If Sydney Market Dropped by 50%?

Hypothetical Question - If Sydney Market Dropped by 50% say in the next 2 years how do you think it would effect other Australian cities?

Let's say apartments and houses in Sydney lost value on average of 50%. So a $700,000 property dropped to be valued at $350,000 for example.

3 Examples:

  1. Brisbane $300,000 apartment
  2. Newcastle NSW $300,000 apartment
  3. Perth WA $300,000 apartment

what do you think would happen with these 3 properties, would they also drop around 50% or what?
 
Talk about a crystal ball topic.

I don't have a answer, but a question.

What cause are you proposing for the 50% drop?

Sydney's economy is strong and diverse, while affordability is on par with previous periods so something pretty significant (national/international) would likely be needed to cause such a staggering drop in values (e.g. sharp rate rises, global economic meltdown, meteorite impact), which I might imagine affect other markets as well.
 
Hypothetical Question - If Sydney Market Dropped by 50% say in the next 2 years how do you think it would effect other Australian cities?

Let's say apartments and houses in Sydney lost value on average of 50%. So a $700,000 property dropped to be valued at $350,000 for example.

3 Examples:

  1. Brisbane $300,000 apartment
  2. Newcastle NSW $300,000 apartment
  3. Perth WA $300,000 apartment
Nuclear war? Or Alien invasion are more likely so who knows what would happen in the other centres. If you are talking about 10 years of underperformance and no increases relative to CPI well that is far more possible
 
It can drop more than 50%. If there is a World war 3

That's about it

I must admit , I worry about that ....:rolleyes:

But assuming most of the devastation in in the northern hemisphere , then assuming the fallout isn't too bad and we haven't been overrun by Isis , we may find there is a strong demand for rental accomodation down here .:

i.e . I don't think you'll get a serious answer to this question ...

Cliff
 
Lets compare apples with apples and not over-panic.

Even in the deepest darkest days of the GFC, property in the UK and US did not fall anywhere near 50%
 
If it did drop anything near that I think we would have much larger issues than how much money we are losing!

Exactly right.

As always, look at the reality. If prices dropped to x range, how much increased demand would emerge to compete with the affordable prices. For prices to sustain a depressed level indefinitely, demand would need to suppressed by a critical event/s.
 
BUT BUT Russian is probably building a super machine to get ready to start the war :p :p :p... So you never know.

Or the north Korean lol!
 
Lets compare apples with apples and not over-panic.

Even in the deepest darkest days of the GFC, property in the UK and US did not fall anywhere near 50%
Not on a nation wide measure, but many cities / regions did fall by 50% or more. http://www.dailymail.co.uk/news/article-1386006/Ten-cities-property-prices-fell-69-FIVE-YEARS.html

Unlikely scenario (Sydney falling by 50% in nominal terms), but if it happened I think we could expect bank failures/bailouts, recession and a domino effect on property prices that would carry through to the other states (but would only be a stab in the dark to guess the extent).
 
Not on a nation wide measure, but many cities / regions did fall by 50% or more. http://www.dailymail.co.uk/news/article-1386006/Ten-cities-property-prices-fell-69-FIVE-YEARS.html

With the exception of Detroit, most have rebounded nicely with many at all-time-highs.

People like MTR, Handy Andy et al have tripled their money by betting against the doomsayers. They bought in the USA when everyone thought the world was going to end. Don't you wish you had done the same Hobo?
 
Not on a nation wide measure, but many cities / regions did fall by 50% or more. http://www.dailymail.co.uk/news/article-1386006/Ten-cities-property-prices-fell-69-FIVE-YEARS.html

Unlikely scenario (Sydney falling by 50% in nominal terms), but if it happened I think we could expect bank failures/bailouts, recession and a domino effect on property prices that would carry through to the other states (but would only be a stab in the dark to guess the extent).

Outside ww3 , you'd need a world wide depression to cause it . A recession wouldn't cut it .

Cliff
 
Don't you wish you had done the same Hobo?
Sure, but if I could invest in hindsight I wish I'd bought Apple 10+ years ago or maybe Med Cannabis Pharma Inc in late 2013. Not sure what your point is?

Outside ww3 , you'd need a world wide depression to cause it . A recession wouldn't cut it .
By what measurable indicators would you define a world wide depression? Arguably we are in one...

A severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts two or more years. A depression is characterized by economic factors such as substantial increases in unemployment, a drop in available credit, diminishing output, bankruptcies and sovereign debt defaults, reduced trade and commerce, and sustained volatility in currency values. In times of depression, consumer confidence and investments decrease, causing the economy to shut down.
http://www.investopedia.com/terms/d/depression.asp

Though it will probably take another 10-20 years to be able to look back and say with certainty.

Look at all the ongoing and unprecedented monetary policies being run by central banks world wide only to be achieving below trend growth...
 
Sure, but if I could invest in hindsight I wish I'd bought Apple 10+ years ago or maybe Med Cannabis Pharma Inc in late 2013. Not sure what your point is?


By what measurable indicators would you define a world wide depression? Arguably we are in one...


http://www.investopedia.com/terms/d/depression.asp

Though it will probably take another 10-20 years to be able to look back and say with certainty.

Look at all the ongoing and unprecedented monetary policies being run by central banks world wide only to be achieving below trend growth...

Certainly have a lot of economic issues at the current time, but we aren't in a global recession, let alone a depression. We are consistantly hitting (subdued) growth, but growth nonetheless.

Global-GDP-001.jpg


Point to an extended period of global history where we didn't have similar issues?
 
I'm sorry if 50% was too extreme, let me write it again then:

Hypothetical Question - If Sydney Market Dropped by 20% say in the next 2 years how do you think it would effect other Australian cities?

Let's say apartments and houses in Sydney lost value on average of 20%. So a $700,000 property dropped to be valued at $560,000 for example.

3 Examples:

Brisbane $300,000 apartment
Newcastle NSW $300,000 apartment
Perth WA $300,000 apartment

what do you think would happen with these 3 properties, would they also drop around 20% or what?
 
Except Tokyo,I think all top 10 cities are at or near peaks(ie NYC London HK Singapore Paris LA Shanghai Sydney Toronto). Odds are in your favour but if. 50% fall really did happen you should try to load up.
 
I'm sorry if 50% was too extreme, let me write it again then:

Hypothetical Question - If Sydney Market Dropped by 20% say in the next 2 years how do you think it would effect other Australian cities?

Over the last couple of years Sydney has outperformed several of the other capitals by around 20%, so don't see there's any reason that the other capitals would HAVE to fall in line with Sydney if it corrected. That said they've been trending in similar growth cycles (see chart below). Some of the influencing factors that cause a correction in Sydney are also likely to impact other markets.

PricesByStateSept2014.jpg
 
Nice chart Hobo, Perth 2006 was massive relative to the other capitals.
Providing a major downturn in Sydney didn't seriously damage the whole financial system the other capitals would suffer a little collateral damage but would probably limp along IMO but it would depend on if they had followed Sydney in a major rise first. This hasn't happened yet, BN and Adelaide are only slightly above previous highs
 
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