Sydney to lead the East's recovery

[MichaelW]

Look out boys here we come!

http://www.theaustralian.news.com.au/story/0,20867,20441721-25658,00.html

Booming Perth and Darwin values will have finally halted, with prices in those cities set to fall within two years, according to the report from Brisbane-based research firm Matusik Property Insights.

But values in Sydney, Melbourne, Brisbane, Hobart and Canberra will be climbing in 2008 on the back of rising rents and a shortage of detached houses, said report author Michael Matusik.

Sydney will be one of the first to experience an uplift when it does occur, for a number of reasons - one of those being that the gap between Sydney affordability and the rest of Australia is actually the narrowest gap we have seen in about nine years," Mr Cornish said.

Australia's largest residential developer, Stockland, also expects an improvement in conditions in Sydney in 2008.

2008, mark your diaries people.

This is all cream for me as my development's success is predicated on today's realisation prices, but a market recovery in Sydney in 2008 would be a bonus. My site is due to come on line mid-2008 if it all goes to plan.

Happy days (unless you're negatively geared in Perth ).

Cheers,
Michael.

 

[Twitch]

OK I'll bite.

Here's todays year growth figures from Residex for the eastern seaboard.

Sydney -0.3%
Brisbane 5.1%
Melbourne 8.2%

So maybe Sydney is leading from behind

 

[asdf]

I certainly hope so Michael. Would be great for us investors. Could set ourselves up in the next boom however I will be taking that in with a grain of salt. The experts were saying back in 04 when they realised the peak was mid/end 03 that prices should start moving again by end 06. That forecast has been delayed another 2 years because the RBA has not changed its tightening stance since Oct 03. If/when we get another 25bps in Nov (Dec bill futures fully factored this in by now), I reckon this market is not going to move in a hurry. BTW, even the Dec 07 futures is showing a yield of 6.25% hence if RBA does go, don't expect rates to fall anytime soon (unlike the Fed where they are predicted a rate reduction in 07). So at average rate of 7.5% on a full doc and NET yields not even close to 5%, it doesn't give me much incentive to bid up this market into 08. I sincerely hope I'm wrong as I'd like to retire too...

 

[Michael Yardney]

It's true that Sydney led previous property cycles, it was the first state to pick up led by its economy.

This time those predictiosn are wrong - very wrong

The next property cycle has begun in Melbourne - about 8 to 12 months ago. Brisbane is also ahead of Sydney this time round.

 

[Kennethkohsg]

It's true that Sydney led previous property cycles, it was the first state to pick up led by its economy.

This time those predictiosn are wrong - very wrong

The next property cycle has begun in Melbourne - about 8 to 12 months ago. Brisbane is also ahead of Sydney this time round.

+++++++++++++++++++++++++++++
Dear Michael,

1. On what basis, do you make your assessment? Care to further share with us for our self-education and due considerations, please.

2. What are the various relevant market indicators showing in favour or/and are actually supporting your views, please.

3. What has been the historical patterns and trends like over the last 3-5 property cycles?

4. Thank you.

Cheers,
Kenneth KOH

 

[grossreal]

hi MichaelWhyte
not sure about 2008 I think it will be before that for cbd sydney.
there are niche markets in nsw that have not been hit with a down movement
if anything the movement has been up.
and we have still 3 months of this year.
yours should be comming on line mid to end of 2007.
my 7 two storey townhouses don't start to get dug until feb 2007 and that a 12 month construct inc sell down time I would be pitching for sept next year for yours to be finished.

 

[MichaelW]

hi MichaelWhyte
not sure about 2008 I think it will be before that for cbd sydney.
there are niche markets in nsw that have not been hit with a down movement
if anything the movement has been up.
and we have still 3 months of this year.
yours should be comming on line mid to end of 2007.
my 7 two storey townhouses don't start to get dug until feb 2007 and that a 12 month construct inc sell down time I would be pitching for sept next year for yours to be finished.

Hi Lawrence,

I have signed a 12 month lease with the vendor in order to secure the site. So, I can't even start building until September 2007. Allowing a 12 month build process means it will come on line mid-2008.

It doesn't really matter that I signed the lease agreement because I'll need this time to get the DA through council.

Thanks,
Michael.

 

[grossreal]

hi MichaelWhyte
1 minor point I missed.
will have a read were you are up to with it soon.

 

[see_change]

It's true that Sydney led previous property cycles, it was the first state to pick up led by its economy.

This time those predictiosn are wrong - very wrong

The next property cycle has begun in Melbourne - about 8 to 12 months ago. Brisbane is also ahead of Sydney this time round.

Michael

Why ?

I'd be curious to know . The market may be moving in Melbourne / Brisbane , but even during flat preiods there maybe preiods where a certain place will make some movement .

Given that the last boom occured not that long ago , It seems to be early to call the next cycle already beginning so confidently.

See Change

 

[kissfan]

however I will be taking that in with a grain of salt. The experts were saying back in 04 when they realised the peak was mid/end 03 that prices should start moving again by end 06. That forecast has been delayed another 2 years because the RBA has not changed its tightening stance since Oct 03.

I'm definately the average Joe but agree with the above.

It seems to depend on who the "expert" is at the time, and even then opinions seem to change all the time.

Regards
Marty

 

[Peter 14.7]

Hello All

As you would now I like to restrict market comments to my specific market.

So having moved 12 weeks ago to regional Victoria Town of 5000, 1 hour drive from Melbourne CBD I can say in support of Michael Yardley, there is a lot of activity here pro-rata.

I am going to build three homes , two IP and on PPOR and spoke to a local builder. He said only the day before he had a developer come up from Melbourne proposing to build three sites with a total of 30 villas.

When you consider we are only 5000 strong that is a lot.

South of Here, towns of Gisbourne and Sunbury is almost joined to Melbourne with suburban sprawl and every time you drive by it seems more are going up.

I do think Sydney will recover as the reality of supply and demand comes into play. Also the drop in petrol price, if held, will help free up wallets and should take pressure off interest rates by reduced inflation.

If I owend IP in Perth and wanted to invest elsewhere I would be selling NOW. It may still run another year but picking the top is fraught with failure.

FYI , Peter 14.7

 

[Twitch]

Michael

Why ?

I'd be curious to know . The market may be moving in Melbourne / Brisbane , but even during flat preiods there maybe preiods where a certain place will make some movement .

Given that the last boom occured not that long ago , It seems to be early to call the next cycle already beginning so confidently.

See Change

SC, clearance rates at auction are now over 70%, sales volumes are up on last year (I think??), prices are up by 8% (and more than double that in quite a few expensive inner suburbs). That suggests to me the start of a recovery.

Just a thought, perhaps RE investors trying to time the market can borrow an idea from share traders; have preset formalised entry triggers that for example define when a recovery is underway based on some metrics in whatever city/suburb. Clearance rates, values and volumes wouldn't be a bad start IMHO.

cheers

 

[see_change]

Does activity mean people are correct . I don't know .

Comment re where I work. there are blocks of units being built around here. Cheap entry level to build if starting as developer. A

re they correct ? I don't know , but I know of one block completed 2 years ago ( 12 units ) of which four have been sold. Not saying it's a good block , but someone obviously thought it was worth building.

See Change