Sydney Market at top - calling a severe correction in 2018-2019
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Not sure what your point is??
Its a way to eat the equity without cashing in..... actually, don't worry about it.
Not a good strategy!! You're right I won't worry about it
With such strong population growth, the pool of potential new buyers is never ending.
Market's don't collapse because the 'last greater fool' decides to buy - it's a meaningless concept. You've got your cause and effect the wrong way around.
Markets collapse when the fundamentals change. When the Sydney market finally turns down, there will be plenty of 'greater fools' who just recently bought at the top, but their purchase won't be the cause of the downturn. Their 'greater fool' status will be an effect of the downturn. They'll probably be Macrobusiness members who finally capitulated right at the peak.
Don't agree that has to be the case. Many shares rocket higher, the price reaches levels not supported by the fundamentals, it turns and everyone tries to exit at the same time. There doesn't have to be a change in the underlying fundamentals of the stock, in some cases the decline will start following a positive announcement (improved fundamentals). The property market is no different, there doesn't have to be a major shift in the fundamentals for prices to fall, though no doubt once they are falling everyone will be finger pointing at anything they can, whether it was a factor or not.
If labor is in power tomorrow or in 3 years later, investor tax is re-introduced again. Then, the market will turn without any changes on fundamentals.
You're describing sentiment, which is one of the fundamentals.
Sentiment is what affects the fools buying near the top. So not sure what issue you had with my post you quoted. You are just trying to play pedantic word games.
I have NFI about the Sydney market but these statements stand out to me.
What will cause IRs to rise? Economic growth and lots of jobs... property prices get some protection from all the growth and jobs paying the higher IRs.
What will cause IRs to fall? Economic slowdown and unemployment... property prices get some protection from the low IRs.
The last time we had "imported inflation" was the run-up to 2008. Lately we have had the AUD tank from 1.10 to 0.78 today (and below) and no sign of inflation yet. So it is clear that what caused inflation in the run up to 2008 was - high economic growth at the time prior to GFC - and not the AUD.
If AUD drops to 0.5, what will happen? It will be because our economy is in the can and IRs have dropped significantly, thereby protecting property prices to at least some degree.
So it is difficult, albeit not impossible, to see higher IRs and lower economic growth / jobs. It's a scenario we should have a plan for but not something I would see as high probability. Will this protect the Sydney market? As I said, I have NFI really - and neither has anyone else if they're honest.
What I will say is that black swans have a habit of flying in over clear blue skies... and from the outside it does appear that pretty much no risk is currently being priced into Sydney house prices. But that could continue a long time of course...
Great post. Dooms day merchants who predict there's a bubble about to burst in Sydney rely on interest rates going up but cannot ever justify why they will go up. In this economic climate we have now it is more likely they will go closer to 1% than to 6% anytime in the foreseeable future.
IR wont go up anytime soon... How do i know this? Our world is entering what you called "Currency war", and whoever has the highest interest is a loser.
the higher our currency, the more expensive our good and services are compare to other country. Hence reducing tourism and domestic businesses will be affected, and of course employment will be affected.
The problem is.. Our world is also entering Asset bubble if this continued. Hopefully Sydney market cools down and the growth back to sustainable level.
the higher our currency, the more expensive our good and services are compare to other country. Hence reducing tourism and domestic businesses will be affected, and of course employment will be affected.
The problem is.. Our world is also entering Asset bubble if this continued. Hopefully Sydney market cools down and the growth back to sustainable level.
I like that - never heard it before. What does it mean, please?
(I understand what you're saying about interest rates and the dollar).
Only rising energy prices will cause rising IRs and rising unemployment. But even then we make most of our gas. Only oil affects us.
I'm seeing new off the plan townhouses going for 880k on 230sqm blocks in my area. That's the effect of the railway making it's way to the wild, wild North West. At an average 10% year on year growth that will be $1,288k when the line opens in 2019. That could conceivably happen out here.
What do we call a correction?
http://www.smartpropertyinvestment.com.au/data/nsw/2030/watsons bay
According to this data this blue chip Syndey suburb has already experienced a 50% correction over the last 12 months! I'm sure if a macro correction (such as high rates, unemployment etc) were to arise then the relative area's will suffer whilst others still experience healthy growth. for example unemployment would correct inner suburbs whilst booming middle/outer suburbs (as the unemployed are forced to downgrade, and investors sell), not to mention rate rises would affect the most leveraged suburbs, I'm not sure whether this would affect investors or home owners more. The middle ring suburbs in this situation would probably be a healthy bet. But if you pick the right area (one with prospects that hasn't peaked in relation to this crazy market) then I can see a correction being irrelevant.
There's no value in buying a house that was half it's price only a few years ago. Unless you want to get in on the game and hope the mood of the market doesn't shift. If the property fad goes on it'll make you rich.
It's a decision to buy something already ridiculously overpriced and gamble that it will become even more overpriced (and it will provided the market goes on), or buy a property in a low demand area that isn't inflated, for less risk less reward.
http://www.smartpropertyinvestment.com.au/data/nsw/2030/watsons bay
According to this data this blue chip Syndey suburb has already experienced a 50% correction over the last 12 months! I'm sure if a macro correction (such as high rates, unemployment etc) were to arise then the relative area's will suffer whilst others still experience healthy growth. for example unemployment would correct inner suburbs whilst booming middle/outer suburbs (as the unemployed are forced to downgrade, and investors sell), not to mention rate rises would affect the most leveraged suburbs, I'm not sure whether this would affect investors or home owners more. The middle ring suburbs in this situation would probably be a healthy bet. But if you pick the right area (one with prospects that hasn't peaked in relation to this crazy market) then I can see a correction being irrelevant.
There's no value in buying a house that was half it's price only a few years ago. Unless you want to get in on the game and hope the mood of the market doesn't shift. If the property fad goes on it'll make you rich.
It's a decision to buy something already ridiculously overpriced and gamble that it will become even more overpriced (and it will provided the market goes on), or buy a property in a low demand area that isn't inflated, for less risk less reward.
I think it was first used in the book Black Swan by Nassim Nicholas Taleb.
http://en.wikipedia.org/wiki/Black_swan_theory
Good book.
Where at NW do you see these prices?
More than 1100 Sydney homes to go under the hammer on NSW state election day
http://news.domain.com.au/domain/re...n-nsw-state-election-day-20150327-1m91bx.html
http://news.domain.com.au/domain/re...n-nsw-state-election-day-20150327-1m91bx.html
Without checking, I'm pretty confident this is a case of misinterpreting data.
First, low numbers of homes are sold in Watsons Bay annually which means the data is very volatile. Second, and more importantly, homes there have big pricing disparities (e.g. waterfront, non-waterfront).
It only takes a couple of higher end properties selling in one year to skew the data massively up, then a few "typical" properties to drag it bac down enormously.
