Sydney prices " go through the roof " - ABC 24

With all these international $$$ rolling into the market it's hard to see it stopping very soon or very suddenly. Especially in Sydney (which gets much more international attention than any other AU capital city). I think unless there is some regulatory measures (similar to Hong Kong's 15 per cent surcharge on non-residents buying into their real estate market) we won't see a sudden hard crash of valuations.

The danger is that Sydney can become a version of Vancouver where no middle class family can afford to buy a property since the market is heavily dominated by unregulated foreign investments and heavily inflated prices. Vancouver has become one of the most unaffordable real estate markets in the world due to a surge of international immigration and offshore investing. The only people who can afford to purchase housing in Vancouver are extremely wealthy, usually from offshore and often able to buy in cash. So good luck to the local middle class in competing with that.

That sounds like good news for people who have already bought
 
That sounds like good news for people who have already bought

Except property rates will go up with increased land valuations and yields will go down if you want to rent your place to one of the growing middle class who can't afford to buy their own property. In other words, holding costs are going to go up too.
 
Except property rates will go up with increased land valuations


Council rates always go up (certainly in my experience) but, in NSW at least, local Councils are limited to the amount of the increase they can impose as a result of DLG rate pegging.

So what this means is that your property can (for example) double in value - but you don't necessarily pay double the amount of rates.

What essentially determines how much your rate rise is (notwithstanding the rate pegging) is how the value of your land changes relative to the value of other land within that local government area.

If everyone's Rateable Value (RV) in a particular LGA doubles in value - but rates are pegged at 5% - then everyone's rates go up 5%.

If some people have their RV treble in value, most people have their RV double in value, and some people's RV is stagnant in value - then those with the greatest RV rises will see more than a 5% rates rise, the majority will see a 5% rates rise or thereabouts, and those with less of a RV rise or no rise at all - well their rates will increase by less than 5% (or if they are really lucky they will fall).

In short - council rating is a zero sum game. The council has to raise $X in rates (this bit is pegged) and it has $XX in rateable property. So to raise what it needs it just apportions on a "cents in the dollar" basis (ignoring any "differentials" in place - eg. Industrial Land pays 2 x RV, etc).

and yields will go down

The yield on the market value will drop (if prices increase relative to rents).

But the yield on your purchase price is unaffected.
 
Hi Macca
Do you have any feedback on the Western Sydney market? How did you go with the opens?

I have 1 going to market probably next week just waiting on contract of sale to be done so once I have 1st open home which should be next weekend I will know more but to what my agent has passed on seems promising.
 
Council rates always go up (certainly in my experience) but, in NSW at least, local Councils are limited to the amount of the increase they can impose as a result of DLG rate pegging.

So what this means is that your property can (for example) double in value - but you don't necessarily pay double the amount of rates.

What essentially determines how much your rate rise is (notwithstanding the rate pegging) is how the value of your land changes relative to the value of other land within that local government area.

If everyone's Rateable Value (RV) in a particular LGA doubles in value - but rates are pegged at 5% - then everyone's rates go up 5%.

If some people have their RV treble in value, most people have their RV double in value, and some people's RV is stagnant in value - then those with the greatest RV rises will see more than a 5% rates rise, the majority will see a 5% rates rise or thereabouts, and those with less of a RV rise or no rise at all - well their rates will increase by less than 5% (or if they are really lucky they will fall).

In short - council rating is a zero sum game. The council has to raise $X in rates (this bit is pegged) and it has $XX in rateable property. So to raise what it needs it just apportions on a "cents in the dollar" basis (ignoring any "differentials" in place - eg. Industrial Land pays 2 x RV, etc).



The yield on the market value will drop (if prices increase relative to rents).

But the yield on your purchase price is unaffected.

Fair points.
 
I went to one auction yesterday . Didn't sell at auction , but must have sold in the aftermath as it's now listed as sold .

Interesting dynamics at the moment . About one out of five auctions we've seen has been highly competitive with the property selling at the top of the range we expect . The majority are drawn out affairs , selling at reasonable expectations either in the auction , or in a period of negotiation after the auction . Of the one fifth that doesn't sell then , most seem to sell in the month after.

So far we haven't seen anything sell at a price that is " way over expectations " , but I'm hoping that might change soon ....

The only properties that don't seem to be selling are the ones where the vendors are over optimistic and end to be conditioned by the market place , and they sell when the vendors becom realistic. There does seem to be a buyer at the right price for everything that we've seen , even the ones on busy roads and other potential problems .

One of the potential issues affecting one area is the construction of the northconex and the placement of a smoke stack nearby quite a few properties in the area affected have come for sale and so far all have sold .

Cliff
 
Except property rates will go up with increased land valuations and yields will go down if you want to rent your place to one of the growing middle class who can't afford to buy their own property. In other words, holding costs are going to go up too.

Only for new purchases though.
 
One of the potential issues affecting one area is the construction of the northconex and the placement of a smoke stack nearby quite a few properties in the area affected have come for sale and so far all have sold .

Cliff

I've been sniffing for a bargain around the Northconnex affected areas in the North Shore catchment and I am surprised that none of the buyers I spoke to seem to have any idea that the road is going in or the stack. The agents sure aren't telling buyers either ;) One agent got really annoyed with me when I mentioned it...
 
I've been sniffing for a bargain around the Northconnex affected areas in the North Shore catchment and I am surprised that none of the buyers I spoke to seem to have any idea that the road is going in or the stack. The agents sure aren't telling buyers either ;) One agent got really annoyed with me when I mentioned it...

We know of one " bargain " . One recently sold in Bareena for around one mill under asking price , which was 4 mill.

From what I can see it's only impacting around one block around the proposed site . Once you get more than that away it seems to be business as usual.

So low balling places in turramurra , or places like water st will not get you any joy .

We've been watching the wahroonga to pymble market very closely for the last few months and haven't seen anything ( with the above exception ) sell below expectations . House on a corner sold in Grosvnor sold for just over 1.8 on the weekend which was a pretty mediocre house for the area . Thought it was a good price ( from the vendors point of view ) and it's not that far from the smoke stack but outside area of perceived impact .

My thoughts are if you're looking to buy in that market , anything you buy at today's price will look like a bargain in two years time .

The area has been flat for the last seven years until the last year when it's moved 15 % . The upper part of sydney is doing well at the moment ( job wise ) so I think that upper part of the RE market is going to do well as well.


Cliff
 
So close to 80 % ....

79.1 % clearance rate for sydney for weekend of 2nd august ...

On a total of 330 houses that just three houses more to make it 80% .

Will be interesting to see what happens next two weekends . Certainly more auctions coming up on those two Saturdays in our area.

Cliff
 
We know of one " bargain " . One recently sold in Bareena for around one mill under asking price , which was 4 mill.

From what I can see it's only impacting around one block around the proposed site . Once you get more than that away it seems to be business as usual.

So low balling places in turramurra , or places like water st will not get you any joy .

We've been watching the wahroonga to pymble market very closely for the last few months and haven't seen anything ( with the above exception ) sell below expectations . House on a corner sold in Grosvnor sold for just over 1.8 on the weekend which was a pretty mediocre house for the area . Thought it was a good price ( from the vendors point of view ) and it's not that far from the smoke stack but outside area of perceived impact .

My thoughts are if you're looking to buy in that market , anything you buy at today's price will look like a bargain in two years time .

The area has been flat for the last seven years until the last year when it's moved 15 % . The upper part of sydney is doing well at the moment ( job wise ) so I think that upper part of the RE market is going to do well as well.


Cliff

HA! No, not Turramurra or Water st. I am talking around the catchment of the tunnel entrances and stack only, including the Normanhurst side where they are going to do a lot of road development. I am doubtful that the stack will cause any grief to sellers on the Wahroonga side of the freeway even.

I am actually not wanting to buy in Sydney at all, the market is too hot for me (I'm more likely to sell ironically) but I still keep an eye on the upper North Shore for bargains because I feel as you have mentioned its been under valued for a while. I think that has changed in the last year which has seen me looking elsewhere. I do kick myself for not buying a few places in the Pymble to Wahoonga area I've looked at 2 yrs ago but that's life.

If the house market moves a lot further as you suggest its so far out of my league its not funny :) Great for a lot of my family and friends who own houses already though. If only there had been movement in the unit market the way houses have gone up I would be smiling but that will take a decade plus in Ku-Ring-Gai considering the over supply.
 
Latest report from news corp on the weekend auctions

Sydney home auctions took an extreme turn last weekend as bidders threw caution to the wind in a string of surprising results.
A number of homes attracted prices well above reserve, with buyers not scared to pay more for the properties they wanted.
?A very large percentage of auctions are selling well above reserve price,? auctioneer Rocky Bartolotto said.......

Cliff
 
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