Where is Sydney on the property cycle right now?

Hi all, does anyone(investor or owner occupier) see any real value (considering rental yield and CG potential) in Sydney, within any respectable distance from the Harbour/CBD? I am struggling to find anything of value within 20km of CBD. Yields are still under 5%, probably closer to 4% for units, and less for houses. The rents have gone up, but not by as much as the media leads us to believe. I think the 'large rent rises' have been from properties that were renting way under market value. Move farther away than 20kms , and there is neg growth relative to CPI. I wonder if there has always historically beeen this discrepance between Sydney and other more affordable citites? Any older investors out there who have seen several property cycles? What is your feeling on where Sydney is on the property cycle?
 
I too have been looking at houses in the outer areas of Sydney such as Blacktown or Liverpool however I cannot see the logic in purchasing an IP there due to the negative growth..... Why would I buy a house now that is going to drop in value the next day??

This will obviously not last forever and the key is to predict when prices will go up in these less-affordable areas?? Inner West and Parramatta good areas while still maybe affordable for some people (but not me:mad: ) Whereas beachside suburbs are just too much!!!

Any ideas on the upside would be great??
Also, peoples thoughts on outer suburbs sucha as Penrith and Blacktown or just too risky???
 
Sydney has so mnay sub markets its an impossible question to answer. The eastern suburbs/north shore is going well while the west/outer west is in the doldrums while the inner west/southern suburbs are probably somewhere in the middle.

You need to research the particular area you are interested in.

Hi all, does anyone(investor or owner occupier) see any real value (considering rental yield and CG potential) in Sydney, within any respectable distance from the Harbour/CBD? I am struggling to find anything of value within 20km of CBD. Yields are still under 5%, probably closer to 4% for units, and less for houses. The rents have gone up, but not by as much as the media leads us to believe. I think the 'large rent rises' have been from properties that were renting way under market value. Move farther away than 20kms , and there is neg growth relative to CPI. I wonder if there has always historically beeen this discrepance between Sydney and other more affordable citites? Any older investors out there who have seen several property cycles? What is your feeling on where Sydney is on the property cycle?
 
Hi Momo

As Glebe has mentioned, the LNS region in particular has experienced great cg over the last 12mths and I do believe that this time last year was actually the best time to buy. I've seen price increases since then of amazing amounts, in some cases, and buyers seem to be more numerous than listings in some parts. Willoughby, for example, has had over 8% cg in the last year for housing- so much for a correction. It, along with other NS suburbs, is on the way up, despite the interest rate rise and media doom and gloom.

I like several suburbs for future growth here in Sydney, but it does depend on your budget and cashflow position, naturally.
 
Jacque is right, best time to buy was 12 - 18 months ago when it was all doom and gloom for Syd housing. Some areas in LNS, NS, beaches have put on about 20% in last 12 months. Theres just no decent stock on the market at all. The middle to top end have just kept going up and up. People are flush with truckloads of cash. I recall attending an open house in Willoughby a few weeks ago when I overheard a gentleman (with 2 small kids in tow looking for a family home) saying to the RE agent after missing out on an earlier auction that he wasn't going to pay the ridiculous $1.35M hammer price for an old home that had a reserve of around $1.05M. When asked how much he was willing to spend, the guy replied "I could've bought that property but I didn't want to borrow that much, not more than $200k or $300k anyway." I was saying to myself, what kind of people have $1M cash sitting around??

Then again my mates out of Asia are pulling in USD$1M a year without even raising a sweat and we know how hot it is over there!

The old supply and demand forces at work again. These are great properties to make money in as these are all blue chip locations, good transport, exclusive schools and if you hang on for 10 years, you will make money. I would rather trade all my fringe IPs in the other states for just a few good quality ones in these areas where renters only account for <5% of total occupiers. But in reality how many of these IPs can you hold? By the time you pay away all your property expenses and dreaded land taxes, you're left with no more than 3% net rental yields. And with interest rates hitting the high 7%s at the moment, I will continue to live the dream... :)
 
Hi Momo

As Glebe has mentioned, the LNS region in particular has experienced great cg over the last 12mths and I do believe that this time last year was actually the best time to buy. I've seen price increases since then of amazing amounts, in some cases, and buyers seem to be more numerous than listings in some parts. Willoughby, for example, has had over 8% cg in the last year for housing- so much for a correction. It, along with other NS suburbs, is on the way up, despite the interest rate rise and media doom and gloom.

I like several suburbs for future growth here in Sydney, but it does depend on your budget and cashflow position, naturally.

Jacque
The entry price is steep. The holding costs would be enormous, because of the disconnect between yield and price. I prefer the Northwest/Hills area, but am still divided on where exactly. The increased infrastructure,incl. retail, transport,etc makes it a good prospect in my opinion. The question is, where, and what type of property. Anything in the catchment for a good school is a must.Proxomity to the train line is a bonus. I like the corridor between Eastwood and Baulkham Hills. Even Lalor Park may be OK longterm.What do you think?
 
Jacque is right, best time to buy was 12 - 18 months ago when it was all doom and gloom for Syd housing. Some areas in LNS, NS, beaches have put on about 20% in last 12 months. Theres just no decent stock on the market at all. The middle to top end have just kept going up and up. People are flush with truckloads of cash. I recall attending an open house in Willoughby a few weeks ago when I overheard a gentleman (with 2 small kids in tow looking for a family home) saying to the RE agent after missing out on an earlier auction that he wasn't going to pay the ridiculous $1.35M hammer price for an old home that had a reserve of around $1.05M. When asked how much he was willing to spend, the guy replied "I could've bought that property but I didn't want to borrow that much, not more than $200k or $300k anyway." I was saying to myself, what kind of people have $1M cash sitting around??

Then again my mates out of Asia are pulling in USD$1M a year without even raising a sweat and we know how hot it is over there!

The old supply and demand forces at work again. These are great properties to make money in as these are all blue chip locations, good transport, exclusive schools and if you hang on for 10 years, you will make money. I would rather trade all my fringe IPs in the other states for just a few good quality ones in these areas where renters only account for <5% of total occupiers. But in reality how many of these IPs can you hold? By the time you pay away all your property expenses and dreaded land taxes, you're left with no more than 3% net rental yields. And with interest rates hitting the high 7%s at the moment, I will continue to live the dream... :)

ASDF
I agree, the sentiment in late 2005 was certainly different to now. Houses in the northeastern part of Chatswood, also Roseville, Lindfield,etc are doing well, but only the fully renovated houses. The older run-down houses are less buoyant, but have held their value and crept up some since 2003. I personally think the pockets of Roseville, Lindfield, and Killara between the trainline and Eastern Arterial Rd are stronger than ever. Very green, large Fed houses, lot of renovation activity. But prices are in the $2.5-4 million bracket for a renovated house. That is very expensive. Chatswood is cheaper, but not on a sqm of land basis. I think Chatswood prices will continue to soar because of proximity to Chatswood CBD.
 
Jacque is right, best time to buy was 12 - 18 months ago when it was all doom and gloom for Syd housing. Some areas in LNS, NS, beaches have put on about 20% in last 12 months.

Well if the outer areas are still going down then we have not yet missed the best time to buy. Does this represent an opportunity? Obviously the prime areas are already going - this always happens early in the cycle. Next the middle ring (and maybe better outer suburbs?) At some point in the cycle the cheaper areas - southwest etc will also be ripe. The question is when? For the timers (seachange I remember you did really well in logan around 03) its something to watch and get ready for. Of course if I could afford paddington, vaucluse I would love to buy there....
 
The old supply and demand forces at work again. These are great properties to make money in as these are all blue chip locations, good transport, exclusive schools and if you hang on for 10 years, you will make money. I would rather trade all my fringe IPs in the other states for just a few good quality ones in these areas where renters only account for <5% of total occupiers. But in reality how many of these IPs can you hold? By the time you pay away all your property expenses and dreaded land taxes, you're left with no more than 3% net rental yields. And with interest rates hitting the high 7%s at the moment, I will continue to live the dream... :)
Hi asdf,

Unless you pay wholesale! I know that the Northern Beaches has already started moving strongly, but thankfully I bought my development site in Mona Vale when it was all still doom and gloom a year ago. Even if I did nothing it would appreciate, but you're right; I'm sitting on a 3% yield at present.

But, when I develop it I'll be holding three premium properties worth $850K each and because of my lower cost position from developing them myself, they'll be on a 7.5% yield. Potentially more.

But if you're just doing passive buy-and-hold it is hard to hold too many 3% yielding properties, that's for sure.

Cheers mate,
Michael.
 
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