Sydney property buoyant in slump
- Thread starter twobobsworth
- Start date
"the least expensive suburbs will outperform the top ones this year"
Interesting bit.........given that there has to be 1st home buyers frenzy soon enough (with the rate drop and rents climbing).
Interesting bit.........given that there has to be 1st home buyers frenzy soon enough (with the rate drop and rents climbing).
I believe there are a few good reasons why we'll see the outer suburbs outperform the inner over the coming years:
1) Increases in rents are driving people into cheaper areas.
2) The socioeconomic group of the majority of migrants will see them settle in cheaper areas (this accounts for a large portion of Sydney population growth)
3) The wealthier suburbs tend to be more subject to equity market fluctuations.
4) The outer suburbs have suffered more from recent mortgage stress.
Consider also that the outer suburbs are often easily commutable to the city (as little as 30 mins by train). As we come into harder financial times many people will not be left with the option living where they desire, rather where they can afford. And regardless of the current financial state, rents are only going to go north in the next few years so even those gainfully employed and residing in the inner suburbs may be forced out further.
1) Increases in rents are driving people into cheaper areas.
2) The socioeconomic group of the majority of migrants will see them settle in cheaper areas (this accounts for a large portion of Sydney population growth)
3) The wealthier suburbs tend to be more subject to equity market fluctuations.
4) The outer suburbs have suffered more from recent mortgage stress.
Consider also that the outer suburbs are often easily commutable to the city (as little as 30 mins by train). As we come into harder financial times many people will not be left with the option living where they desire, rather where they can afford. And regardless of the current financial state, rents are only going to go north in the next few years so even those gainfully employed and residing in the inner suburbs may be forced out further.
Nathan
Properties with low holding costs are the way to go and you've bought yours at the right time. Soon when your IP's become cash flow +ve you could buy more but as a buyer you will have competition and it won't be easy to find bargains anymore.
IMO you've done the right thing but...
The problem with buying too many properties is that if interest rates turn you could find yourself struggling to cope with the repayments so you'll need to have a holding plan and an exit plan.
I am thinking that if interest rates drop by another 1% I should try and fix the loans of the IP's I am keeping long term for 10 years or so.
10 years is a sufficiently long enough time and will take me through the next boom.
Cheers
not so, if interest rates fall further by 1% people will be saying
hold on, our rent is the same as a mortgage repayment and will go for the later
If it costs about 5% of a value of a property to rent and about 9%-10% to own. How will it be the same if IR drop 1%.
There is still a a very long way before owning will be come as attractive as renting....let alone more.
Affordibilty is still at record historical lows, prices are still very high and yields are still very low.
And i disagree that now is the best time to buy. Why would you negative gear to a large extent when there is no sign the market is turning up. And most likely is still falling.
Believe me, if you wait for signs of an upturn in the market you wont have much competition as it takes quite along time for sentiment to turn.
As a successful, long term investor you have to restrain from looking for things that confirm your existing beliefs. Its a dangerous way to invest and its preferable that you keep an open mind to things you might not agree with and/or might hinder your investing success.
There is still a a very long way before owning will be come as attractive as renting....let alone more.
Affordibilty is still at record historical lows, prices are still very high and yields are still very low.
And i disagree that now is the best time to buy. Why would you negative gear to a large extent when there is no sign the market is turning up. And most likely is still falling.
Believe me, if you wait for signs of an upturn in the market you wont have much competition as it takes quite along time for sentiment to turn.
As a successful, long term investor you have to restrain from looking for things that confirm your existing beliefs. Its a dangerous way to invest and its preferable that you keep an open mind to things you might not agree with and/or might hinder your investing success.
Evand,
Where does the 9 to 10% come from?
My rough calcs are telling me that a drop of another 1% will bring rates to approx 6.5% and the introductory rate could be lower.
Ok the area where you are buying might not have yields close to that
but some properties will.
Possibly, but it will certainly make some tenants consider their options.
Cheers
The rent v's owning still rages.......why can't intrinsic value be placed upon owning...you know....I'd like to stay here... not be at the whim of a landlord....I want my own house to live in......
The figures may stack up, but will it be the absolute case when people start to see mortgae rates drop.....some will want their own piece of ground....
Either way, I'm happy there will be more renters......
The figures may stack up, but will it be the absolute case when people start to see mortgae rates drop.....some will want their own piece of ground....
Either way, I'm happy there will be more renters......
Renting versus buying, i think what you need to remember is the bulk of renters are maxed out on credit, and probably living from pay packet to pay packet with no credit history, if they did have any money they spent that on either a car or plasma, so if the remainder do have any money they may have enough for a very small deposit on a house, the banks are not going to lend on a property that’s falling in price or a 95+% mortgage, now picture this you are a 1st home buyer who may or may not have a job buy the end of the year! you have no security with your job, you will do almost anything at work to keep it within reason! also the daunting task of outlaying all your hard savings which took you 5yrs to save on a property that may go down in price, plus a huge commitment on paying a mortgage for the next 30yrs, also with a economy spiralling out of control plus all the fear that goes with the whole process, i really think renting in this current market would suit them more rather than buying, the whole process for some people is just to daunting, i have not touched on renters yet with kids
Don’t try & pick the bottom, cash is king, where you keep it stashed is your call, a friend of mine owns a debt collection business his phone never stops ringing, 6 months ago he was quite, when these houses get repossessed out west as the owners cant pay the mortgage what do you see in the house all the latest gadgets from washing machines to a new car no wonder they went broke
Buy in a good area when your gut feeling, intuition & experience tells you, buy in a area where you have done your homework or a area that you know very well, sit outside the area in a car for a while, check out the neighbours & feel the space, ask yourself “would you live here” {assuming your purchasing property for {IP}, personally I only buy within a 10 minute driving time from the cbd, that’s all the criteria I need
Don’t try & pick the bottom, cash is king, where you keep it stashed is your call, a friend of mine owns a debt collection business his phone never stops ringing, 6 months ago he was quite, when these houses get repossessed out west as the owners cant pay the mortgage what do you see in the house all the latest gadgets from washing machines to a new car no wonder they went broke
Buy in a good area when your gut feeling, intuition & experience tells you, buy in a area where you have done your homework or a area that you know very well, sit outside the area in a car for a while, check out the neighbours & feel the space, ask yourself “would you live here” {assuming your purchasing property for {IP}, personally I only buy within a 10 minute driving time from the cbd, that’s all the criteria I need
the market is pricing in a recession as a near certainty. Will rents really go up very much in that environment ? Might rents not go DOWN as everything else goes down except unemployment. I mean that is what deflation is all about
The stockmarket is punishing people and organisations that are leveraged. Do you think the property market is any different ?
The stockmarket is punishing people and organisations that are leveraged. Do you think the property market is any different ?
This may be in CONTRY to what you belive, however... i see the picture as....
Australia has put it hands up and said were F@#KED by redusing cash rate by 100points, i believe that that was the first nibble and we may se 150-200 more BP romoved from the cash rate by end of the financial year, and wouldnt be suprised if we see a special reduction before nect month RBA meeting.
What does this mean? it means the RBA will be printing more money, and putting more debt in the economy to give a level of comfort to the market and get average joe spending again, what this also does is triggeres inflation, the obverese to deflation/stagflation.
what happens in inflationary periods? everything goes up across the board, including wages, you can see it now, pensioners wanting increase of 20%+ public servants wanting increases, and private sector causing strikes over pay disputes. so in inflation periods everything goes, up and therefore your debt in todays terms gets waterd down...
I think i still have my year 9 commerce books in the shed if anyone would like to borrow them
Australia has put it hands up and said were F@#KED by redusing cash rate by 100points, i believe that that was the first nibble and we may se 150-200 more BP romoved from the cash rate by end of the financial year, and wouldnt be suprised if we see a special reduction before nect month RBA meeting.
What does this mean? it means the RBA will be printing more money, and putting more debt in the economy to give a level of comfort to the market and get average joe spending again, what this also does is triggeres inflation, the obverese to deflation/stagflation.
what happens in inflationary periods? everything goes up across the board, including wages, you can see it now, pensioners wanting increase of 20%+ public servants wanting increases, and private sector causing strikes over pay disputes. so in inflation periods everything goes, up and therefore your debt in todays terms gets waterd down...
I think i still have my year 9 commerce books in the shed if anyone would like to borrow them
Financial year ends June 30 2009
i dont see that type of cut by the end of the fin year, the rba will cut by .25 increments over a longer period, the rba had already gone to far raising rates in feb & march, it can take many months for the effect of a rate rise to work through to the market & start changing the inflation figures, when they raised the rates in march the figures still would not have come through from the feb rise, they just over did it, Mr. Stevens in his job he just wanted to prove his point, im not sure if anyone remembers what he said when he took the job over, his comment was "i dont believe the figures on inflation" you dont say those sort of comments when you move into a new job about your predecessors figures, since then rates have been going up continuosly
