Sydney Market at top - calling a severe correction in 2018-2019

Yes...for the experienced as some areas of Sydney have some room to move...but it is risk.

Old saying take profits just before the top as most people can never get it right....when the top is...human emotion to hold out too long... :D

charlieandkath said:
I'll contravene your post as believe there is a contradiction in the name of the thread. If Sydney is at top then the correction starts today - not in 18/19. This is where I disagree with you sash.

I'm looking for a median of 1.3m by 2018. Then your 10 to 20% crash for 2 years - then your stagnation for 7 or 8 years - then your buy in again in 2027/2028.

I do believe your right though by warning people to take care now but if you can afford to do it and factor in some big buffers then I still think it is worth a shot especially if you have an exit strategy of less than 2 years.
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sash said:
Yes...for the experienced as some areas of Sydney have some room to move...but it is risk.

Old saying take profits just before the top as most people can never get it right....when the top is...human emotion to hold out too long... :D
Click to expand...

Yes - the risk is increasing every week now at a quicker pace. For me though there is just not enough silliness around yet which is why I reckon we have a way to run yet and if you take some off the table now that could be a sensible thing but you are missing some beautiful cream. My strategy would be to make sure your properties are ready to sell and then when the silliness is crazy then list them.
 
sash said:
MTR

It has a lot to do with how long before distressed sales appear..

It is almost always due to the cost of holding...with current rates the market will laze around at the top for 6-12 months. Just people start moving to suburbs which are more affordable in the Sydney market.

As I said I believe interest rates will head up next year....it take 18 months for rates to rise to say say about 8%. At this rate people would have hit distress when it went above 6.75% but they prop things up for say 6-12 months. It usually will not stay at the peak of the interest rate cycle for more than 6-12 months. At this point of the cycle you get the most amount of bargains.

Obviously...a severe economic recession may push things out earler.
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Sash

There are always distressed sales , and certainly an increase in interest rates will increase their number and there will be occasional bargains

My observation in the past has been that if it's just interest rates , there will always be enough people who can afford to buy to stop a wholesale slump .

Once you throw in significant unemployment and a significant economic downturn that causes widespread fear ........
That's the recipie for a widespread slump and some very very nice bargains

Cliff
 
Yep..if someone offers me $650-700k for my Woy Woy property...happy to off load it. It is now worth about 480-500k.

I bought it for 263k in 2010.:D

Whe I bought it Evand on this site was telling me it would never go up... :rolleyes:

charlieandkath said:
Yes - the risk is increasing every week now at a quicker pace. For me though there is just not enough silliness around yet which is why I reckon we have a way to run yet and if you take some off the table now that could be a sensible thing but you are missing some beautiful cream. My strategy would be to make sure your properties are ready to sell and then when the silliness is crazy then list them.
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ZachAnSel said:
MTR,

Sorry I should have include my area. I definitely keep my card too close to my chest.
I will buy 2018, but not in Syd for sure
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OK, so what you are saying is you will access equity from Syd properties prior to the crash whenever that is?? ready to take advantage of a market that is rising in Australia wherever that may be??
Perhaps Brisbane will shine in 2018:)
 
sash said:
He...he..lets see... ;)

Just remember 1990...1996 and 2006....
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Nope It really depend on the situation and your investment.
if your buying a median value apartment in a high demand with low supply say for 500k where the price used to be 400k in 2010...

Really what are the chance for that to drop back to 400k in 2018..

If you buy in the top end of the market for 1.8-2.5 mill in Epping for instance. Yes it might collapsed. But again most buyer in that area are buying house to live.

And remember RBA will not raise an interest rate if they know that the whole housing will collapse. They will carefully analyse the market and the economy before making such move.


And + our population growth in nsw in the next coming years is so strong and has already been forecasted to outstrip all the building approval that we currently having. This again will push the rent prices up if interest do go up.
 
A question so what do you consider will be a severe correction in terms of %???

I think there is evidence that the longer the ride the likelihood of greater falls.

The recent rising market in Perth 2012-2014, 2 year rise - perhaps typical cycle, now that it is slowing down its relatively tame perhaps 5% falls? in areas where this is an oversupply of same product.

Will we Syd prices fall back as much as 20-40%?? Similar to what happened in Gold Coast, Mandurah.

Just thinking out loud, Syd West has been going insane for so long now, when this market tanks will we see huge drops??

MTR:)
 
Biz said:
Rates going up? What do you think will drive that? Imported inflation?
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Imported inflation, plus reallocation of resources and capital and human labour. I've just contacted agents to sell 3 places this week, which would virtually reduce a couple of A-grade behemoths to debt-free.

My gauge is, when all my friends start talking about properties and going to auctions bidding, it's a good time to sell. When all of them are laughing at property investors, I romp in to the market.
 
sash said:
As I said I believe interest rates will head up next year....it take 18 months for rates to rise to say say about 8%.
Click to expand...

The average prediction is around 3.2% inflation next year, and interest rates up 1%. Now all this could be wrong, which is why the banks also allow you to fix for 5 years at 4.5%, but that also has a lot to do with cost of funds.
 
Let me ask the question....do you think there was a oversupply in 2008?

Also...the reserve bank will do what is relevant to keep the economy on track and that means containing bubbles...

How many cycles have you seen?

windyzz said:
Nope It really depend on the situation and your investment.
if your buying a median value apartment in a high demand with low supply say for 500k where the price used to be 400k in 2010...

Really what are the chance for that to drop back to 400k in 2018..

If you buy in the top end of the market for 1.8-2.5 mill in Epping for instance. Yes it might collapsed. But again most buyer in that area are buying house to live.

And remember RBA will not raise an interest rate if they know that the whole housing will collapse. They will carefully analyse the market and the economy before making such move.


And + our population growth in nsw in the next coming years is so strong and has already been forecasted to outstrip all the building approval that we currently having. This again will push the rent prices up if interest do go up.
Click to expand...


I am impressed with how Perth self cooled quickly...this gives it a sustainable housing market. Even now things on some areas are going backwards but not 20%...more like 3-5%...that is an ideal outcome. But people are still buying homes.

Western Sydney, Epping/Eastwood, Inner West will have the largest correction as thye went up the most. 20% is not out of the question...in 2006..some houses in Kellyville got up to 650k and when the market came off some sold for 510k-530k via distressed sales. Most of these were newer homes were FHB and investors got themselves into trouble. I could also remember going through Wiley Park where the big 4 were letting 2 brm units sell for 115-125k post auction after they peaked at about 180k.
MTR said:
A question so what do you consider will be a severe correction in terms of %???

I think there is evidence that the longer the ride the likelihood of greater falls.

The recent rising market in Perth 2012-2014, 2 year rise - perhaps typical cycle, now that it is slowing down its relatively tame perhaps 5% falls? in areas where this is an oversupply of same product.

Will we Syd prices fall back as much as 20-40%?? Similar to what happened in Gold Coast, Mandurah.

Just thinking out loud, Syd West has been going insane for so long now, when this market tanks will we see huge drops??

MTR:)
Click to expand...
 
MTR said:
A question so what do you consider will be a severe correction in terms of %???

I think there is evidence that the longer the ride the likelihood of greater falls.

The recent rising market in Perth 2012-2014, 2 year rise - perhaps typical cycle, now that it is slowing down its relatively tame perhaps 5% falls? in areas where this is an oversupply of same product.

Will we Syd prices fall back as much as 20-40%?? Similar to what happened in Gold Coast, Mandurah.

Just thinking out loud, Syd West has been going insane for so long now, when this market tanks will we see huge drops??

MTR:)
Click to expand...

My view is. Sell B-grades that you can get any day.

Hold A-grades that come on only once every 3-4 years. Refinance A-grades and have them in an offset account. Be close to debt free.

Cashflow is strong. Once the crash happens, use elephant guns.
 
3-5% sound about right.... 20-40% doesn't sound right at all....

2 bedroom unit in Most part of Sydney has only gone up 5-8% per annum in the past 5 years. i.e.
- Western Sydney : Westmead, Parramatta, etc
- Lower north shore : Lane cove, etc

I really don't see this to drop 20-40% in 2018....


sash said:
Let me ask the question....do you think there was a oversupply in 2008?

Also...the reserve bank will do what is relevant to keep the economy on track and that means containing bubbles...

How many cycles have you seen?




I am impressed with how Perth self cooled quickly...this gives it a sustainable housing market. Even now things on some areas are going backwards but not 20%...more like 3-5%...that is an ideal outcome. But people are still buying homes.

Western Sydney, Epping/Eastwood, Inner West will have the largest correction as thye went up the most. 20% is not out of the question...in 2006..some houses in Kellyville got up to 650k and when the market came off some sold for 510k-530k via distressed sales. Most of these were newer homes were FHB and investors got themselves into trouble. I could also remember going through Wiley Park where the big 4 were letting 2 brm units sell for 115-125k post auction after they peaked at about 180k.
Click to expand...
 
I just don't see the largess and silliness yet for us to be in a boom. To me a boom is where there is so much money in the economy eg share prices at ridiculous prices, top end property breaking through ridiculous barriers, bankers on massive bonuses, commodities at high prices. I am not seeing any of this yet. In fact quite the opposite - share prices are not booming, top end property is just starting to revive, commodities are almost at their lows. Interest rates are at lows to try and get us going.

For the above reasons and others such as supply and demand I still believe a further 30% this cycle in Sydney which say at a median now of 1 million takes us to 1.3 million.
 
Big call....but if everyone is going to stop buying that work perfectly fine with me...as im still hunting and buying :)

However i do agree the CG growth will "slow" down...esp once US rate goes up and our rate goes up as well.

North/ north west and inner west i reckon is close to the top....but south and west has still a bit to go + demand in sydney has always and will always be strong.
 
Yes but I think this round of 'Silliness' is a different beast to the last round you mentioned. The silliness for this round is the 'mum and dad' investors, first-time green thumb investors, and of course modest FHB's in the lower-medium brackets, not the top end.
When silliness occurs en-masse, in the low-medium areas, it'll have the same impact as when a smaller cluster were playing with fire in the top-end.
 
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