What's gonna stop the Sydney boom?

Discussion in 'Property Market Economics' started by ej89, 27th Apr, 2015.

  1. ej89

    ej89 Member

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    I'm young and wasn't old enough to see how the last boom ended.. Does it take an interest rate rise to stop it? Did it just stop over one weekend? Did something happen to the economy?


    Just seems never ending atm doesn't it.. I mean, how much can a house in Blacktown, Penrith and Campbelltown really be worth? Could Campbelltown hit 600k for old established homes? Will Blacktown stop at 800k? Will Penrith stop at 650k?

    Seems like every sale is the starting price for the next sale a week later.. It's become nuts.. Where are people getting their money from lol how is a standard house in Fairfield selling for 750k...the place is a dump.. I work there lol
     
  2. Shadow

    Shadow Evil Specufestor

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    It won't end until after one or more of the following happens...

    1. Interest rates hit 'effective ZIRP' and can't go any lower.
    2. Interest rates rise by at least 1% (from whatever level they bottom at).
    3. The construction boom creates an oversupply of empty dwellings (the last time this happened was in 2003 when rental vacancy rates hit 4.5%).

    According to RP Data, Sydney posted an all-time record-high clearance rate of 92% this weekend... https://www.scribd.com/doc/263203560/Weekend-Market-Summary-Week-Ending-2015-April-26

    In 2003 the Sydney boom ended as a result of rising interest rates combined with an over-supply of dwellings and rising vacancy rates.
     
  3. windyzz

    windyzz Member

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    According to last week Statistics from skynews. Sydney Vacancy rate is at 0.9%
    Stats by Charles Tarbey CEO of Century 21
     
  4. ZOMG

    ZOMG Hungry

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    Change in legislation or policies (read: negative gearing or CGT discount) that would affect property investment or investments in general.

    Or another GFC without the mining boom to spot us.
     
  5. Erica

    Erica Member

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    Thanks Shadow, good info there
     
  6. 2FAST4U

    2FAST4U Member

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    There must be a lot of people with some fat pockets or heavily leveraged. How much rent are you going to get for an established 750k house in Fairfield? $500 a week? How much potential is there to raise the rent in the future? As a buy and hold investor with the yields in Sydney it just doesn't make sense to invest there. That said I'm a low-mid income earner so I can't even afford to live in Sydney in the first place.
     
  7. see_change

    see_change Apprentice Timing Lord

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    2FAST4U

    if I was in Adelaide I'd be looking there . I'm not and it's still somewhere I'm thinking about .

    Cliff
     
  8. cadence

    cadence Member

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    If australian dollar goes up it could affect new developmts which might flow on to general market

    overseas buyers can only buy brand new

    dollar has dropped over the years so even though $1m seems like a huge median for us
    its probably costing the foreigners less than what they wouldve paid a few years ago when the dollar was higher and the price was lower
     
  9. Phar Lap

    Phar Lap Member

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    AND?Bob Carr and Michael Egan of the State Labour Govt of the day brought in Vendor duty. That was the priick that popped the bubble.
     
  10. Mick C

    Mick C Mortgage Broker

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    Interest rate rise or high(er) unemployment ( Which are linked) - ie Doom and loom won't drive price down ...if anything it will slow the price increase and prices will remain flat for a period of time.

    It's not really "where are ppl getting the money from" it's the BORROWING capacity that has increased due to the lower rates = Can afford to buy at a higher price....the money comes from the bank to answer your question :)
     
  11. see_change

    see_change Apprentice Timing Lord

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    Ah ... Yes ... That did have an impact .

    Cliff
     
  12. 2FAST4U

    2FAST4U Member

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    Yeah there are definitely bargains to be had in Adelaide. My last purchase was in February and I'm worried about job security atm. If I had a permanent position I would be on the prowl but because I'm only temporary I don't want to over-leverage myself.
     
  13. 2FAST4U

    2FAST4U Member

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    Besides interest rates for the Sydney market it would also come down to dwelling supply, population growth, and foreign investment. If there's a decrease in immigration, a glut of supply, and a crackdown on foreign investment capital growth will be minimal at best. Given current trends that all seems unlikely.
     
  14. bob shovel

    bob shovel Muppet

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    2FAST4U

    Any hot tips for which areas in Adelaide? It hasnt been on my radar. Do you think things will start moving soon?
     
  15. D.T.

    D.T. Property Lookerafterer

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    Things are already moving. Need to look for deals whereas last year they were on a silver platter. Refer to the 2 threads in the Where To Buy section of these forums for more info.
     
  16. 2FAST4U

    2FAST4U Member

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    I like the north side. 7%+ yields.

    Check out this place for example.
    http://www.realestate.com.au/property-house-sa-elizabeth+park-119530279
    165k free standing house with low maintenance. 688sqm + solar panels. You would get $260 a week rent for it easy.

    If you want to settle for 5% yield and greater capital growth potential look at inner southern suburbs, such as Ascot Park.
     
  17. Ausprop

    Ausprop Member

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    If prices are a function of borrowing ability, why is Adelaide not booming?
     
  18. bob shovel

    bob shovel Muppet

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    Sold! Your the best buyers agent i know, and cheapest!

    With solar, who gets the $$ ? Or is it a selling point that tenants gets smaller electricity bills? Extra rent per week for the landlord?
     
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  19. 2FAST4U

    2FAST4U Member

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    Haha thanks.

    With regards to the solar it's a selling point because the tenants save around 1k-1.5k a year on electricity bills. It's a good marketing strategy. The $20 a week the tenants save on rent can easily be added to the rent price.

    The only downside with Elizabeth is that it's a low socio-economic area so some of the potential tenants are the lowest of the low so being in Perth you'd want to find a good property manager.
     
  20. bob shovel

    bob shovel Muppet

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    Good for the environment and for your pocket!
    I remember hearing about Elizabeth a few+ years ago, I thought it's day was passed, or has it come to life again??