Is this the start of the next boom?

[Les]

G'day all,

Stumbled over this today - and wondered if the content might signal the start of the next property boom.

http://theaustralian.news.com.au/common/story_page/0,5744,12494649%5E25658,00.html

However, as I don't usually "follow" the high end of the market, there might be others reasons for this article, and its bullish bent.

I heard though, that the next boom would start on Sydney's waterfront (seemed to make sense to me at the time) - is this IT???

Regards,

 

[Merovingian]

The way I see it, is that properties that are worth more than a few million dollars, are in a market of their own. The percentage of buyers in this market is relatively small, compared to the "mainstream" market consisting of properties within a few standard deviations of the median house price of a particular city. i.e. Expensive properties constitute a very small niche market and have their own market conditions; and in my opinion, the article seems mostly based on loose facts. Having said that, I only did skim the article...

I heard though, that the next boom would start on Sydney's waterfront (seemed to make sense to me at the time) - is this IT???

I reckon the next boom will start somewhere in Sydney. Sydney seems to be the epicentre of market trends, and it will ripple out geographically from there, in my opinion. Could be wrong though, Melbourne or Brisbane could be the next trend-setter...

 

[geoffw]

On the other hand- Buyers' market as house prices slide

 

[Merovingian]

On the other hand- Buyers' market as house prices slide

What's the sayings?

• Lies, Damn Lies, and Statistics...
• Statistics are numbers looking for a cause.

It seems that all of these articles are just a journalist, finding some statistics, removing those that don't form part of their article/argument, and writing a whole heap of poppycock based on statistically insignificant data.

Heck, the article quoted above is based on 5 house prices in Sydney. How pathetic!
I know I wouldn't be finding an investment property in a high growth suburb by looking at statistics based on 5 house prices...

Again, I suppose that this is "news" that sells to the general public...

 

[Peter 14.7]

I reckon the next boom will start somewhere in Sydney. Sydney seems to be the epicentre of market trends, and it will ripple out geographically from there, in my opinion. Could be wrong though, Melbourne or Brisbane could be the next trend-setter...

I agree that the next boom will be here in Inner City.

I will personally keep an eye out for youse all.

As for mega trophy sales, IMHO they have a lot more to do with family wealth movements, divorces, babies (murdoch), deaths, and bankrupts or apparent bankrupts ( ala Bondie style) than market demand.

I mean you never see any luxury stuff available for rent. To rent it means you couldn't afford it in the first place and that is very tut, tut in the A List Sydney scene.

And they rent well below value compared to an average IP.

If you want to see an indication of the next boom look at the good old median rent units and houses around the area.

They have gone down but rents are still pretty flat. Either more loses are coming or rents will have to rise to make the deal worthwhile.

Also remember around here there is only SO much housing in the preferred eastern suburbs.

It is not like Gold Coast or Central Coast where your can knock over a farm and expand. The only way is up baby!

And with Clover Moore , Mayor of Sydney Council, pushing a very low density development agenda , the large site like the CUB Brewery have stalled. Australand days it dont stack up and have walked ( publicly at least)

Peter 147

 

[geoffw]

If you want to see an indication of the next boom look at the good old median rent units and houses around the area.

Even medians can be misleading.

I was listening to somebody recently (from Residex) who was saying that, at the end of a boom, it's the lower end of the market which is selling. This means that median sale prices make things look worse than they really are- if the middle/high end houses are not for sale then the median sale price for the suburb, based on sales in the period, will appear lower than they really are.

However, the high end of the market is subject to a whole different series of market forces.

 

[grubar30]

On the other hand- Buyers' market as house prices slide

Ouch, there's some bad losses there.

Btw, I noticed at the bottom of the article how they tried to balance the story by showing how not all properties were selling at a reduced price. But look closely and that last property - the one that sold for a profit - and you see it was purchased in 2002 (and not in late 2003 as the others). Now correct me if I’m wrong, but in 2002 prices had not yet been hit by the property boom (well not the majority) - so of course your going to make a profit on your original purchase, because you didn’t buy in inflated times.

A great example in distorting the message.

 

[Panic]

Sydney

IMHO, Sydney realestate prices are going one way.

There will always be properties that increase a bit, in highly saught after areas, but that is minority.

In general Sydney median prices have fallen 15% in one year, with more to come IMHO.
Reasons:
Low afordability
Decline in migration (both internal and from overseas)

Rents can rise only so much. You can not make someone pay 2X rent if they can not aford it.

Thx
V

 

[Merovingian]

IMHO, Sydney realestate prices are going one way.

There will always be properties that increase a bit, in highly saught after areas, but that is minority.

In general Sydney median prices have fallen 15% in one year, with more to come IMHO.
Reasons:
Low afordability
Decline in migration (both internal and from overseas)

I was somewhat surprised that Sydney wasn't one of the fastest growing cities in the country.

Perhaps one reason is because of the high costs of housing...

How far do you believe the median Sydney house price would fall, until it reaches a safe equilibrium?

 

[Panic]

It depends

Hi Mero,

It all depends. I think that some areas will go down more some less, some may even increase in value. I know this is nothing new to the forum members, but that is what I think at this moment.
Another issue is the uncertainty in the air. Investors and overstretched homeowners are breathing with half of their lungs not to cause another rate rise. The one's that want to buy are waiting, knowing this is their time.
Anyway, in general I think that Sydney will come back to its normal 6:1 home/earnings ratio. Currently it is at 9:1.
I can easily see units in the 15km circle falling another 20-25%. Houses will have to follow, but they hold more value due to land to price ratio.

What I have also noticed that in the last 12 months the resort style units have fallen much more then other units. A friend of mine had his valued at 420K 18 months ago, now in the same complex units sell for 330K and no buyers yet....Why?..... For investors these units are not interesting anymore due to high holding costs. Buyers also see that the holding costs are very high so would rather have something else with lower holding costs. This has effect on other units though. Buyers think... if that unit over there in a resort is selling for 330K... then this unit which is not in a resort should be selling for less then 300K.

These are my observations
Thx
V