Bob there are some really great threads on the area if you have the time to search them. I like the value, and it appears to have some good things going for it with gov priority for development but the employment situation is the question mark with car and related industry stuff closing down. There are others more qualified than me to debate that part.
What's gonna stop the Sydney boom?
- Thread starter ej89
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Bob there are some really great threads on the area if you have the time to search them. I like the value, and it appears to have some good things going for it with gov priority for development but the employment situation is the question mark with car and related industry stuff closing down. There are others more qualified than me to debate that part.
Yeah had a quick scan, I need to play catch up with those posts -good info as you mentioned! Might need to spread the love, one in sa, maybe one south coast, and another in Perth
Unaffordability will be a good start
I think it'll cool with pretty normal market forces:
1. Affordability constraining home owners.
2. Yields falling driving investors elsewhere.
3. Large supply side response as a result of low rates. Further impacting yields as well as price growth.
4. Potential confidence falling as affordability restraints become tighter.
Rate rises can really sting and make it all happen quicker. But i don't think that'll be happening for a while and the RBA doesn't set monetary policy on Sydney housing.
Rate cuts just extend out that affordability wall. Investors can borrow significantly more and that translates in more price growth. I don't think rate cuts will really fuel any more supply side activity either, i doubt financing restraints are holding developers back.
Cheers,
Redom
1. Affordability constraining home owners.
2. Yields falling driving investors elsewhere.
3. Large supply side response as a result of low rates. Further impacting yields as well as price growth.
4. Potential confidence falling as affordability restraints become tighter.
Rate rises can really sting and make it all happen quicker. But i don't think that'll be happening for a while and the RBA doesn't set monetary policy on Sydney housing.
Rate cuts just extend out that affordability wall. Investors can borrow significantly more and that translates in more price growth. I don't think rate cuts will really fuel any more supply side activity either, i doubt financing restraints are holding developers back.
Cheers,
Redom
I thought it was unaffordable a while back ..... Now it is even more unaffordable!
Some people just have too much money and it is not me!
Exactly. It just depends upon where you stand. If you have zip then the median priced house is out of reach. Solution: become a bottom feeder & purchase affordable not aspirational.
If you have assets, then it's simply a matter of equity vs capacity to pay/servicing debt.
Every generation struggles to get into a market, nothing has changed.
What were all the seppo's saying during the gfc? They had no jobs, no income & were seeing their houses sold for nothing or being bought up by cashed up foreigners on the back of a high AUD. It's come home to roost.
When I was 23 I said the same thing. I'm now 52 and my first home rose in value from $84K to $700K+. In the same time my income has risen in a similar fashion. And the price of fuel, bread etc.
In 1986-87 rices rose faster than we could save like now and we thought we overpaid for the $84K cottage out near Prospect. And in 90s and in the post Olympic period and still today. My tip would be to avoid rushing in and overpaying BUT you run the risk it could continue. There are loads of posts on SS over the past two-four years about "the sky will fall" stories. People who brag they will buy when prices crash...Hasn't happened yet and didn't happen before either. I can imagine they have either jumped in or they are still homeless.
The market has lows and when that happens you will know. Sales will favour buyers not sellers. You can hold sellers hostage to your offer. Sellers will cut their offers. And REAs will find jobs hard to keep. But that's not now.
The boom will end and prices may stabilise and fall but prices only fall in reality if you are a seller. The extent of the fall may be forced on some overgeared owners but reality is they may just lose equity and see no reason to sell. They will wait. Dont expect a flood of sales in a falling market. I wont care if Prospect is worth $650K or even $600K and that's how 95% of owners see it. It will hurt borrowing capacity more that ownership. Prices will fall for some suburbs, properties and areas and they may flatten in others.
Have you considered buying an IP in an area where it hasn't risen and which is starting to rise ? That is affordable ? Don't think too local.
Sydney Northern Beaches house prices rise 10% in three months!
http://news.domain.com.au/domain/re...-price-soars-past-900000-20150429-1mvpss.html
http://news.domain.com.au/domain/re...-price-soars-past-900000-20150429-1mvpss.html
Depending on what you do.. My area, we have very strong wages growth.
What industry? I'm in IT and the rates have been about the same for a while.
Last increase (recent) was 10%.
Professional Services IT consultant... Wages growth is very very strong.... around 15-20% per year Currently...
Shadow, are you on the northern beaches? If so, how long have you been there? Did you see this growth where you are?
Yes, it has gone crazy here, especially in the last year. Some of the suburbs around me are up 20-30% in the past year. Never seen anything like it, and I have been on the Northern Beaches for over 15 years. Good times, as long as you're already in the market!
And if you're not? Stay away?
It's very hard to get into the market at the moment. Many houses are selling within a few days of listing, and well before they even go to auction.
I think the market has another couple of years of growth but then a decline followed by a long period of stagnation. I'm thinking another 20-25% growth over two years, followed by 10-15% nominal decline over two years followed by 3-4 years of going nowhere.
OK for buying a PPOR for a long term hold, but not a great time to buy an IP because after the decline and stagnation phase it won't have provided much (if any) return after 7-8 years.
It would be a bit like buying a Sydney property in 2002-2003. By 2012 it was still worth roughly the same amount (in real terms). Fine for a PPOR but not a great investment.
The time to buy an IP in Sydney was 2007-2012 when prices were starting to edge up slowly, but before this massive boom really began.
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