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

[Peter Parker]

So far no one has shown me anything to suggest WS gets better long term growth than closer suburbs.

How important is this? The answer is it depends on your investment strategy.

The western suburbs don't need higher long-term growth than closer suburbs for BV's strategy to work successfully.

Indeed, due to the higher yields and ability to have a bigger portfolio, even if they grew at a lower percentage rate the owner may do as well as the investor who only has 'blue chip' inner suburban IPs. Give me 7% of $1m over 10% of $500k any day!

In the current environment, I would argue that an investing strategy that only needs property to grow at CPI (on average) is far safer than one that assumes much higher growth (eg 10% pa) to work.

Plus the higher holding costs inherent in lower yielding property increases the risk of the investor having to sell up (due to being unable to meet the -ve cashflow) or becoming disheartened at the big losses and selling.

Murphy's law states that the next boom starts about 6 months after selling so a portfolio that can be sustained long-term without forced sales or excessive negative cashflow is best.

 

[buck nammit]

How important is this? The answer is it depends on your investment strategy.

The western suburbs don't need higher long-term growth than closer suburbs for BV's strategy to work successfully.

Indeed, due to the higher yields and ability to have a bigger portfolio, even if they grew at a lower percentage rate the owner may do as well as the investor who only has 'blue chip' inner suburban IPs. Give me 7% of $1m over 10% of $500k any day!

In the current environment, I would argue that an investing strategy that only needs property to grow at CPI (on average) is far safer than one that assumes much higher growth (eg 10% pa) to work.

Plus the higher holding costs inherent in lower yielding property increases the risk of the investor having to sell up (due to being unable to meet the -ve cashflow) or becoming disheartened at the big losses and selling.

Murphy's law states that the next boom starts about 6 months after selling so a portfolio that can be sustained long-term without forced sales or excessive negative cashflow is best.

I was never arguing his strategy. His strategy is fine - that's what did when I got started. If you check the OP we are debating whether or not WS is a boom area. Rather than acknowledge my points, BV has resorted to changng the parameters of the debate and accusing me of being arrogant and dismissive. Must be hard for him to concede that it's actually possible he may be wrong.

 

[buck nammit]

Leaving this topic!

goodluck with your investing hey.

Hope you do well out of you inner city stuff.

Better think twice next you accuse someone else of being all talk no action.

 

[buck nammit]

How important is this? The answer is it depends on your investment strategy.

The western suburbs don't need higher long-term growth than closer suburbs for BV's strategy to work successfully.

Indeed, due to the higher yields and ability to have a bigger portfolio, even if they grew at a lower percentage rate the owner may do as well as the investor who only has 'blue chip' inner suburban IPs. Give me 7% of $1m over 10% of $500k any day!

In the current environment, I would argue that an investing strategy that only needs property to grow at CPI (on average) is far safer than one that assumes much higher growth (eg 10% pa) to work.

Plus the higher holding costs inherent in lower yielding property increases the risk of the investor having to sell up (due to being unable to meet the -ve cashflow) or becoming disheartened at the big losses and selling.

Murphy's law states that the next boom starts about 6 months after selling so a portfolio that can be sustained long-term without forced sales or excessive negative cashflow is best.

The OP has a $400k budget to buy a house in WS. He can't buy 2 houses with this amount which makes this argument irrelevant.

He can either buy a house out west or a unit close to the city. So the debate really centres around which one we all speculate is the better option.

Some of you are going to extreme and illogical measures to justify your opinion. It speaks volumes that you have moved outside the paramters of what is being discussed. I wonder why no one has been able to show how WS historically gets better growth, and any reasons why it may be a better short term option.

 

[PrimeCommercial]

If you check the OP we are debating whether or not WS is a boom area.

We'll on this point I wouldn't like to wager. IMO there is far too much available land yet to be developed for there to be a 'boom' of sorts. I doubt there will be a substantial increase in capital growth over and above other areas of Sydney.

I am positive on western Syd as a growth area and think its a great yield/growth investment but Its just not going to be in the top 5 CG areas of NSW.

 

[Peter Parker]

The OP has a $400k budget to buy a house in WS. He can't buy 2 houses with this amount which makes this argument irrelevant.

Why not?

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007178687 $189k

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007283209 $215k

Talk the latter vendors down to $211k (shouldn't be hard) and there's your 2 houses for $400k. Or if you don't want to do the work, buy two units for that amount in better nick or maybe one house and one unit (maybe NOT in a far outer suburb eg http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2006979767 ).


If I had $400k available and 'had' to spend it all on just one property, then a $400k house in a middle suburb would possibly be a better bet than the same in an outer suburb (which would probably be an over-capitalised McMansion on little land). A $400k unit in an inner suburb might be OK as well.

But as the examples above show, that's not the only option and luckily there is no requirement to spend the $400k in one go, or on only one property.

 

[BV]

I'm here to discuss the pros and cons of WS vs other alternatives, but everytime you here something you don't like you start with "you look down on WS" or "you're the only one saying your view is better".

Buck

As I said in my earlier post, property in the capital cities appreciates at approx the same levels irrespective of where it is with the exception of the few exclusive suburbs.

Is my strategy working for me?
It is and I am sticking to it.
In fact, when prices came down I went out and bought more...
I should point out that I am nearly cash flow positive in an enviroment of high interest rates so you can imagine what will happen when interest rates start to come down.

May I suggest that instead of trying to make a point that area A will never see any capital gain and area B will, you sit down and work on a plan on how to achieve your investment goals and when you do feel free to share them with the rest of us.

 

[buck nammit]

May I suggest that instead of trying to make a point that area A will never see any capital gain and area B will,

Do you mind quoting where I said this?

 

[BV]

Do you mind quoting where I said this? .

You've implied this in your following post with your last sentence.

http://www.somersoft.com/forums/showpost.php?p=443554&postcount=53

 

[contrary]

Bill, what do you think of even further west and north of there, windsor/richmond or south west badgery's creek ?

 

[BV]

Bill, what do you think of even further west and north of there, windsor/Richmond or south west badgery's creek ?

Contrary

I strongly believe that if area A increases in price, then area B will also increase because of association to area A.

I am not going to live in Windsor because it would be too far from my work but others do. I actually know a couple, the son works at Richmond and mum works in Penrith.
People assume that every1 needs to travel to the city.
It's not so. A lot of people do, but the majority of us don't.

Also, our jobs are changing, if you recall a couple of years ago, call centres were closing shop here and opening up in India.
They are now packing up and coming back to Sydney, Melbourne etc
but they are not necessarily opening up in Sydney CBD.
In 10 years time a lot of people will be working from home or out of employment hubs conveniently located all around the city and this means that decentralisation will continue.

Interest rates should start coming down soon but it may take a while before we see any significant price increases so low holding costs are very important. IMHO if we buy along a transport corridor and at property entry level we won't go wrong.

Have you travelled to Windsor or Budgerys creek recently?
I don't know where you live but if you intent to buy there you should take a drive first and look at the area for it's potential and with an open mind.

Is Richmond going to be Sydney's 2nd airport?
I don't know but from an article I've read it's on the cards
and I guess a new motorway joining the M2/M7 will be required.

Sydney's transport has changed dramatically in the past 5 years and will continue to improve.
The widening of the M2, M4, M5 is now inevitable.

Finally, our population is increasing, it's just a matter of time before they open up new housing estates and new business parks and those farming areas will sooner rather than later convert to cash.

IMHO

 

[buck nammit]

You've implied this in your following post with your last sentence.

http://www.somersoft.com/forums/showpost.php?p=443554&postcount=53

I just went and read that post. It implies nothing of the sort. In fact, I have mentioned several times that I do believe WS will boom - just not in the short term.

 

[buck nammit]

Jacque

Thanks for that.

I am copying the relevant section here because I am sure
some people are accidentally going to miss your link

"Sydney
The best capital growth performers between 1995 and 2005 all averaged better than 13 per cent growth per year, according to RP Data figures.

They include humble locales in the far western and southwestern suburbs such as Holsworthy (averaging 15 per cent, with a 2006 median house price of $375,000), Bonnyrigg Heights (13.5 per cent, $386,000), Busby (13.3 per cent, $272,000), Tahmoor (13 per cent, $290,000) and Glen Alpine (14.1 per cent, $498,000).

The standout performer is extremely humble North St Marys, with a 2006 median house price of just $255,000, despite growth of 18.6 per cent a year over 10 years.

Compare that with some of the so-called prime suburbs, all with median house prices above $1 million: Artarmon 9 per cent, Bellevue Hill 5.1 per cent, Bronte 5 per cent, Coogee 11.4 per cent, Cremorne 7.2 per cent, Gordon 9.4 percent, Kensington 8.1 per cent, Mosman 5.8 per cent, Paddington 10.5 per cent, Palm Beach 7.8 per cent, Queens Park 5.4 per cent, Randwick 8.5 per cent, Rose Bay 10.6 per cent and Woollahra 11.1 per cent.

The flag-bearers for the “better” suburbs are Vaucluse and Collaroy, which both delivered 15.5 per cent capital growth over 10 years. Manly also did well, with a 13.7 per cent average. "

Cheers

Any chance you are man enough to admit you are wrong?

 

[BV]

Buck
If I missunderstood your meaning is irrelevant now

 

[contrary]

Hi Bill, I've had residential property in sydneys west in the past, and it did well, but am moving to aquiring rural this cycle as I think I can do better with that. I bought a farm near Badgery's creek last month. If the airport ever gets off the the tarmac, I think it may actually be a positive as the area will probably be rezoned industial. I am going to try to get some agricultural operations on the farm, glasshouses and some buildings to make it CF positive and the potential for rezoning is a free option if it happens.

I just missed out on a farm on mamre rd about a years ago and one near claremont meadows 5 years ago and that was a mistake. They have done very well, particularly the one on mamre road. The ropes crossing devellopment has done wonders for residential in St Mary's. Badgery's creek is not an adjacent suburb to the residential devellopment fringe in the immediate future but it will eventually get there.

Windsor/ richmond, I also had a look at as you can still get 5-10 acres out there for 500-800k. Unfortunately it's nowhere near where I live but will keep looking for a project that will work. If and when transport improves there (M2 connection or simillar) it will be a major positive.

The LPT blow up may have a short term effect on rural sydney fringe property, especially if stockland or someone with landbanking goes under. The CG is there but you have to have very strong cashflow. The effective yield on a farm house without develloping agricultural use is about 1%. Setting up the agricultural use involves a bit of cash as well.

I reckon some people will have their minds closed to buying out west, but who cares, there is money to be made out there. Personal experience and cash in the bank is always good evidence.

 

[BV]

Contrary,

I agree that buying farmland is not a bad move, but I am not able to do this.
I am building up my portfolio using OPM and I couldn't do it without the rent coming in.

I am looking for 1 more IP at present and I think the current negative sentiment works in our favour because there is less competition.

I went to a bank auction in South West on Sat. hoping to pickup a bargain but wasn't successful. Unfortunately there were 2 young couples bidding and they pushed the price up by $45K above reserve.

Not to worry there is always next week.

Cheers

 

[msa]

Attraction to suburbs close to water

I would like to say:
By looking at the capital growth trends for Sydney's western suburbs compared to the capital growth reached by properties along Sydney's coastal suburbs over the last 10 years, I will certainly be still buying along the coastal suburbs.
At the end of the day, human beings are attracted to the water. If unable to live near the water, at least for a holiday or even a day-trip, everyone wants it.

 

[ziggy2214]

I would like to say:
By looking at the capital growth trends for Sydney's western suburbs compared to the capital growth reached by properties along Sydney's coastal suburbs over the last 10 years, I will certainly be still buying along the coastal suburbs.
At the end of the day, human beings are attracted to the water. If unable to live near the water, at least for a holiday or even a day-trip, everyone wants it.

msa

It depends on where the IP is and what tenants you get.
Often you could be relying on weekly leases and those are weather and season dependent.
Long term tenants are not always easy to get.
It depends on location

 

[buck nammit]

msa

It depends on where the IP is and what tenants you get.
Often you could be relying on weekly leases and those are weather and season dependent.
Long term tenants are not always easy to get.
It depends on location

I believe he said Sydney's coastal suburbs. There's no seasons or weekly tennants or lack of tennants.

There's absolute no doubt these suburbs will get beter growth than WS, the issue is one of affordability. But then again, I've seen older 1 bed apartments not far from the beach and city around the $400k mark.