I watched Blacktown( and Mt Druitt ) during the last cycle.
While Inner Sydney moved up around 50 % , the outer west went sideways for the same period . There were many articles I saw in late 90's early 2000 along the lines of why invest there because prices don't go up . Subsequentally it all caught up butt it was the last place to move in Sydney .
Well they did , but only after the boom was well and truly established in other places in Sydney.
I'm not convinced that the FHOG is enough to change this pattern.
Blacktown has no features that suggest it will out perform or change it's underlying demographic pattern . It's in the middle of the outer western suburbs .
It's not on the water like Frankston , or relatively centrally located like Logan ( though I won't be holding my breath for logan to change ).
You are getting relatively good rental returns compared with Logan , but I think that's more that Logan is out of kilter so something will come back there , either the rents or prices or possibly both. From our experience you need a 10 % return to break even on the type of property you'd buy for 300 in Blacktown.
I will happily buy in Blacktown or Mt Druitt at some stage in the cycle but now is too early for me .
Job losses in Oz have mainly been in the upper end of the market and that is leading to occasional bargains in that market. There are still enough people cashed up to pick those up .
Overseas we're seeing job losses in the lower levels and it's only a matter of time before that starts filtering through in Australia . When that happens there will be many more highly motivated vendors in places further out west , and I'd have a guess that , relative to the more affluent areas there won't be as many cashed up buyers in these areas ( though there will be some ) so the bargains may be more obvious .
In the last cycle there were , even to some one like me ,( who at the time was only a casual observer and not an active participant Some moron of a financial advisor told me to pay my PPOR of before I bought IP's ... Took a few years to realise how wrong he was .). I saw houses sell for 60 K in Mt Druitt in late 90's which would have sold for 100k at the peak of the preceeding boom and were selling for 240 a few years later. They were down to 180 a while ago ( havn't checked recently ) .
There certainly seems to be more doom and gloom this time around than in the last recession , so personally I wouldn't be suprised to see prices of entry levels houses in Mt Druitt reach down to 120 -150 mark. ( I quote Mt Druitt because I'm more familiar with it , but Blacktown follows the same trend )
The one area which we've been watching and just bought in is the 1-2 bedder market in Lower north shore , which seems to be quite strong at the moment , based on our observations . There was an article last week ? Fin review , which also reported strength in that market , specifically mentioning Wollstonecraft . While most of these are over 300K , there are some complexes where studios are selling for less than 300K . We're not personally intersted in that market as we have a different strategy in the current market , but if that was my budget <i'd be looking at centrally located units in Sydney , Lower North shore , Lower northern beaches up to Deewhy ( though Manly preferred ) , inner city ..> eastern suburbs and possibly inner west. I'd expect these to be moving up within the next five years ( but there's no guarantees , so make sure you buy a bargain)
Cliff
