Sydney inner west: what is happening with the market?

Propertunity said:
I reckon the market moved 10% from 1/7/09 to 31/12/09 and then another 10% from 1/1/01 to 28/2/10 - mostly due to shortage of stock + huge demand.
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Supply & Demand at work.....of course the G & D'ers will claim it's all due to easy credit or FHOG or anything else that makes this look like anything but the market doing what the market does when there are anomalies in the supply/demand equation....

It had to happen...after years of stagnation it's now the cycle moving in SYD favour...simple cycle stuff enhanced with supply demand micros....
 
504k! That's truly crazy, this is reminiscent of 2003, there's a frenzy going on where prices are going to get ahead of rental yields.

The smart thing to do would be to stay out for a bit, once the RBA hikes rates to 7% it will take the wind out this and turn it back into a buyers market when people start thinking before they splash out the cash. Properties stay on the market for longer and there's a bit more negotiating power around.
 
tab said:
....and I have also been reading that in the next 20years the amount of single person households will rise considerably which leads me to think 1 bedders in inner west or desirable areas will grow quite well?
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tab, the Mrs & I have a lot of 1 brm granny flatted properties and the demand for 1bedders is huge, so I have no doubts about what you are reading - the demand is already here.

I'm not saying 1 bedders aren't any good for CG or yield - just that I have not had much to do with them.....and the couple I did look at fell below that magic 50m2 mark where lenders get all coy about lending ;)
 
inner westie i think u may be a bit off the mark there but time will judge who is right,

I live in Melb and we have enjoyed massive growth in Melb metro in 2007 and again in 2009, 2010 has started out of control, 30%-40%pa growth in some areas based on like for like sales 12 months ago.

I am a "hotspot investor" (try to pick a market at beginning of upswing) who started investing in 2003 and have invested in all states and (NT) bar SA and NSW over the past 6 1/2 years, I may well be wrong but I think the time for Sydney to boom is now, it really started last year and Syd has not had much growth since 2003 and that is a big build up of demand. Especially for existing Syd investors who now the market has started to move have more equity to access and invest again if they choose.

It is the biggest RE market in the country and I want a piece of it, actually 3-4 pieces would be better.

I will make a predication that you may ridicule latter but i estimate 40% growth over next 3 years for the Sydney metro market

Cheers

Bigtone
 
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I think the Inner West market is most definitely "hotting up". Our suburb (Marrickville) is going crazy at the moment....houses going for $100k over reserve. We have had exceptional growth on our place in the past 3 years - about 40% and it has been suggested by many in the media you'll double your money buying in Marrickville over the next five years. Whether this is true or not, i am not sure but going by the growth we've experienced over the past three years....we're keeping our fingers crossed!
 
Bigtone said:
inner westie i think u may be a bit off the mark there but time will judge who is right,
...

I am a "hotspot investor" (try to pick a market at beginning of upswing) who started investing in 2003 and have invested in all states and (NT) bar SA and NSW over the past 6 1/2 years, I may well be wrong but I think the time for Sydney to boom is now, it really started last year and Syd has not had much growth since 2003 and that is a big build up of demand. Especially for existing Syd investors who now the market has started to move have more equity to access and invest again if they choose.

...

I will make a predication that you may ridicule latter but i estimate 40% growth over next 3 years for the Sydney metro market

Cheers

Bigtone
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Hmm - i don't know if the people of sydney can tolerate 40% growth over the next 3 years. 40% capital gains leads to 40% bigger loans and also 40% increase in rents at current yields.

I'm looking for a way into my second IP and I'm very hesitant to borrow large amounts - 350-400k for 80% LVR cos the repayments will be around ~$3k a month should rates go back up to 7% in a couple of years time. You'd need $800/week in rent to cover water/strata/council/mortgage - could you get that for a property worth $500k today?

That by the way is how I got my first IP, seller was distressed - interest rates were at 7.25% in early 2008 and they were demoralized and wanted out asap so I got a big discount, they'd made total 10% CG from 2003 to 2008, couldn't even keep up with inflation.

I hung on for a bit and then *bam* GFC hit, interest rates fell to 4% and all of a sudden I'm really comfortable + I've ridden the wave of 20% CG growth over the last 2 years

Early '08 was a golden time to buy, it was a buyers market. When u need to compete like you do now I would say the boom boat has set sail. The current situation is such that I think people are over-borrowing and overbidding which is driving up the prices.

Then again I could be totally wrong - Sydneys market needs to be compared to Hong Kong/Tokyo/New York/London now - it's globalized, you have foreign investors, large immigrant inflows, jobs that pay comparably to those other big cities.

Time will tell :) As they say, the market will remain irrational for longer than we can stay solvent. Patience is also a virtue, whether you're in the market or out of the market.
 
Just to add one more thing into the mix, many agents are telling me that a lot of the investors buying are doing so using their SMSF's as the vehicle.

This means wads of cash from the SMSF and a very low (if any) LVR loan used to purchase the property. The purchasers are chasing CG and yields are almost irrelevant.

If true, this boom could be blamed partially on the government's changes to SMSF rules. LOL :p:p
 
As you say inner-westie time will tell.

You now have good equity in your property, if you think Sydney is overheated why not borrow that equity out and buy Brisvegas or somewhere else and get some diversification happening.

I hotspot because i don't want the situation you had with no growth for years 4-5 after purchase. I want to be able to access equity and move on to the next place and keep going and going.
 
Whats an SMSF? I'm pretty noob to the whole thing :)

I'm very much a buy and hold strategy so yield (and general liveability) matters a lot to me, the aim being to get positively geared to a point where I need to borrow more to get negative again and then use those funds to purchase the nth IP.

Bigtone - I've thought about inner Melbourne since mid 2007 but decided to put my money in Sydney instead cos Syd yields were better but Melb CG has probably outperformed if this forum is anything to go by. Now is definitely not optimal for Melbourne.

Brisvegas might be the next thing if I can find some easy-to-let places. I also separate greater western sydney and inner sydney the latter of which I'm priced out of now. western sydney has good yields.

5.5% gross rental is my magic decision making number, i just won't touch anything below that. Both my IP and primary residence were surprisingly close to that number when i bought them.
 
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