Sydney property market-greenshoots?

[Ajax]

I've been renting in a coastal Eastern suburbs for the last 13 years.

Around 2000 the advice from Robert Mellor at BIS Shrapnel was that Sydney property prices would fall after the Olympics. (He was wrong).

From the press I was reading at the time I kepth thinking Sydney property prices were a bubble waiting to burst. Yet the suburb where I rent was a buzz with substantial construction and renovations. This building/renovation frenzy continued unabated until 2003. In hindsight these savvy owners and developers rode the Sydney property market rise right up until 2005/2006 highs.

It is happening again in my suburb. There are 3 fairly major renovations/rebuilds out of 24 houses backing onto the lanway behind where I am.

When I drive into Sydney past Moore Park and Redfern/Waterloo unit developments on Moore Park Road there are 6 Meriton cranes working flat chat. Triguboff may have it wrong but I don't think so.

I recall that Meriton were prepared to sit things out with unsold units in World Square when it was completed a few years back and simply rent them out until the property market improved...now he can't seem to build units quick enough.

Alan Kohler showed a graph on ABC news last night showing a predicted large shortage of rental properties to happen in Sydney over the next 5 years and another graph showing rents rising well above CPI.

Is Sydney on the cusp of another property price boom?

IMO one or two more interest rate cuts could see this scenario happening.

 

[virgo]

Sydney

Dunno....all i know is there are NO HOUSES below 200k anymore in Sydney....

last year there were still a scattering in Western Sydney and South Western Sydney ...this year completely gone

Damn it (pardon my French)...should have picked up more when i had the chance!

 

[travelbug]

Well according to Matusik clock in the latest API magazine Sydney is at 12 o'clock (Peak). Now THAT I don't understand.

I would have thought more like 7-8 o'clock. Am I crazy/hopeful?

 

[Propertunity]

What I am seeing in a number of places is property that you can buy for $300K that is renting for $350, 360 & 370pw. These kind of yields of over 6% are (to me at least) a pre-cursor to a burst of CG. I am witnessing investors moving back in picking them up.

 

[redwing]

Dunno....all i know is there are NO HOUSES below 200k anymore in Sydney....

last year there were still a scattering in Western Sydney and South Western Sydney ...this year completely gone

Damn it (pardon my French)...should have picked up more when i had the chance!

Nathan and wise SS investors bought all the sub $200k ones, renovated them and pushed the prices up

 

[ok180]

Sydney isn't anywhere close to a Boom. I reckon we're a good 5-10 years away from anything significant happening. There will be pockets that do ok here and there but a boom like what we saw 10 years ago isn't even a remote chance of happening at the moment.

Sydney is basically in a recession.

 

[ali]

Well according to Matusik clock in the latest API magazine Sydney is at 12 o'clock (Peak). Now THAT I don't understand.

I would have thought more like 7-8 o'clock. Am I crazy/hopeful?

Herron Todd White also has had Sydney at it's peak for a while. It could be due to stock on market? I do know however, that tight rental vacancy rates eventually can drive up rents to the point that it is cheaper to buy than to rent and that can lead to more buyer activity. Not sure how far Sydney is from this point, and of course credit availability, market confidence and interest rates will play a part.
Cheers Ali

 

[virgo]

Sydney

And i learnt in Economics 101 that price is a function of Demand and Supply....

the rest is just temporary NOISE...

Does Sydney have both? You draw your conclusion...

BTW i don't need a Boom just a steady 6-7% increase per year....

 

[Ajax]

A bit more noise. I work as an immigration lawyer in Sydney. I currently have more visa applications involving construction related positions than ever. Mainly subclass 457 and Employer Nomination Scheme (Permanent Residence) applications for construction managers, building associates, construction estimators, bricklayers and urban and regional planners (for an inner city Council). Most applicants are from Ireland so it may also be a reflection of the poor state of the construction industry in that country.

 

[virgo]

Immigration

Huh? (sorry please explain the impact on prices...)

And do you think these people will stay on and swell the ranks??

i know one who did :my other half (from Tipperary...seriously)

 

[Ajax]

Virgo,

I'll have a go at explaining impact on prices.

When I see an increased demand by employers in a particular industry sector to sponsor foreign employees it usually means the employers anticipate increased work/activity in their industry and are confident enough to spend $ on immigration advice and employing these people. It shows a very high level of confidence for employers to take this next step (to proceed with sponsorship). They usually hire local employees first (as this is less hassle) and then turn to overseas applicants.

What my immigration work is telling me is that there is sufficient confidence amongst employers in the construction industry in Sydney that they will have increased construction work in the future (even if things have not been so strong in the last few years). The decision to ramp up workforce by players who are at the coal face in an industry usually means there will be increased construction activity in Sydney in the next few years (and in all likelihood Sydney's economy will be strong).

Same goes for Meriton and the six cranes working frenetically building apartments in Redfern/Waterloo/Moore Park. It tells me that these players anticpate strong demand for property in the next few years in Sydney (despite what the newspapers say now) and a stronger economy.

I also get to see visa planning levels for employer sponsored visas issued by the Department of Immigration for future years (albeit at a Federal level). Planning levels are still strong (suggesting the governement thinks the economy is still robust and will need to employ an increasing numbers of foreign workers). If the government has concerns about certain visas and expected economic activity it will make the visa more difficult to obtain (reduce planning levels for the visa). The governemtn did thsi for certain visas around the time of GFC (it looked at making the Skilled-Independent visa more difficult to obtain by making the points test harder).

 

[devank]

You can argue the other way as well. Based on your view, the supply is going to increase which means there is going to be less demand for existing dwellings

 

[virgo]

Sydney

Hi Devank

Yes, supply is going to increase but it all comes down to whether they can meet demand eh?

If there is an imbalance, sure prices can move either way....

So, it all boils down to demand in Sydney, what do you reckon??

My neighbour had 40 potential tenants go through on 1st day of listing for rent....

 

[ok180]

When I see an increased demand by employers in a particular industry sector to sponsor foreign employees it usually means the employers anticipate increased work/activity in their industry and are confident enough to spend $ on immigration advice and employing these people. It shows a very high level of confidence for employers to take this next step (to proceed with sponsorship). They usually hire local employees first (as this is less hassle) and then turn to overseas applicants.
.

I work in the construction industry and see it differently. I think building margins have been squeezed so much now in Sydney that that only viable thing to do for any decent sized contractor is to start getting in cheap labour on 457 visas from overseas. I have worked in this industry for 15 years and my father for 30 years and we've never seen it as bad as it is now.

Don't be fooled by a few cranes here and there by the big players. Sydneys building industry is in absolutely dire straits. Rampant corner cutting, cash payments to workers, subbies sending companies under every 6 months, builders going bust. These aint boom times. When you start seeing brothers getting together with a cousin or friend to do "speccies" that's when it's picking up.

 

[Propertunity]

The rental situation is getting seriously difficult for prospective clients in Sydney and Newcastle & surrounds. We have a number of clients who've engaged us to find them a property to buy - and not because they necessarily want to buy - but because they can't find anywhere to rent.

 

[Rolf Latham]

I work in the construction industry and see it differently. I think building margins have been squeezed so much now in Sydney that that only viable thing to do for any decent sized contractor is to start getting in cheap labour on 457 visas from overseas. I have worked in this industry for 15 years and my father for 30 years and we've never seen it as bad as it is now.

Don't be fooled by a few cranes here and there by the big players. Sydneys building industry is in absolutely dire straits. Rampant corner cutting, cash payments to workers, subbies sending companies under every 6 months, builders going bust. These aint boom times. When you start seeing brothers getting together with a cousin or friend to do "speccies" that's when it's picking up.

I think the recent demise of Medium OLD OLD builder Kell and Rigby is a good example of how things have changed, and if, as a business, you dont move with the times.................

much of the construction labour certainly in Qld has been sucked out of the Comm and resi market and into mining and energy projects..............I know the same is happening In Perth.

ta
rolf

 

[virgo]

Building industry

I work in the construction industry and see it differently. I think building margins have been squeezed so much now in Sydney that that only viable thing to do for any decent sized contractor is to start getting in cheap labour on 457 visas from overseas. I have worked in this industry for 15 years and my father for 30 years and we've never seen it as bad as it is now.

Don't be fooled by a few cranes here and there by the big players. Sydneys building industry is in absolutely dire straits. Rampant corner cutting, cash payments to workers, subbies sending companies under every 6 months, builders going bust. These aint boom times. When you start seeing brothers getting together with a cousin or friend to do "speccies" that's when it's picking up.

Hiya

I come from SIngapore where almost all building work is done not by locals but with immigrant labour mostly from Bangladesh...and the local labour laws have allowed for that....

The Singaporeans themselves cost too much...YET there is so much demand in the building trade...so we are flexible enough to import labour..why not?

Here in Australia, labour is too expensive...and i suspect deliberately prohibitive...do you know how much a plumber or electrician costs in SIngapore? And don't tell me about need to upkeep building standards...the Singaporeans are among the strictest in the world

Sorry i really can't see your link about builders going broke and no demand for housing though...but i am willing to listen and to learn....

 

[ok180]

Sorry i really can't see your link about builders going broke and no demand for housing though...but i am willing to listen and to learn....

There is demand for housing but not to the point where prices will rise 10% every 3 months like what we saw in the early 00's. That's what I called a "BOOM" when you see the value of your house double over 6 months. Builders don't go bust in booms like they are in droves at the moment unless they're up to some "funny business". Builders don't stretch your payments out by months when they are making money but they are at the moment.

From what im seeing right at the coal face though. No Boom. There's plenty of people busy but the prices we get haven't increased in probably the last 6 or 7 years, infact they have gone backwards. When you start to see subbies naming their price and getting work that's when it will be happy days again.

Boom = Builders getting fatter margins = struggle to find available subbies = subbies getting better prices = workers getting paid properly = workers spending more = Boom time.

 

[virgo]

Sydney

Hiya

Just came on today:

http://www.news.com.au/money/proper...ssure-on-housing/story-e6frfmd0-1226315015730

 

[devank]

and not because they necessarily want to buy - but because they can't find anywhere to rent.

and/or they would rather buy than paying a higher rent. May be this the next stage in the cycle... which is a good news.