inner westie i think u may be a bit off the mark there but time will judge who is right,
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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.
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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
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.