Where not to invest - Bluechip suburbs??

[sash]

With the current large scale loss of white collar jobs in Banking, Finance, and Professional Services....there are suburbs which are likely to take a hammering. See articles below....

http://www.smh.com.au/national/job-axe-falls-hardest-on-rich-suburbs-20111104-1n02f.html

http://www.smh.com.au/business/offshoring-coming-soon-to-a-job-near-you-20111104-1mzsh.html

The unemployment rate in places like the lower North Shore and Eastern suburbs....the rate of unemployment has risen 1-1.5% over a course of 12 months. This is not good...funnily enough the loss seems to me primarily in the white collar jobs.

I was looking at units in Potts Points for a friend to buy to live and I was astounded at some of the stories that some of the agents were telling. They were telling me that the 1.5m+ market was dead. As a matter of fact in one instance a very wealth executive had put his $5m house and his house in highlands ($2m+) on the market with no reasonable offers. He has now been given notice that his job will cease to exist by Feb 2012. As a result he has listed his 4 properties in Potts Point for sale...they are low end (under 650k) the agents expect these to fly out the door particularly the 450k one bedders.

The funnny thing is that I doubt this will affect the suburbs around Parramatta, Hurstsville, Merrylands, Campsie, etc. as these suburbs seem to have a constant stream of immgrant buyers.

So the moral of the story is Bluechip suburbs are not always low risk!

 

[BayView]

The term "bluechip" implies a safe, sound, tried and true investment over the long term, and top quality. The wild card in that lot (in my opinion) is "top quality" or high end.

High end properties (price wise) are renowned for making very quick gains when times are good in the corporate and high income world (hence the buyers who buy them).

But, just as quickly, when times go bad economically and financially, a lot of high end jobs get cut back, or the higher earners spend a lot of the income they earn and not necessarily put enough away for a rainy day etc, and may not ever expect the good times to end..

This is when you see these properties offload very cheaply; the owner might have to sell very quickly to cover a margin call, or the boat and beemer repayments are not affordable any longer and so on, and the pool of buyers at this range is small anyway, so the demand is less.

For mine; a blue chip property is yer middle of the road, well positioned, good condition property that the majority of people can afford, they like and are happy to live in it.

Something near the middle of the price range of the majority of folk's budgets basically, unless you are doing a buy/reno/develop/sell or hold project.

 

[Deltaberry]

When a media article writes about falling prices in general and doom and gloom, we dismiss it as fear-mongering journalism.

But when it otherwise writes an article that we want to hear, we reference it.

Did anyone check if this was the same journalist?

 

[Ausprop]

a similar thing happened here in Perth about 3 years ago. the $1m-2m took a haircut of about 40%, whilst the lower end didn't do much and some middle suburbs grew. We now have the interesting situation where ahouse in say east vic park is not a whole lot different to to some of the blue chip western suburbs.

I just watched a pickles auction and saw a similar pattern - old toyotas fetchign not a whole lot less than low mileage mercs

so we see a case here of a flattened market generally, where every dollar you can throw at somehting is giving you greater returns

now is the time to be upgrading, buying beachhouses, art and boats - just plain old counter cyclical purchases

 

[sash]

Interesting.....I am planning to trip to WA soon....

Where would these nice Blue suburbs dropping like a lead ballon be??

Just negotiating some new houses in WA at the moment! But if you can show me a better deal happy to learn.

PM perhaps??

a similar thing happened here in Perth about 3 years ago. the $1m-2m took a haircut of about 40%, whilst the lower end didn't do much and some middle suburbs grew. We now have the interesting situation where ahouse in say east vic park is not a whole lot different to to some of the blue chip western suburbs.

I just watched a pickles auction and saw a similar pattern - old toyotas fetchign not a whole lot less than low mileage mercs

so we see a case here of a flattened market generally, where every dollar you can throw at somehting is giving you greater returns

now is the time to be upgrading, buying beachhouses, art and boats - just plain old counter cyclical purchases

 

[LJH Merrylands]

I just watched a pickles auction and saw a similar pattern - old toyotas fetchign not a whole lot less than low mileage mercs

so we see a case here of a flattened market generally, where every dollar you can throw at somehting is giving you greater returns

now is the time to be upgrading, buying beachhouses, art and boats - just plain old counter cyclical purchases

I like this comment alot! Definitely agree!
Call it what you will- Counter cyclical, blood in the streets, buy low sell high, whatever.

Those white collar middle managers tend to be absolute ******s with big pay packets and very little financial education. As a general rule, if the flashy Armani wearers are buying assets, the economy is overheated. It's the only time they're got any money left over after the 5 star restaurants, casino, shopping spree, trip to Aspen, private school fees etc.

If you believe this time ISN'T different - they buy, buy, buy!

Some people think he world economy is undergoing a fundamental shift . This is possible. If this is the case, or you belive this to be the case- then the game's changed!

Potts Point is a magnificent area- and flats are a full $200 000 cheaper than they are 5 minutes walk away in Darling Point. Yes, Potts Point is very noisy (nightclubs and car hoons) and is populated by hookers and junkies , but these undesirable elements won't be there forever (the cars are worse than the seedy crowd!) and we will be left with prime real estate- walking distance to CBD, parks, Unis, stations etc.

We have bought, and continue to buy real estate in Potts Point (admittedly cheap rental properties) but I personally will be purchasing a home there to live within a few years (barring a major catastrophe/ illness etc!)

Just as we've seen Sydney suburbs like Glebe, Balmain, Surry Hills and Redfern gentrify and shoot up in value- so too will Potts Point/ Kings Cross/ Elizabeth Bay. It's a goldmine!

If the yuppies are selling- buy, buy, buy. Having studied, lived and worked with those people, I can assure you, they are financially braindead. Do the opposite of what they do and you'll be fine!