Sydney Market at top - calling a severe correction in 2018-2019
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Perth had periods of prices falling as well as stagnating while there was strong population growth and increasing incomes...
No . Not soon . We will need higher than anticipated interest rate rise or a SIGNIFICANT economic shock to DROP Sydney .
Cliff
Suffice to say, most savvy investors are sitting out of the Syd market atm and those with significant long term Sydney holdings are probably doing the same but enjoying the show for however long it lasts. Longer the better 
The thing I wonder about the most though is where rents are headed in the short to medium term. If/when this boom subsides, will rents rocket up as they did in 2007-9 or are we in for a protracted period of structural change where real rents fall or plateau?
I think it depends upon what wages do...I don't think the simple projection of 'poorer people will move further west or interstate' will justify any material rent hikes. If house prices in Sydney are at their peak, are rents as well...or do they have room to grow?
The thing I wonder about the most though is where rents are headed in the short to medium term. If/when this boom subsides, will rents rocket up as they did in 2007-9 or are we in for a protracted period of structural change where real rents fall or plateau?
I think it depends upon what wages do...I don't think the simple projection of 'poorer people will move further west or interstate' will justify any material rent hikes. If house prices in Sydney are at their peak, are rents as well...or do they have room to grow?
I don't see how rents could go up if the boom subsides. Why would a tenant be paying more for a house that is worth less? Certainly when interest rates rise you can pass it through to the tenant and you've got a reasonable explanation. The yields in Sydney are soo low because the prices are out of line with traditional fundamentals like price to median income.
If rents did rise I think we'd see a higher vacancy rate as people either move towards more affordable suburbs, move into share houses or just move back in with their parents.
As for wages there is an excess pool of labour. Employers can afford to be selective and pay competitive wages so I see wages remaining fairly stagnant across the board. Once again another factor as to why rents won't increase much.
Rents will move down in the medium term.
I have an IP that was bought new in 2002. It rented for 480pw at the time.
Boom ended late 2003, by around 2005 / 2006 the same property was renting for 400pw. The oversupply of houses caused this - and this is likely to happen again (oversupply of rentals after the end of the price boom).
David
I have an IP that was bought new in 2002. It rented for 480pw at the time.
Boom ended late 2003, by around 2005 / 2006 the same property was renting for 400pw. The oversupply of houses caused this - and this is likely to happen again (oversupply of rentals after the end of the price boom).
David
Why ?
I prefer sitting on the sidelines , watching for when things are taking off , and then buying .
Or wait for the crashes and buy when no one else is buying . Makes it easier to accelerate the returns .
Cliff
True, I preferred stable Than too much fluctuation
I'd rather have stable growth, it ensures pesky interest groups, the government and anyone else with an opinion stays out of the way of making money. If things go too crazy I'm worried that governments either federal or state will look for ways to handicap those evil property investors. It's all I hear and read, whether negative gearing or changes to financial regulations blah blah blah......
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How did the last boom end? Was it just one week that got slow and everyone stopped buying or was it an interest rate rise? Im too young to undersand how this will end.. Seems neverending to me right now.. All im seeing is people investing over and over again and using the equity over and over.. I don't see how it will end without something that kills consumer confidence like the media using the word "recession" or interest rates going up
How is that possible a rent rate going down in Sydney especially in CBD area ?
it may be yes in the far mining town but in a mtero area, I've never heard of.
The most possible one is just the rent rate will stays as it is now (sideway).
You mention A and B grade properties a lot -
What is an A grade property, and what is a B grade property - in your view?
Increase in rental? I have rather seen the opposite: reduced rents, less demands, longer to find a tenant.
Why would someone sell a positively geared property? Well, first many investors in Sydney are not seeing positively geared properties. Second selling can happen simply for the purpose or redeploying the funds elsewhere/ reduce debt etc.
For me:
A grade is probably a combination of north orientation, tree lined street, quiet but sufficiently close to the heart of a suburb, beautiful nature strips, beautiful houses next to or opposite you, could be regarded as a top 5 street or top 2 pocket in a suburb, ideally good bones, best if it holds development potential, no undesirable buildings or industrial land visible or probably even too close by, close to key public transport infrastructure.
I guess a B grade is a property that doesn't exhibit enough of these attributes. Particular killers for me would be main roads, opposite commission flats, T intersections, street looks ugly or is too narrow, street too industrial and doesn't have enough trees or has ugly nature strips, it belongs in a dodgy pocket of a suburb or an inferior pocket, far from the shopping strip, far from bus/monorail/tram/train.
I find A grades retain value in a downturn better.
That's great .
As non a drop further in a down turn , then you have a potential of high percentage changes in a cycle . I've observed this in last cycles , so I operate on the basis that I'm more than happy to buy in b grade suburbs , but wouldn't buy a d grade property . The property doesn't have to be perfect .
The main attraction for me for nice properties in nice areas is they involve less hassle to maintain , so make A good long term hassle free investment .
Cliff
