The Mother of All Booms is Coming??

Discussion in 'Property Market Economics' started by sash, 10th Mar, 2010.

  1. sash

    sash Member

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    Hi

    I am seeing that Sydney is looking cheap compared to other states in terms of property prices. Even a global scale you can buy houses within 40 klms of the Sydney CBD for less than 400k. Even Melbourne, Adelaide, and Brisbane look cheap when you go out 30-40 klms.

    I know that Gen Y don't like living in their suburbs but as they age they will change their expeactations just like my generation (Gen X) did. This along with high immigration, high birth rates (need for a backyard for kids), and an endemic structural planning issue which both the state and federal governments are failing to address is going to cause the lack of supply and thus the Mother of All Booms.

    The article below also support some of what I am saying...

    http://www.news.com.au/money/proper...ery-reserve-bank/story-e6frfmd0-1225838977173

    So...what happens once this booms happens....just make sure you are not holding the can in 2014-2015..

    Would love to hear other views.
     
  2. josko

    josko BluePlanet-Green Shackles

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    Hi Sash,

    I had a meeting with an investment group last week that sources alot of data through BIS, REA, ABS etc.

    It seems that the following is obvious:

    1. Opportunist investors are heavily in the market.
    2. There is an under supply of property in Sydney.
    3. Rents are rising due to above.
    4. Rental returns Versus Affordability in Sydney is driving Investor Interest. (Not seen since the 80's)
    5. High immigration.

    I'm not sure about your thoughts on Gen Y's and backyards. Although we have had a high birthrate in recent years, I personally don't consider that this will reflect on statistics in regards to what type of housing is preferable in certain areas. Don't forget we still have the Boomers retiring.

    One thing seems obvious: Sydney/Newcastle is moving NOW, prices are affordable and rents are great. About time too! :)

    Personally, I see 2012 as the year of the boom as the rest of the country realise what is happening.

    Regards JO
     
  3. Propertunity

    Propertunity Real Estate Buyers Agent

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    People keep asking me if NOW is the peak (because prices have reached 2003 peak boom levels). IMO, now is the START of the cycle. people buying now have missed 10% growth of last year in 2009, but there is plenty left to go.
     
  4. bespoke

    bespoke Member

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    So what do you recon the market will do in Newcastle. I have 3 properties in Newcastle and a PPOR just north of Ncle but I havn't really looked at prices till a couple of weeks ago and nearly died at the prices compared to 18 months ago when I bought the IP's. Asking prices seem to have taken a large leap forward recently here. Glad I boughty 18 months ago. Actually I am considering selling 1 unit in Charlestown as it no longer fits in with the direction I wish to go but think I probably should wait 12 months.
     
  5. Propertunity

    Propertunity Real Estate Buyers Agent

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    It is still rising. I'd hang onto it and ride the wave :)
     
  6. bespoke

    bespoke Member

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    What do you mean by this. Do you think it will all come crashing down in 4 years time?:confused:
     
  7. bespoke

    bespoke Member

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    We are going to be selling our PPOR probably around the end of the year in order to build on our 3/4 acre block. I have been monitoring prices where we live (Medowie) and the rises in Newcastle dont seem to have made their way here. A friend of my mother (who is currently selling a PPOR on an acerage in Medowie) reckons the local agent said the market locally in this suburb has tanked. I dont really believe this (she tends to get things wrong) but I'm interested in hearing of your views of this area.:)
     
  8. Propertunity

    Propertunity Real Estate Buyers Agent

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    Yes, have a look at the graph attached. The Medowie market has quite clearly NOT tanked - in fact quite the opposite.........great local agent :rolleyes:
     

    Attached Files:

  9. bespoke

    bespoke Member

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    Hey, thanks for that, much appreciated.

    We actually bought in late 07, but our house is above the median. We will probably get about 40K more than we paid BUT we have spent about 30K on improvemants like a huge verandah and deck and a few other things. I really dont think we'll come out ahead as our place value is probably butting up to the 400K mark and I think there is probably a phsycological block to get over that mark plus you miss out on the people who put under 400k in their search engines. In hindsight, I think we probably paid about 10K too much for it.

    To be fair to the local agent, the lady I am talking about does (with regular monotony) get "the bull by the tail". As she is selling a 3 bed house on a couple of acres and the fact that it is a 3 bedder and on an acerage cuts out alot of buyers - her target market is alot smaller than the average homes target market here. I suspect she may have been told something along these lines and has gotten confused.
     
  10. sash

    sash Member

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    Well property markets like all markets are imperfect....they tend to overshoot or undershoot so supply and demand is never perfectly balanced.

    So whilst we have a shortage which is rapidly growing...at some point the govt. policy will ease the shortage to prevent a bubble. But usually this will be late....and the consequence could be a massive boom after which a bust has to follow.

    So bear that in mind...at the moment it is all apples for Eastern seaboard property in the major cities at least.:D

     
  11. Propertunity

    Propertunity Real Estate Buyers Agent

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  12. sash

    sash Member

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    Well that is a worry...when you have the RBA also spruiking up price.

    It also means that when the next major boom does happen....the downside is going to be interesting......

    I am trying to lock anything of good value with land within 30-40 klms of Sydney. This is where I see the supply constrainsts most.....

    There is not way the NSW govt can turn up supply quickly for a couple of reasons:

    1. Planning rules....no matter how streamlined

    2. Infra levies (can't see them removing this as it will affect govt revenue)

    3. Physical supply of labour ...as they will need to compete with the resource sector.

    4. Other factors already discussed - immigration, birth rates, adjustment of expectation of Gen Y.

    I can see the Sydney median somewhere in the order of 800k sometime if 2014-2015. Which means the 250-350k homes in the Western suburbs will be all but gone!

    The good thing is that median wage is going to be something like 85k per annum by 2014-2015!:D Still unlikely to buy you much here though...

     
  13. Aaron Sice

    Aaron Sice Seldom Seen Kid

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    picking the bottom leaves you with dirty fingers.

    i'd rather see 10% confirmed trend and invest, rather than speculate on the bottom.
     
  14. hobo-jo

    hobo-jo Not a bear just a realist

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    30km out and $400k looking cheap? lol

    $400k would buy you something within 10km of Adelaide.
    30km out you would be looking at $220-250k

    Lending figures released today from the ABS and figures earlier in the week from AFG show a downturn in lending and transactions, we are entering the bust not the boom IMHO.
     
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  15. Piston Broke

    Piston Broke Banned

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    The Population growth & undersupply argument has been going on for >6 yrs.
    It is not a factor.

    The RBA is predicting the last 10 years of devaluation of the currency to start having effect, as they are the main source of that devaluation and have been since their inception.
    And of course use it as an excuse to raise interest rates while keeping the banks solvent.

    lol People who bought before generally lost money.
    Most those who bought last year barely made transaction costs and paid any -CF.
    Too bad I missed out on all that :eek:
     
  16. evand

    evand Member

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    Are you forgetting the growth of last year was caused by one off factors. FHBG, lowest interest rates in 40 years, massive stimulus, Govt bank guarantees etc etc.

    Thats all finished now and rates are rising fast, how can you be so sure we are the start of a boom?

    http://www.smh.com.au/business/home-loans-slump-most-in-a-decade-20100310-pxpp.html

    I reckon prop and sash head to head for spruiker of the year award. With daylight a distant second. :D

    Id love just for once to hear some unbiased commentary.

     
  17. willair

    willair xx

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    When you look back over the past ten years most forecasters generallyfailed dismally to foresee the drastic changes that are unpredictable in real estate,so much can change over six months when there is uncertainty outside the plan itself,Propertunity how many downturns have you sold property through over the past 15 years??willair..
     
  18. stumunro

    stumunro PCA

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    Sorry guys i can't see a MOTHER of a boom without credit sorting itself first.

    The prices moving of recent is due to the sentiment in the market, and don't get me wrong it isn't going anywhere.

    I am still optimistic, I think 10% per annum in Sydney for the next 3 years.

    30% in 3 years is a good enough boom for me.

    IF credit sorts itself out it could be more like 60-70%
     
  19. twobobsworth

    twobobsworth Member

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    Was looking at a place at the end of last month. Western sydney townhouse. 25 minutes just to get in the front door. No definately no boom happening, market is going to tank, you'll see.:rolleyes:
     
  20. Reality Cheque

    Reality Cheque Member

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    Tell me about it. I'm trying to sell at the moment and sales keep falling through due to finance. The agent reckons he's seeing 7 out of 10 falling through due to finance at the moment.

    RC
     
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