Western Sydney suburbs - Is this the boom area for Houses???

[dedfred]

Hi All,

Dedfred is back on line looking for property number 3. This time after much thought we’ve decided to make a lifestyle move and purchase a house for us to move into (currently living in a 3 br unit in Lidcombe). However, even though it’s a place we’re going to live in, I want to make the choice in suburb etc similar to that of buying an IP so I retain the opportunity to make some potential capital growth and utilise the equity in the years to come.

I managed to get a look at the Residex April report for Top 100 suburbs and found it rather interesting. From my modest experience in the property market I know that some of the key factors for suburbs to be earmarked to boom include items like:

• Current Infrastructure
• Proposed plans
• Transport
• Population
• Government future investment
• Schools etc

Saying that, many of the suburbs in Sydney’s West have been identified in the above report as boom suburbs in the next 5 – 8 years. Suburbs like Glendenning, Hassall Grove and surrounding have been predicted to boom; I don’t get the logic behind the report and was hoping someone can give me insight into these areas that I can’t seem to locate on the net.

I’ve tried to see if there’s much plan’s in the further for these suburbs from the government but haven’t had any luck locating such evidence. The current infrastructure is rather good with the recently redone Plumpton market place (Wollies, Big W, Medical Centre etc) and the Mt. Druitt Westfield just a 15 – 20 min drive away. I’m not too sure about transport arrangement in the area, given that I work in the city this is important so if there are locals who have more information on this area’s transport infrastructure or any future plans the government may have in relation to transport – please share.

My budget is around the $400K mark and from initial search’s on realestate.com.au it seems we can get a decent place for a family of 5 (2 Adults + 3 kids under 6 years). I will be looking at leasing out the property for the first year, so I wouldn’t mind getting an idea of the rental market demand in the area. Couldn’t find much information in relation to rental market online but I do plan to call some agents from tomorrow.

Appreciate all the help I can get in understanding why Residex claim these suburbs will boom and any/all information people may have on these areas - what’s good and not so good about these suburbs and surrounding areas.
Look forward to some quality advice as always.

Cheers

Dedfred

 

[PrimeCommercial]

For that kind of money I wouldn't be looking in the area's you suggest. I've owned retails stores in Wetpoint Blacktown and Seven Hillls. I've regularly driven thru Donnside/Woodcroft/Plumptom and although from an investment point of view some areas out there have potential, with a budget of $400k I think you'd be better off looking in Seven Hills/Kings Langley/Tonngabbie area.
Train station at Seven Hills and Toongabbie, M2/M7 and M5 within 5 mins drive, a handful of public and catholic schools both primary and secondary. Hills private hospital being built 5 mins away at norwest.

I think these areas would show a better growth rate than the ones you have mentioned. Again I wouldn't discount any of those areas further out west as some have good growth potential.

 

[Nathan]

yes it will be good.

 

[JIT]

yes it will be good.

Hiya Nathan,

...then how come you voted ''No - You must be joking''?

Thanks.

 

[dedfred]

Hiya Nathan,

...then how come you voted ''No - You must be joking''?

Thanks.

I guess I'll take that as a 'I wish I knew' Nathan

 

[Ridin-High]

nathan has around 6-7 propertys in western sydney so i can presume that he thinks something about that area

 

[dedfred]

nathan has around 6-7 propertys in western sydney

Hi Nathan,

Seeing that you are putting you money into this area are you able to share your logic behind your investment. Do you have research that leads you to believe the boom is going to happen or is it something else.

I would love to get some insight from you. Please post your reply or private message me.

Ridin-high, thanks for the heads up on nathan

 

[Nathan]

thanks guys,

i got on here earlier today after a big night last night... (hence the short reply) did not read the question properly, and couldnt find any way of changing it.

my logic is that the western sydney areas will grow in the future as supply and demand kicks in... sydney is the entrance to australia, and there is a lot more room for this to grow.. also i live in sydney and it is affordable housing, there will always be tenants and need for rentals out here. the infrastructure is all being set up and if you look @ similar states with similar areas the gap in price aint like sydney. i just belive and prognostication is telling me that this is the key.

i wish i bought up in 1990, however i was just starting kindergarden so couldnt raise the funds, but if we go back and look @ a 200k house now in 1990 that same house would most likely sold for 60k or less thats 4 times its value in 18 years. if we look @ the yeilds they can be quite ok out there, and means you can service more exposure. for you sydney siders, if you have $500pw - cf per wk, you can buy a red brick in baulkham hills that will cost you $500 pw in the red for a $500k purchase, out west i can buy 5 x $200k places that will cost me $500pw so $1 mill exposure.

people will say western sydney is crap or whatever and i will argue this tiill i turn blue in the face when i hear prices will not go up... if we go through the past for comparison sales in areas we will see a pattern but im going to be simple here... if property doubles in 10 years my 500k is 1 mill and my 1 mill is 2 mill, therefore 500k better off, but when you take in the power of compounding we will see 1 house @ mt druitt will cost $400k and house @ baulkham hlls will be $1 mill, so there cant be such a gap compounded so we will se some kind of catch up.

also if you look @ these areas out west there the same as ermington, dundas, ermington, etc, was 15 years ago (when i was in kindegarden) as time goes on the areas will come into shape and clean up.

hey i may be wrong, i belive im right, who knows, guess we will see what goes in another 15 years.

 

[buck nammit]

These suburbs will boom, it's just a matter of when. I suspect "when" is a long time away.

Sydney is a 2 tiered market at the moment. Suburbs in close proximity to the city have been getting reasonable growth over the last 2 years (eastern suburbs, inner west, north shore, even sutherland shire), but suburbs out west have been in decline, hence the two tiered market.

Whilst I do believe Western Sydney is hit bottom (or near enough), I don't believe it will move much in the next few years, if at all. It will only be when IR drop considerably and that gap between the 2 tiers is so wide that people see how undervalued it is, hence a spike in demand, and a boom.

But right now, I think it's a poor choice. Better off buying a similarly price cheap unit close to the city. Sydney is the place to buy right now - just not out west yet.

 

[buck nammit]

also if you look @ these areas out west there the same as ermington, dundas, ermington, etc, was 15 years ago (when i was in kindegarden) as time goes on the areas will come into shape and clean up.

hey i may be wrong, i belive im right, who knows, guess we will see what goes in another 15 years.

15 years is a long time to wait for gentrification. Too long a time.

One one hand, it's too long for gentrification, on the other, it's too long to take advantage of short spikes. Over the long term WS will never get the growth of suburbs close to the city. You may ge lucky, buy in a suburb that get's 20% in 1 year and then sell and buy elsewhere, but you have indicated this is not what you're about. The odds are heavily against you getting better growth out was as opposed to close to the city.

 

[Nathan]

15 years is a long time to wait for gentrification. Too long a time.

One one hand, it's too long for gentrification, on the other, it's too long to take advantage of short spikes. Over the long term WS will never get the growth of suburbs close to the city. You may ge lucky, buy in a suburb that get's 20% in 1 year and then sell and buy elsewhere, but you have indicated this is not what you're about. The odds are heavily against you getting better growth out was as opposed to close to the city.

true, to certain extent. your governed how much porperty you can service and how much debt the cash flow can service... this is also important as is your plan with the property... i think of property as a vehicle for long term as entry and exit costs are high. if you want quick in out and gains the sharemarket offers that, but thats a different ballgame and enter at your own perill.

a sydney boom is on the cards right now, its been deflated for 5 years. give it 3-5 years. 15 will gaurentee 2 booms pretty much.

 

[josko]

These suburbs will boom, it's just a matter of when. I suspect "when" is a long time away.

Sydney is a 2 tiered market at the moment. Suburbs in close proximity to the city have been getting reasonable growth over the last 2 years (eastern suburbs, inner west, north shore, even sutherland shire), but suburbs out west have been in decline, hence the two tiered market.

Whilst I do believe Western Sydney is hit bottom (or near enough), I don't believe it will move much in the next few years, if at all. It will only be when IR drop considerably and that gap between the 2 tiers is so wide that people see how undervalued it is, hence a spike in demand, and a boom.

But right now, I think it's a poor choice. Better off buying a similarly price cheap unit close to the city. Sydney is the place to buy right now - just not out west yet.

Hi there Buck,

What we may be seeing now is a start to the ripple effect.

Generally speaking, it always the inner city prices that start to move. Then as property becomes unaffordable people look to the next suburb, then the next and so on. Western Sydney will have it's time.

It seems many investors are debating whether or not the time is right to buy. Forecasting the boom is as difficult as forecasting the bust.
In the long term, which is what most of us are here for, the only bad time to buy is in an overheated market - the peak of a cycle.

So whether or not you or I think the market may or not boom for another 2 years is irrelevant. What is relevant is buying now rather than not at all, while there are some great bargains out there..

Regards Jo

 

[Gatoblanco]

well I dont know if they are the next boom suburb but the question in the subject of your post reminds me of quite a few posts i have seen in the last six mths that have been asking essentially "is the boom coming now for Sydney" I can see there are a few expectant and hopeful investors there waiting for things to happen in Sydney. I hope they do for all of you who own property there.

 

[Nathan]

well I dont know if they are the next boom suburb but the question in the subject of your post reminds me of quite a few posts i have seen in the last six mths that have been asking essentially "is the boom coming now for Sydney" I can see there are a few expectant and hopeful investors there waiting for things to happen in Sydney. I hope they do for all of you who own property there.

Self forfilled propehcys ey??

i for one think we are on convergance, and will see it blow off top with any sign of recovery mode.

 

[BV]

But right now, I think it's a poor choice. Better off buying a similarly price cheap unit close to the city. Sydney is the place to buy right now - just not out west yet.

I disagree on the poor choice comment
I'd say it depends on what people are looking for.

If I had the choice to buy 1 property in Bondi or 4 in well located suburbs out west I'd go for the later because my holding costs will be lower and because I would have a bigger pool, of tenants.

I buy cheaper properties because I am not convinced that the price difference between expensive suburbs and cheaper suburbs is sustainable over the long term.

Don't pay too much attention to property reports.
Trends can and will change.
There is a lot of decentralisation taking place in Sydney, new bussiness parks are being built all the time, the transport system WILL improve shortening travelling times and interest rates will fall again making cheaper properties easily positive geared.

I voted yes because I have no doubt that those suburbs and
the whole of Western Sydney will see good price increases in the future.
How long it will take for this to happen is anyone's guess but it will happen and as long as my holding costs are low I am in no hurry.

I have several IP's in Western Sydney and I will be buying again soon.
The only thing stopping me is the uncertainty of interest rates
and the suspicion that WE WILL ALL be asked to pay for the losses of NAB, ANZ CBA etc.

Cheers

 

[BV]

well I dont know if they are the next boom suburb but the question in the subject of your post reminds me of quite a few posts i have seen in the last six mths that have been asking essentially "is the boom coming now for Sydney" I can see there are a few expectant and hopeful investors there waiting for things to happen in Sydney. I hope they do for all of you who own property there.

Gatoblanco

A lot has happened in the financial markets in the past 6 months.
The high interest rates are making properties unaffordable.
Prices have come down in some areas and there could be price corrections in others.

I am not too concerned because I am not selling but the high cost of finance has made me stop buying for now. When the time is right I will be buying again.
Cheers

 

[dedfred]

Property reports

Don't pay too much attention to property reports.
Trends can and will change.
There is a lot of decentralisation taking place in Sydney, new bussiness parks are being built all the time, the transport system WILL improve shortening travelling times and interest rates will fall again making cheaper properties easily positive geared.

Hi BV,

I wished someone told me this a little sooner I would have saved myself $215.00 . I'm not too sure what other people's thoughts are on Residex reports, I tend to think they were/are pretty good. No doubt it is a trend analysis and given that the property cycle is said to be around the 8 year period one can justify the reports are a waste of money/un-required.

I tend to use them to lock my sights on specific suburbs. I always find it overwhelming coming into the market to by a property and having the whole of NSW to choose from if not the whole of Australia. The last time I bought the report for QLD (2006), using the details I purchased a second hand property for $270K in Morayfield - today this property is valued at $330K (not to bad for my first time). Anyway, that's my theory on reports and how I use them.

With this good debate about Western Sydney, using the data from the Residex report the suburbs that I've mentioned in my original post have been highlighted to make good capital growth in the years to come. From reading the posts put up by others it seems to make sense:

• The interest rates have dropped prices.
• The price correction in various suburbs has also levelled prices out.
• And that beautiful subprime market crisis has slowed things up.

All in all a great time for buyers (I think). Ideally, I would have bought a unit within 15Kms radius from the city, but this time (as mentioned in the post) it’s a life style decision. Having 3 little ones under 6 is fantastic but they're asking for pets, more room to play etc and a 3 brm unit can only offer that much.

• My question in relation to these suburbs was to identify if there was anything specific that was planned to take place in these areas that I'm not aware off. Normally, this is the trend (from my modest knowledge).
• My question in relation to transport was to identify again any plans from the govt to improve these facilities. I work in the city and need to be able to get to and from work (as much as I love to stay home).

All in all I think the various posts have captured a few key points:

• The property market is possibly slowing up due to various factors which makes it a good time to buy if you're in the market for a property (IP or owner)
• Sydney is potentially due for a boom after the 3 - 4 year correction (quiet) period.
• The interest rate and banks are still treading on uncertain waters.
• One should by their property to meet their personal requirements - saying that I'm trying to buy a house to live in by using an IP method to purchase this property (if you know what I mean).

Keep it coming folks...interesting pool results as well.

Cheers

 

[buck nammit]

true, to certain extent. your governed how much porperty you can service and how much debt the cash flow can service... this is also important as is your plan with the property... i think of property as a vehicle for long term as entry and exit costs are high. if you want quick in out and gains the sharemarket offers that, but thats a different ballgame and enter at your own perill.

This is exactly my point:

Why would you buy in a suburb that you already know will not get the same growth as another over the long term?

You seem to have assumed I advocate short term trading? Not true. If you read it properly I advocate the opposite. I acknowledged that the only time you will come out on top by investing West rather than Inner is if you time it right for a sport term spike.

a sydney boom is on the cards right now, its been deflated for 5 years. give it 3-5 years. 15 will gaurentee 2 booms pretty much.

1. I believe that is half correct. A boom is on the cards for tier 1, tier 2 will follow much later
2. 2 booms in tier 1 > 2 booms in tier 2

Serviceability and outlay is not that much harder with inner suburban units.

 

[buck nammit]

Hi there Buck,

What we may be seeing now is a start to the ripple effect.

Generally speaking, it always the inner city prices that start to move. Then as property becomes unaffordable people look to the next suburb, then the next and so on. Western Sydney will have it's time.

Inner Sydney has had growth, not boom. I'm far from convinced that this ripple effect will happen just yet.

Why?

Interest rates
Bad press/bad consumer feeling
Too many people forced to sell out West

The Western boom most likely won't happen until the inner suburbs boom making the gap between the two tiers so great that Western Sydney is value for money. Then investors will swoop and create a boom. But I think that is a few years away.

Short term: Inner suburbs > West
Long term: Inner suburbs > West

It seems many investors are debating whether or not the time is right to buy. Forecasting the boom is as difficult as forecasting the bust.
In the long term, which is what most of us are here for, the only bad time to buy is in an overheated market - the peak of a cycle.

So whether or not you or I think the market may or not boom for another 2 years is irrelevant. What is relevant is buying now rather than not at all, while there are some great bargains out there..

Regards Jo

This is all well and good, and I agree, but my point is: why buy West when the percentages say buy Inner (or beachside etc)?

Can you mount an argument as to why Sydney's West is better than other regions? (apart from people who absolutely can't afford anywhere else?

 

[josko]

Inner Sydney has had growth, not boom. I'm far from convinced that this ripple effect will happen just yet.


I did not say it was booming.

However when you make comments like:

15 years is a long time to wait for gentrification. Too long a time.

I was merely trying to point out that Nathan won't be waiting 15 years for his property to double in value. The fact that prices are rising sparadically in some areas of the inner city, and beachside suburbs is a start.

Why?

Interest rates
Bad press/bad consumer feeling
Too many people forced to sell out West

The Western boom most likely won't happen until the inner suburbs boom making the gap between the two tiers so great that Western Sydney is value for money. Then investors will swoop and create a boom. But I think that is a few years away.


I agree

Short term: Inner suburbs > West
Long term: Inner suburbs > West


This is all well and good, and I agree, but my point is: why buy West when the percentages say buy Inner (or beachside etc)?

Can you mount an argument as to why Sydney's West is better than other regions? (apart from people who absolutely can't afford anywhere else?

You answered your own question

You tell me where you can buy a townhouse for $130,000 closer to the city or beachside?

I know for a fact in New Zealand I could buy a house for 80k!

I've bought houses there, but would you be comfortable buying there?

My point is:

1. We all have our comfort zones and we all have our own learned experiences and knowledge of property investing. In most instances, this will effect our choices of where we are comfortable buying.

2. If you want to change the question to a more mathematical, analytical point of view - then why not buy in Western Sydney. I for one have not researched this area, but I have seen the numbers. They add up!

Nathan's townhouse is a classic example.

Purchase Price: $130k
Rental Income: $240/week
Return: 9%

While these are gross figures, it sure does sound good to me.
Even if this property is NG, it will only set Nathan back @$2k/yr.

But putting the above debate aside, your question was:

Can you mount an argument as to why Sydney's West is better than other regions? (apart from people who absolutely can't afford anywhere else?

I have never said Sydney's West is better than other regions - but from an affordability point of view, it sure does beat alot of them!

Regards Jo

PS: Just because the letters are in bold- doesn't mean I am yelling at you.