Sydney Silliness Warnings 2015

Hi guys, I've recently just found SS and wow, there is so much value here! Thanks for all the shares, lapping it up.

Also wanted to say that through work (lender, big4) I see a fair amount of valuations daily across Sydney metro area. In the last 3/4 months especially the number of vals with market risk of "4" or greater has increased substantially. Not massive news I'm sure but in these instances, policy dictates deals referred to credit manager (as opposed to crossing T's dotting I's say 6mths ago)... makes it just that bit tougher to obtain financing
 
Concur! I just did 3 x customer-ordered-vals a couple weeks ago for suburbs spread out across the Sydney inner, middle, outer rings.

All three of them came back with a score of '4' for that section of risk factors pertaining to 'market conditions/changes'. I was initially alarmed but my broker said it is pretty much standard practice for every val right now to give blanket scores of 4 for that area...

The other 5 or so score areas all came back at 1.5's to 2.5's though which saw the average of all the scores look much less scary...
 
For a first post you are one smart mofo....the Big 4 are starting to shutdown lending in Sydney...this will affect the liquidity in the market..no liquidity (less finance) means prices taper off and fall....some will be caught....interesting times indeed. As someone said the main game is financing...not property as it is the vehicle. Lot so newbies who will be burnt when the music stops....:D

The interesting thing is investors will still invest....just that they will look at Brissie or Melbourne.

Hwangers said:
Hi guys, I've recently just found SS and wow, there is so much value here! Thanks for all the shares, lapping it up.

Also wanted to say that through work (lender, big4) I see a fair amount of valuations daily across Sydney metro area. In the last 3/4 months especially the number of vals with market risk of "4" or greater has increased substantially. Not massive news I'm sure but in these instances, policy dictates deals referred to credit manager (as opposed to crossing T's dotting I's say 6mths ago)... makes it just that bit tougher to obtain financing
Click to expand...
 
BayView said:
A sharp reduction in credit would see a shortage of buyers.

If the rates remain low when this happens, there would not be much change - not much stock to sell.

But if rates go up at the same time - more sellers I'd say, coupled with less buyers - prices will soften a bit.
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Shortage of buyers = dropping prices. Interest rates don't matter so much when the loans are not available. If credit dries up as it did in some countries (90% drop in loans made) prices crash, they don't just soften. Its the finance that's holding the whole thing up, low interest rates just gave it an extra push.
 
DITTO....you got it...you da man!;)

wategos said:
Shortage of buyers = dropping prices. Interest rates don't matter so much when the loans are not available. If credit dries up as it did in some countries (90% drop in loans made) prices crash, they don't just soften. Its the finance that's holding the whole thing up, low interest rates just gave it an extra push.
Click to expand...
 
wow there are so many of these threads stuck in positive reinforcement loops it's amazing - had to slap myself to stop me from running out and buying a house in Mt Druitt
 
wategos said:
Shortage of buyers = dropping prices.
Click to expand...
Not necessarily.

If sellers hold on to their properties - which means stock decreases, it evens out the lack of buyers pretty much. So, basically little change....a flat market, maybe a slight decrease.

Interest rates don't matter so much when the loans are not available. If credit dries up as it did in some countries (90% drop in loans made) prices crash, they don't just soften.
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After the GFC, credit dried up here in Aus to a decent extent.

I personally was in the throws of buying our workshop, and that process took about a year to get done, and over that time, I saw a big shift in (our) goalposts for our borrowing structure (more PPoR equity needed, less Comm lend).

But over that period, not much really changed in the Resi real estate climate.

Its the finance that's holding the whole thing up, low interest rates just gave it the extra push.
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If buyers disappear (due to credit tightening by Banks) it doesn't mean existing borrowers need to sell at all.

In many cases; those who were looking to sell, and who experience no buyers, merely take their properties off the market.

I have seen this scenario a few times here in Aus.

The end result is a period of flat and/or no growth. There is no crash.
 
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Ausprop said:
wow there are so many of these threads stuck in positive reinforcement loops it's amazing - had to slap myself to stop me from running out and buying a house in Mt Druitt
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Mt. Druitt NSW ?

No man don't buy in NSW, buy in Brisbane suburbs that is not flood prone (outside CBD 5KM+)
 
Rate increase = property drop ?

BayView said:
Not necessarily.

If sellers hold on to their properties - which means stock decreases, it evens out the lack of buyers pretty much. So, basically little change....a flat market, maybe a slight decrease.

After the GFC, credit dried up here in Aus to a decent extent.

I personally was in the throws of buying our workshop, and that process took about a year to get done, and over that time, I saw a big shift in (our) goalposts for our borrowing structure (more PPoR equity needed, less Comm lend).

But over that period, not much really changed in the Resi real estate climate.

If buyers disappear (due to credit tightening by Banks) it doesn't mean existing borrowers need to sell at all.

In many cases; those who were looking to sell, and who experience no buyers, merely take their properties off the market.

I have seen this scenario a few times here in Aus.

The end result is a period of flat and/or no growth. There is no crash.
Click to expand...

Mr. Bay,

Do you mean as per this graph taken from premium Eureka Report website:
Australia?s three speed property market ? by lending
150601%20Carr%202.png


Those dips in June 2000, June 2004, June 2008 and June 2010 (exception)

was due to the rate increase by RBA ?
 
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C-mac said:
I think if APRA really cuts the legs off of local investors, it'll see a reduction in Sydney investment by locals, simply because at the paultry DSRs and LVRs that lenders will allow, no 'mum and dad' local investor would realistically have the means to touch Sydney. Those folks will go elsewhere. QLD maybe, or regional NSW, who knows.

So, who does that leave remaining in the Sydney 'game' at that point, then? Well, good old home buyers (the FHB's who can afford it, and the upgraders mostly), and oh, of course the Chinese. Big time. In fact, it'll be even more of a cashed-up playground for the Chinese if their local investor competitors pull out of the game.

Hence my belief that we may (possibly) see a scenario where many non-Chinese-interested suburbs in Sydney will plateau (offering home buyers perhaps a better chance in these suburbs), whilst all those good old Chinese hotspots (the Eppings, the Chatswoods, the Hills Districts, the Strathfields, the Hurstvilles etc.) Will continue to throttle along at full pelt.

So; in my mind; no Sydney crash, just a muted plateau in say 70-80% of wider metro suburbs, and continued silliness in the Chinese favoured + top-end local buyer postcodes.

Just my two cents though, based on observations. Nothing is a certainty in this wild marketplace :)
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WOW C-Mac You could be right... WOW very nice observation... I think so too...
If APRA continue to tighten lending to local investor... It will slow down Non-Chinese suburb. but those Chinese hot spot suburb will continue to fly.

NOT GOOD!
 
BayView said:
Not necessarily.

If sellers hold on to their properties - which means stock decreases, it evens out the lack of buyers pretty much. So, basically little change....a flat market, maybe a slight decrease.
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Sellers hold out for a while in when prices are decreasing, they don't want to accept the new reality. The beginning of a crash involves very low sales volume. But people need and want to sell and after 1-2 years lower offers are accepted and the thing snowballs downward when expectations are for prices to decrease more.
 
wategos said:
Sellers hold out for a while in when prices are decreasing, they don't want to accept the new reality.
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What is your perception of the "new reality"?

Mine is that sellers deal with their own reality everyday. I've been a seller a number of times - some simply due to my direction in life at that time, others due to needing money. The timing was not related to the market at all; just my needs at that time.

Right now, if you are a seller, the chances are that you will get a good price due to buyers able to access finance through lower rates (DSR).

Based on this, a lot of sellers will "test the market" and put their house on the market and try to land a big fish. Sydney is one of those places for sure, and parts of Melbourne are showing similar signs.

I see it every Spring; folks trot out their for sale signs and cross their fingers.

If they don't sell; the sign comes down. These are the folks who don't need to sell.

So, the volumes of sales drops from this group.

Now; put current Sydney into this picture; lots of folks rubbing their hands together right now; trying to land the big fish....then; let's restrict the availability of credit, the buyers disappear.

All those fishermen will pull the sign down and go back to their life. They are not needing to sell just because the credit for others has dried up.

The people who need to sell when there are no buyers? Well; this has always been the case, and they have to take their chances.

The beginning of a crash involves very low sales volume.
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That was Sydney back in the early Naughties. Low volume of sales. But no crash that I can remember; just a flat line.

But people need and want to sell and after 1-2 years lower offers are accepted and the thing snowballs downward when expectations are for prices to decrease more.
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Methinks you are merely just trolling now.
 
haha thank you! Guess just fortunate to be in a position at the "coalface" - incidentally though I do work with a few referrers and in the last couple of weeks especially they are seeing some noticeable drop-offs in volumes, even having time for lunch! Except for the Chinese ones... they just buy the restaurant...
 
Hwangers said:
haha thank you! Guess just fortunate to be in a position at the "coalface" - incidentally though I do work with a few referrers and in the last couple of weeks especially they are seeing some noticeable drop-offs in volumes, even having time for lunch! Except for the Chinese ones... they just buy the restaurant...
Click to expand...

Do you mean there is a reduced sellers activity this week onwards ?
 
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