We're building towards a home construction boom

[knightm]

What I took from that....

"The wrinkle in this boom is that so much of the work is on towers rather than the detached houses once so beloved by Australians."

So the bulk of approvals are inner city towers. This means be cautious if buying inner city apartments.

No changes to the ripple of Sydney money moving down the coast in my area. No change to fundamentals of well located small complexes in desirable locations
No change to fundamentals of freestanding homes in growing population areas.

If people blindly buy inner city towers without doing their maths they will pay the price.

 

[Redom]

What I took from that....

"The wrinkle in this boom is that so much of the work is on towers rather than the detached houses once so beloved by Australians."

So the bulk of approvals are inner city towers. This means be cautious if buying inner city apartments.

No changes to the ripple of Sydney money moving down the coast in my area. No change to fundamentals of well located small complexes in desirable locations
No change to fundamentals of freestanding homes in growing population areas.

If people blindly buy inner city towers without doing their maths they will pay the price.

That's pretty true and good advice in general.

Although in Sydney, the supply is coming all over major geographic centres and not all located in the CBD ring.

But the same principles for good purchases do very much hold.

Impact on rents is likely to be more pertinent in the short run - supply increases definitely put lids on rental growth and that adjustment happens reasonably quickly.

Cheers,
Redom

 

[knightm]

That's pretty true and good advice in general.

Although in Sydney, the supply is coming all over major geographic centres and not all located in the CBD ring.

But the same principles for good purchases do very much hold.

Impact on rents is likely to be more pertinent in the short run - supply increases definitely put lids on rental growth and that adjustment happens reasonably quickly.

Cheers,
Redom

True Redom - I have been saying my view is the best buying time is past for Sydney for some time. An interest rate drop would give it a final kick for 2015 but otherwise the boom run will slow after that (IMHO).

Its all about locations with low supply, low vacancy, and increasing buyer interest.

 

[Redom]

Its all about locations with low supply, low vacancy, and increasing buyer interest.

Agree knightm - this is a good combo for longer term success.

Sydney has:
1) Low and falling rental yields.
2) More supply of dwellings being built than demand per year. Of course, lots to soak up for years, but nonetheless, the fact we're building more will come online and have an effect soon, especially in rents.
3) Affordability issues - price to income ratios are at peak points. Affordability constraints are a natural barrier.

Nonetheless, with low rates and easy credit conditions, the hungry investor will keep adding to the portfolio. All this should see investor activity move into other markets that exhibit the conditions you've mentioned above.

Cheers,
Redom

 

[natedog]

2015 starting strong

Watch the sales data for new homes and dwelling vommencements over the next 6 months, based on the January sales it could be a decent year for construction....purely from a Melbourne perspective.

 

[Shadow]

New home approvals at all-time high

http://www.heraldsun.com.au/busines...to-rise-in-march/story-fni0xqe4-1227333712333

RECORD low interest rates and a fast growing population have pushed the number of new home approvals to an all-time high in March.

APPROVALS for the construction of new homes rose 2.8 per cent to 19,419 in March, the highest monthly reading for the figures, which go back to 1983.

 

[Shadow]

Well done Shadow

I'd love to hear about how you cashed in on this prediction

I bought several Sydney properties between 2005 and 2009. Just sitting back now and enjoying the growth.

 

[MTR]

I bought several Sydney properties between 2005 and 2009. Just sitting back now and enjoying the growth.

Good for you, You are making money, such fun

 

[Shadow]

BIS Shrapnel predicting a fall in Sydney house prices from next as the construction boom leads to over-supply...

http://www.news.com.au/finance/real...y-prices-to-fall/story-fncq3era-1227416605503

'The supply side of the equation will still have an impact in Sydney, though the increase in construction is starting to see some of these pressures alleviated, Mr Zigomanis said. That alleviation is expected to lead to a fall in values of 4 per cent across the following two financial years, ending in June 2018. For the full three years, growth will top out at 2 per cent.'