to 7.5%....that translates to a mortgage repayment of 60k. So tell me do you think they will be able to live on 40k per annum for a fmaily of 3-4??

As for brokers....it is on its way...my broker is a mainlander and she is already preparing for this.....

The RMB is not a transparent currency...only fools would put their money on it...China might be the largest economy but due to poor transparency everyone is going to old stalwart the US$. The economy in China has been built on a house of cards...look at Japan when that happens watch out...the currency could collapse. Even the Chinese govt invest in US$!

Finally...when the student is open to learning the teacher appears...

But Sash, wouldn't most of Sydney go down if we reach 7.5% interest rates? Kellyville wasn't the only place with families haha if you think that $2400/week is bad wait til you see the amount of people on 1k a week buying 650k properties. Surely at that time the market would turn completely and there would be thousands of mortgagee sales

Our economy is slowly heading towards a recession if things don't pick up. It'll be a while before we get to 7.5% interest rates, if ever.. Some on this forum even seem to think we'll never get to 7.5% rates.. Didn't interest rates rising and that vendor duty stop the last boom? What stops this one? You were around for it..
Question, what happened to property the last time our economy was this slow?

 

[jerrybee]

Yes everywhere is hit, but some of those places hit harder.

 

[ej89]

Sash. Delete some of your inbox messages I cant get through to you haha

 

[Deltaberry]

I presume you don't mean Beijing or shanghai.

I mean exactly that. And Guangzhou Shenzhen.

 

[Deltaberry]

3. Yep....lambs to a slaughter....they have no idea of the Australian market fundamentals. Happened with the Japanese in the 80s...sadly looks like it will happen again. The party never goes for ever.

Yep well... classic wealth transfer. Someone has to be slaughtered for another to eat (eg developers, sellers to Chinese etc). Just make sure you're not the one being slaughtered.

 

[Deltaberry]

I value your opinion, I just like testing other peoples opinions especially when they are forecasts.. And especially when the forecast goes off past experience where the economy is in a whole different state than it is now

What determines value when you say true value? Value is what people are willing to pay is it not? You're right in that I wasn't old enough in last boom.. What were the household income to debt of Kellyville in the last boom? Can you show me some statistics please?

Is NW really a worry? I see household monthly repayments of $3200 ($800/week) and household incomes of $2400/week, which is in a safer zone than most suburbs in Sydney where repayments are over 35-40% of weekly income..imo if NW goes down with those numbers then all of Sydney goes down with it.
1. Brokers and a few managers at NAB who deal with whole health departments investment loans.. You'd think brokers would be experiencing first hand the "tightening" of lending for their clients would they not? Unless of course you're saying you're finding things out that none of us know that are yet to play out..

2. That already happens regularly. It just gets people thinking "hmm shouldnt buy off the plan maybe".. I hope rates do go up cause that means inflation's gone up and I get a pay rise which will offset my mortgage repayment increase . Our economy is in transition atm and I cant see rates going up in a long time.. In saying that, you never know

3. They'll be protected by our dollar dropping would they not? They'd make 10% just on our currency going down.. That becomes their 10% buffer doesn't it? I's wanna know a bit more about this tbh.

4. I disagree but yeah you're more experienced so I'm open to your thoughts.

5. Teach me please .

P.s I definitely don't know as much as you and would like to learn off you..

You sound like a new investor who's just bought these few years, and believes the "this time is different" argument and even though all the statistics are against a much more bullish market now, you are kind of in denial.

Reality is, markets rise and fall. It's rising a lot now, has probably peaked, and there'll be pretty tough times next 5 years in the Sydney property market.

 

[Deltaberry]

Question, what happened to property the last time our economy was this slow?

The last time this economy was very slow - slower than now - in 1990, the market tanked like you wouldn't believe and anyone with 80%+ gearing was wiped out and took 10 years to pay off their debts.

 

[ej89]

You sound like a new investor who's just bought these few years, and believes the "this time is different" argument and even though all the statistics are against a much more bullish market now, you are kind of in denial.

Reality is, markets rise and fall. It's rising a lot now, has probably peaked, and there'll be pretty tough times next 5 years in the Sydney property market.

Haha this may be true.. Who wants their party ruined?

 

[chilliblue]

Going out on a limb here but internationally is Sydney property that expensive?

I noted that in Toronto the average price of single home in 2014 was $965,000.

 

[Deltaberry]

Haha this may be true.. Who wants their party ruined?

You sound quite young - 4 years younger than me.

My view would be, if you only have one property and you've made some equity, refinance it and let the cash sit in your offset. Don't gear more and buy a second house. Trust me on that. Done it before when I was younger than you are now - and it's not cool (although it all worked out in the end with so many booms behind me now). Now is the time to buckle up your belt, save up $$ and pay down your original debt. Plenty of buying opportunities later.

If you have more than one property, consider keeping one and selling the rest to try to go debt free, then refinance at a high valuation and then let cash sit in offset. Don't sell all of it, because after taxes + fees it's not really worth it sometimes. Pay down enough so that even if rates rise 2%+, you are fine.

If it's a PPOR, consider selling it if you have a lot of debt. Tax free CG.

 

[Deltaberry]

Going out on a limb here but internationally is Sydney property that expensive?

I noted that in Toronto the average price of single home in 2014 was $965,000.

You are comparing one bubble with another.

Try check out Venetian or Paritian properties. Last I checked Italy and France are much larger economies than Canada and Australia combined. What justifies these prices in Sydney and Toronto?

 

[ej89]

You sound quite young - 4 years younger than me.

My view would be, if you only have one property and you've made some equity, refinance it and let the cash sit in your offset. Don't gear more and buy a second house. Trust me on that. Done it before when I was younger than you are now - and it's not cool (although it all worked out in the end with so many booms behind me now). Now is the time to buckle up your belt, save up $$ and pay down your original debt. Plenty of buying opportunities later.

If you have more than one property, consider keeping one and selling the rest to try to go debt free, then refinance at a high valuation and then let cash sit in offset. Don't sell all of it, because after taxes + fees it's not really worth it sometimes. Pay down enough so that even if rates rise 2%+, you are fine.

If it's a PPOR, consider selling it if you have a lot of debt. Tax free CG.

I won't be buying my second til middle of next year but there's no way that'll be in Sydney. It's a PPOR play that will be an investment for a few years then PPOR later when I actually need more than a 1 bed unit to live in..Once I can access it upon completion of my build I will pull all the equity I can out and sit it in my offset account..

I'm trying to convince the parents to sell their Mcmansion now because the prices are ridiculous. They've got two blocks of land in The Ponds and I told em to just turn one into an IP and downsize into the other while paying down debt by selling the PPOR..Should be able to get 400k tax free money from selling the PPOR. They've also thought about building and selling one in The Ponds next year and staying with one small single storey house that has barely any debt.. What would you guys recommend?

 

[chilliblue]

You are comparing one bubble with another.

Try check out Venetian or Paritian properties. Last I checked Italy and France are much larger economies than Canada and Australia combined. What justifies these prices in Sydney and Toronto?

People wanting to buy and actually being able to pay for them.

I have relatives in Italy and no one wants to work. People live off their parents and grandparents.

 

[Deltaberry]

Haha sounds like another country I know

 

[Deltaberry]

I won't be buying my second til middle of next year but there's no way that'll be in Sydney. It's a PPOR play that will be an investment for a few years then PPOR later when I actually need more than a 1 bed unit to live in..Once I can access it upon completion of my build I will pull all the equity I can out and sit it in my offset account..

I'm trying to convince the parents to sell their Mcmansion now because the prices are ridiculous. They've got two blocks of land in The Ponds and I told em to just turn one into an IP and downsize into the other while paying down debt by selling the PPOR..Should be able to get 400k tax free money from selling the PPOR. They've also thought about building and selling one in The Ponds next year and staying with one small single storey house that has barely any debt.. What would you guys recommend?

If you can hold the Ponds debt free without subdividing

 

[sash]

Only in parts where there a lot of new home buyers and investors who borrowed a lot due to the FOMO (Fear of Missing out) syndrome. The banks pushed by APRA will make the 7.5% as the norm as the serviceability stress test. Some banks like SunCorp have always have done this.

Australia will have some mortgagee sales....but not to the degree of the US..this is why APRA is in the Big's 4 face.

You don't need a recession for a property market correction...but a crash will occur if a recession coincides. A correct could be up to 20% in SELECT areas...

But Sash, wouldn't most of Sydney go down if we reach 7.5% interest rates? Kellyville wasn't the only place with families haha if you think that $2400/week is bad wait til you see the amount of people on 1k a week buying 650k properties. Surely at that time the market would turn completely and there would be thousands of mortgagee sales

Our economy is slowly heading towards a recession if things don't pick up. It'll be a while before we get to 7.5% interest rates, if ever.. Some on this forum even seem to think we'll never get to 7.5% rates.. Didn't interest rates rising and that vendor duty stop the last boom? What stops this one? You were around for it..
Question, what happened to property the last time our economy was this slow?

Deleted some...don't ask silly questions or opinionated responses you may get blunt responses!

Sash. Delete some of your inbox messages I cant get through to you haha

 

[sash]

I second that....I was in Milan last year. Everyone keeps up appearances of being wealthier than they are. Very arrogant and shallow city. I used call it "all showa..butta no mooneeyy".

I cannot believe how the hell Italy got into the EU.....in a few years their standard of living will be less than Thailand, Malaysia, and Taiwan.

They have the cheek to bag Chinese products when their own quality of over priced goods is in question!

People wanting to buy and actually being able to pay for them.

I have relatives in Italy and no one wants to work. People live off their parents and grandparents.