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

Hi ll,
My 2 cents...

In the last cycle , some properties in Kellyville did fall 40%. But these properties in Seymour avenue (near where I live) were bought overpriced at the 900k mark (should've been closer to 750 / 800) and then sold for Mid 5's..
The truer figure was around a 15% drop IMO. My place was valued at 650k in 2003 then around 550k in 2008.


There may be areas that will drop by around 20% by 2018.. I feel for the people who are now paying over $1300 per sqm in Schofields , Riverstone and parts of Kellyville (around Hezlett road). These people will have very little equity when this boom stops , Interest rates go up and unemployment hits.

Some who bought land there in Nort Kellyville 2 to 3 years ago have seen their prices double ... I have a friend who bought a 650 sqm block for 420k less than 3 years ago and its doubled in value since. These people who bought in early will be ok as they have enough equity to ride it out till the next pickup in prices.
The train line will help in 2019 , but most of the growth has already been priced in.

Watch for Sydney prices to pick up again after 2020...

David
 
Thanks Perky for the info..a drop from 650k to 550k would be good buying....more would be awesome. I would jump in....I didn't do that last time...

From what I recall the rents rose steadily in the hills as the property market correct. Not a strong pace but a healthy 4-5% per annum. If history repeats I will be in like Flynn......;)

perky29 said:
Hi ll,
My 2 cents...

In the last cycle , some properties in Kellyville did fall 40%. But these properties in Seymour avenue (near where I live) were bought overpriced at the 900k mark (should've been closer to 750 / 800) and then sold for Mid 5's..
The truer figure was around a 15% drop IMO. My place was valued at 650k in 2003 then around 550k in 2008.


There may be areas that will drop by around 20% by 2018.. I feel for the people who are now paying over $1300 per sqm in Schofields , Riverstone and parts of Kellyville (around Hezlett road). These people will have very little equity when this boom stops , Interest rates go up and unemployment hits.

Some who bought land there in Nort Kellyville 2 to 3 years ago have seen their prices double ... I have a friend who bought a 650 sqm block for 420k less than 3 years ago and its doubled in value since. These people who bought in early will be ok as they have enough equity to ride it out till the next pickup in prices.
The train line will help in 2019 , but most of the growth has already been priced in.

Watch for Sydney prices to pick up again after 2020...

David
Click to expand...
 
Hi Sash,
My place originally rented at 480pw in 2002. So around a 5% return.
By around 2005 / 2006 was only renting for 400pw. Perhaps a return of 3.5% if we say the place was worth 550k to 600k
It picked up in around 2008 / 2009. Was 580pw around 18 months ago , although we could've got more. I would say it was around 4.5% mid 2012.
We live there now, but my agent thinks it would rent for close to 700pw now - a return of perhaps 3.5%... a large drop off.
My feeling is that it may get to around 4% return one day - perhaps in 2018...

What we need the Government to abolish negative gearing to get the yield back to 5% !! But that's another thread I think.

David
 
I see some real opportunities if the govt abolishes it....I doubt it...have you looked at how many pollies have more than 2 properties??;)

perky29 said:
What we need the Government to abolish negative gearing to get the yield back to 5% !! But that's another thread I think.

David
Click to expand...
 
perky29 said:
Hi Sash,
My place originally rented at 480pw in 2002. So around a 5% return.
By around 2005 / 2006 was only renting for 400pw. Perhaps a return of 3.5% if we say the place was worth 550k to 600k
It picked up in around 2008 / 2009. Was 580pw around 18 months ago , although we could've got more. I would say it was around 4.5% mid 2012.
We live there now, but my agent thinks it would rent for close to 700pw now - a return of perhaps 3.5%... a large drop off.
My feeling is that it may get to around 4% return one day - perhaps in 2018...

What we need the Government to abolish negative gearing to get the yield back to 5% !! But that's another thread I think.

David
Click to expand...

What caused the rent drop in 2005/06? Oversupply in the area?
 
perky29 said:
Hi ll,
My 2 cents...

In the last cycle , some properties in Kellyville did fall 40%. But these properties in Seymour avenue (near where I live) were bought overpriced at the 900k mark (should've been closer to 750 / 800) and then sold for Mid 5's..
The truer figure was around a 15% drop IMO. My place was valued at 650k in 2003 then around 550k in 2008.


There may be areas that will drop by around 20% by 2018.. I feel for the people who are now paying over $1300 per sqm in Schofields , Riverstone and parts of Kellyville (around Hezlett road). These people will have very little equity when this boom stops , Interest rates go up and unemployment hits.

Some who bought land there in Nort Kellyville 2 to 3 years ago have seen their prices double ... I have a friend who bought a 650 sqm block for 420k less than 3 years ago and its doubled in value since. These people who bought in early will be ok as they have enough equity to ride it out till the next pickup in prices.
The train line will help in 2019 , but most of the growth has already been priced in.

Watch for Sydney prices to pick up again after 2020...

David
Click to expand...

Wow. People were buying houses for that much back then? Thats ridiculous.

Why would interest rates be going up if unemployment rises? Shouldn't rates go down if unemployment rises?
 
kamchatsky said:
Hills District is like a car park at peak hours. With all those houses added daily M2 becomes a car park itself.

The kicker will be when NWRL gets commissioned in 2019, and second harbour crossing completes by 2024. It is a long way off but the funding is there.

Funny thing though right now a lot of people living at The Ponds and Rouse Hill drives to Schofields station to catch trains. That is the closest station they get right now.
Click to expand...

The intersection at Sunnyholt Road and Old Windsor Road is planned for an upgrade to 3 lanes each way, although should really be an underpass. One of the big issues is the poor design of the access to Norwest Business Park. All the roundabouts don't really help traffic flow in peak times.
 
wombat777 said:
The intersection at Sunnyholt Road and Old Windsor Road is planned for an upgrade to 3 lanes each way, although should really be an underpass. One of the big issues is the poor design of the access to Norwest Business Park. All the roundabouts don't really help traffic flow in peak times.
Click to expand...

Old Windsor is disgusting coming up to Norwest Boulevarde. Once you go passed there it's not too bad
 
Shadow said:
Macrobusiness have been posting doom and gloom for half a decade. In 2010 they said a property crash was inevitable, could not be avoided, and that house prices would fall in nominal terms for a decade. Five years later and prices are up.

You can see how badly they called things on this chart... http://i187.photobucket.com/albums/x308/LPShadow/Chart-Of-Shame-Q3-2014.png~original
Click to expand...

Thanks for the chart and summary of the economists who made a fool of themselves. Some people do not have much professional pride to go making strong predictions that do not turn out to meet them half-way. They do not know what they ought to know to make the assertions they do.

By the way, you have put your chart in a site that seems to market secret ways of becoming a millionaire with advertisements that are rigged never to turn off regardless of the button option you choose. That is not a good impression!
 
sash said:
Agree...people are insane in the membrane if they pick up one of those. For a similar price you could get one in a much better location...like the lower North Shore...though even there I would be vary....
Click to expand...

Let's just say I've never met anyone who's made money buying apartments, except for the ones my old man picked up in 1992 for 80k ea because he was the developer. Which he still holds. I keep telling him to sell but he's sentimental
 
I've met plenty of people who have made money with apartments. If you look at how much some of these Parramatta apartments are selling for at the moment compared to pre-boom, fair whack of money.

I do agree with Sash though, those apartments are not a good idea.
 
Must be because I come from a Melbourne perspective. Not sure about Sydney.

Would a Paramatta apartment really outperform land though? They're selling for what today, $800k? Can get them for $550k 3 years ago? That would be a pretty dismal return in my books given the boom that's gone on, I'd expect to double-triple my money.
 
I never said they outperformed land, but buying land isn't always an option, many people who bought apartments in Parramatta 3-4 years ago probably couldn't afford land. We're just starting out and bought an apartment in Sydney for our PPOR. We would have loved to buy land but we can't afford it.

$250k in three years isn't dismal. If you're just starting out, scrape together the money for a deposit on an apartment, three years later sell it for that kind of profit, that's great.
 
Well as I said I'm thinking in terms of Melb. And many things worth 550k 3 years ago are 1m plus today.

But yes any profit is good. Better than losing dough for a start.
 
Deltaberry said:
Must be because I come from a Melbourne perspective. Not sure about Sydney.

Would a Paramatta apartment really outperform land though? They're selling for what today, $800k? Can get them for $550k 3 years ago? That would be a pretty dismal return in my books given the boom that's gone on, I'd expect to double-triple my money.
Click to expand...

I've just visited parramatta today after meeting up with some friends from Blacktown.

It is a truly different place nowadays, few years ago in 2010 no one ever think that Parramatta will be one of the greatest newly gentrified city in Australia.

I guess it is too late now to buy any sort of IP there this year to invest in Parramatta.

But anyhow someone in this thread/forum commented that Parramatta will be having some problem with oversupply of the apartment units in the next 2 years, I agree with that but it only affects the new OTP apartment rental price only not bringing the price down so much.
 
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