Is Syndey Overpriced

[L Bernham]

Good to see that even me voting on a poll can still get Acey fired up!

I have been quiet lately. Just content reading. Now that it seems a lot more have the same view as me I don't feel the need to contribute as much. It seems many more are looking objectively at property investing and are beginning to realise they have missed the boat (no - surely not with net yields at 2%!).

I gave warnings in an attempt to give a balanced opinion to what can at times be a one-sided forum. All I wanted is for some of the misled newbie investors thinking they can make a quick buck on a sure thing to stop, have a look at the fundamentals and question some of the myths they've been brainwashed into believing. I also hoped that I would trigger some decent debate along the way (that was harder than I thought).

It seems there are many content to accept their valuations but they wouldnt buy themself at that price and FHBs well they just cant afford to buy fullstop. Makes you wonder where all the buyers are going to come for the plethora of properties appearing for sale in almost every city (bar some of course).

On a side note, the apartment next to the one I sold almost a year ago has currently been for sale for about 2 months for $42K less than what I sold mine for. I'm only saying this because many questioned my judgement on that sale because you should NEVER SELL! Hmmm.. I wont say what my rate of return on the proceeds have been.

Still lurking
LB

 

[JFEWSTER]

LB

Good onya mate!

In the last month I have seen this:-

Close friend's property has sold 5 times and fallen thru 5 times, mostly AFTER cooling off! Seems the only ones left in the market are the ones who either don't know what a contract means or can't get finance.

Drove past a first time open inspection on Sunday and there was no cars!
10 months ago you would have had trouble finding a park!

A close friend offered 289K on a property that was initially on the market for 350K. He got it!

In the last year-

A property that I personally offered (as a PPOR) 550K (totally clean contract as well), was rejected as the vendor thought he could get 600K, is still on the market more than one year later for 530K. Ha Ha Ha!

You make your money when you buy AND when you sell! Timing IS important and market sentiment does not necessarily follow on from some well meaning but overly logical argument from a forum members who just likes to dominate!

I love property.Always will. I have put my money where my mouth is and will get back in when the conditions are just right. No need to hurry.

 

[Glenn]

The great thing about all of this is that if all of the different opinions were investigated through interrogating the individual deals\theories that the individuals here are talking about......they would all be correct.

Acey would have to agree that there has been an oversupply of mediocre property being tarted up and sold as "premium" or "executive" property in some areas that he would not buy into....and L Bernam would probably love to invest... or at least get some of the returns that people like Acey are able to extract on properly identified and reworked property.

Me...well I am an eternal optomist that looks for the good side in everything and if he can't find it....will find someone to make a good side for me at a reasonable cost!

Good hunting

Glenn

 

[Aceyducey]

The great thing about all of this is that if all of the different opinions were investigated through interrogating the individual deals\theories that the individuals here are talking about......they would all be correct

I'd agree with that Glenn

I'm also an optimist - but a reformed pessimist. Because I've found through my experiences that when you look for something you tend to find it, whether it be the upside or the downside.

Personally I prefer to find the upside.

And I can't help all those people making bad decisions out in the market - nor can the pessimists.

But I can, and attempt to, help some of the people who find their way to this forum (when others haven't helped them first)

Cheers,

Aceyducey

 

[JFEWSTER]

Glenn

Are you presuming I'm referring to Acey? Why?

 

[JFEWSTER]

And by the way, Glenn, Acey.

I'm not a pessimist. I have settled in the last 10 months.

I am in the process of planning a 2 townhouse subdivision. Value adding!

I do not believe there will be a bust, nor have I ever suggested there would be. Just a very long plateau which newbies should be factoring in. Unless interest rates rise considerably.

Hold for long enough and you will always do well. I just think I can do better than that so I like to hear all views!

Lets not discourage these views.

 

[Jase]

Peter 147 raises an interesting point.. I wonder what will happen to the masses who rushed to perch on the edge of the sea (change) if global warming does raise the sea level or research proves theres going to be big trouble in that dept. I guess high ground inner city & lakeside views will be the go.

RE: the strawman .. yawn .. I think you'll find he was in the wizard of Oz first

Jase

 

[Aceyducey]

Peter 147 raises an interesting point.. I wonder what will happen to the masses who rushed to perch on the edge of the sea (change) if global warming does raise the sea level or research proves theres going to be big trouble in that dept. I guess high ground inner city & lakeside views will be the go.

Which is the topic of the discussion I began here: http://www.somersoft.com/forums/showthread.php?t=14501

I'm surprised that few of the more pessimistic people on the forum have actually offered their views on the effects of climatic change on housing.

Cheers,

Aceyducey

 

[Glenn]

And by the way, Glenn, Acey.

I'm not a pessimist. I have settled in the last 10 months.

I am in the process of planning a 2 townhouse subdivision. Value adding!

I do not believe there will be a bust, nor have I ever suggested there would be. Just a very long plateau which newbies should be factoring in. Unless interest rates rise considerably.

Hold for long enough and you will always do well. I just think I can do better than that so I like to hear all views!

Lets not discourage these views.

Hi John,

Congratulations on having the heart to have a go at building a couple of townhouses...something we are planning yet treading carefully with.

I suppose the thing that us bulls try to get across to everyone else is that:

there will be winners
there will be losers
until we make the choice to be winners, we will be average at best, but often be losers...and I am not going to sit around with a bleeding heart when I could spend that time making a better life for my family

in the best possible property/share/tulip market, some people will lose money on individual deals
in the worst possible property/share/tulip market, some people will make money on individual deals......this is what we shall attempt over the next few years.....that is, if the bears are correct!

The bears are a necessary part of the market....they assist us with understanding the psychology of the herd when all we can see are green lights...go, go, go!

Just another rant

Good hunting

Glenn

 

[JFEWSTER]

Good point Glenn

If we can hear ALL views, we ALL learn!

 

[Jacque]

Though I picked the overpriced option on the poll, I'd like to point out that, being a very generalized statement, it's hard to be 100% about it!
After all, some areas of Sydney will always grow, no matter what price the properties are, due to demand, popularity and land scarcity. The demographics of the area also have an impact as higher income earners will push prices up if they really want to live in a particular location. Beach suburbs, in particular, spring to mind here.

Affordability for the average household also factor here, and it's for this reason that I don't think lower priced areas (under $300K) will drop in value, due to the fact that most buyers can still afford these areas.

Sydney is a diverse large sprawling city and is not, in MHO anyway, likely to suffer from any catastrophic drops in value unless something drastic happened (like 17% interest rates or a natural disaster perhaps!)
Really, the properties that would be most at risk would be highrise units that have little land value and areas where there is an oversupply.

Interesting to wait and watch anyway
Who ever said property investing was dull?!

 

[suggo]

Good to see that even me voting on a poll can still get Acey fired up!

I have been quiet lately. Just content reading. Now that it seems a lot more have the same view as me I don't feel the need to contribute as much. It seems many more are looking objectively at property investing and are beginning to realise they have missed the boat (no - surely not with net yields at 2%!).

I gave warnings in an attempt to give a balanced opinion to what can at times be a one-sided forum. All I wanted is for some of the misled newbie investors thinking they can make a quick buck on a sure thing to stop, have a look at the fundamentals and question some of the myths they've been brainwashed into believing. I also hoped that I would trigger some decent debate along the way (that was harder than I thought).

It seems there are many content to accept their valuations but they wouldnt buy themself at that price and FHBs well they just cant afford to buy fullstop. Makes you wonder where all the buyers are going to come for the plethora of properties appearing for sale in almost every city (bar some of course).

On a side note, the apartment next to the one I sold almost a year ago has currently been for sale for about 2 months for $42K less than what I sold mine for. I'm only saying this because many questioned my judgement on that sale because you should NEVER SELL! Hmmm.. I wont say what my rate of return on the proceeds have been.

Still lurking
LB

Alot more have the same view as you!!?? 9 out of 74 polled . WOW LB I'm sorry for ever questioning you, you have been vindicated!! I know all my property have fallen in price by at least your predicted 35%!!! NOT!

 

[L Bernham]

keep holding suggo. I expect in 12 to 15 years you'll once again be able to get the prices you may have been able to sell for last year.

LB

 

[BV]

LB

Strange that your Brisbane apartment dropped in price.
Was there an oversupply of units in that area?
Did prices also drop in other Brisbane areas?

Here in Sydney, although the general perception of forum members
is that properties are overpriced I have not seen price drops
on low rise residential properties yet.

Sure some over optimistic vendors can't get the high prices
they were hoping to get in a very hot market but it only means
that prices are not climbing up as fast as they used to.
And thats a good thing.

Some investors are now probably thinking of selling to avoid paying
the new NSW stamp duty, but they will also have to pay CGT so most
of them will choose to keep their IP's.

At the same time there is no other pressure for people to sell
The interest rates are low and will stay at current levels.
New CPI figures came out today and they are under 2%.

Buyers are a bit shy atm but that will change sooner or later when they
realise that without an "oversupply", the property prices will not drop.

So I can only see prices going up and considering the NSW stamp duty
exemption for first home buyers the prices of cheaper properties in
particular are likely to go up at rates well above CPI.

 

[geoffw]

So I can only see prices going up and considering the NSW stamp duty exemption for first home buyers the prices of cheaper properties in particular are likely to go up at rates well above CPI.

BV,

This may be a worry. This may encourage renters to buy rather than rent, and perhaps increase rental vacancies (at least in areas where renters are prevalent, and in cities where they can affordc to but elsewhere within convenient reach)

 

[Baloo]

Here in Sydney, although the general perception of forum members
is that properties are overpriced I have not seen price drops
on low rise residential properties yet.

I've been watching some areas of Sydney quite closely since arriving over 6 months ago. In the Marsfield, Ryde, Chatswood, Forestville & Frenchs Forest area I can tell you that I am seeing prices coming down. Not by much, but easily 20-50k less than they would have sold for last year.

A review of listings that have been on the market for a while will show asking prices lowered by up to 10% yet the still seem to be unsaleable. Granted some of these places were initially priced too high, but a couple were originally asking what comparable places in the same street sold for not too long before they listed.

At the moment I have no real feeling of how far this drop/leveling off/readjustment go/last so I'm watching carefully before I plan my next steps.

 

[always_learning]

I've been watching some areas of Sydney quite closely since arriving over 6 months ago. In the Marsfield, Ryde, Chatswood, Forestville & Frenchs Forest area I can tell you that I am seeing prices coming down. Not by much, but easily 20-50k less than they would have sold for last year.

A review of listings that have been on the market for a while will show asking prices lowered by up to 10% yet the still seem to be unsaleable. Granted some of these places were initially priced too high, but a couple were originally asking what comparable places in the same street sold for not too long before they listed.

At the moment I have no real feeling of how far this drop/leveling off/readjustment go/last so I'm watching carefully before I plan my next steps.

I too have been watching the Upper North Shore housing market, I also believe prices have come down 10%. Also agents who I have contacted with have been much more helpful. Example was a property in Roseville I was interested in on a large but as I then found out very sloping block...I emailed asking for a price estimate and was told "early $1M"....ouch too much I thought...I followed up and found the auction result was $880K passed in (still too much)!

 

[Sunfish]

At the same time there is no other pressure for people to sell
The interest rates are low and will stay at current levels.
New CPI figures came out today and they are under 2%.

Bold call BV. You must be careful where you publish such opinions, you wouldn't want the young and impressionable to take you too seriously now would you?

Thommo

 

[suggo]

keep holding suggo. I expect in 12 to 15 years you'll once again be able to get the prices you may have been able to sell for last year.

LB

You must be getting tired by now LB, all that dancing....

 

[BV]

Baloo and AL
Good to hear those reports.
I admit, I haven't looked at Upper North shore lately.
20 and even 50K adjustment in a 800K property in this market
is logical I think. There are not many buyers at that level so if a
vendor wants out, he will be willing to drops his price.
There is always room for a good negotiation if you are looking
to buy in the high end market.

Geoff,
Any shortage of tenants will be temporary.
Sydney population is constantly increasing.
I do see some for lease signs come up
but it doesn't take long before these properties are leased.
In some areas its easier to sell or lease a property than in others.

cheers.