Who is actually buying in Sydney right now?

[Newbieatlife]

Though many of us would like to deny it, and the rest of us choose to ignore it, I think the evidence is clear;

Sydney is getting completely out of hand and I am finding even seasoned investors making excuses as to how this or that property in the sticks represents good value for money when clearly and in reality, ALL places are way 'overpriced'.

Some will argue that this is what creates the market...though i think the current market is driven primarily by a false sense of security and a comfort zone with long term low interest rates, sheep mentality, and most importantly; FOMO mentality (fear of missing out)

Many of my friends and family have come out of the woodwork with absolutely no experience or care about property and are buying crappy inner city 1 bed units or properties in nowhereland just so they can keep up with everyone else who is doing the same thing

Personally I have a budget of $900k looking at a PPOR within 10km of CBD and I am perplexed as to how limited my selection is and I would consider myself significantly above average when it comes to personal wealth

The big question ofcourse is; will prices come down when interest rates start trending up or when there is a slight shift in confidence???

Even if the market merely plateau's at this stage, it is still completely unaffordable to the average citizen and unless they decide to replace national parks with houses and units, or everyone gets massive payrises across the board, I just can't see how the market is sustainable at this rate.

 

[bobby85]

There are economists out there still spruiking the bust of the 'housing bubble'.

With interest rates likely to remain on hold for another year you can expect prices in inner Sydney to plateau or rise slowly as there is a chronic housing shortage.

It's unlikely you'll see house prices come down from where they are at present.

I for myself would look into Leichhardt, Lilyfield etc with the light rail and close proximity to the CBD, those suburbs have a lot to offer. Most house+land properties are 1mil+ but you can still find a few nice 2 bdrm terraces below that price.

 

[Bentley]

http://www.smh.com.au/business/mark...ollar-sydney-house-prices-20140703-zsud8.html

http://smh.domain.com.au/real-estate-news/youve-got-the-wrong-city-gvner-20140703-zsuuh.html


Which side are you on?

 

[see_change]

What you are seeing is par for the course as is your post .

At some stage Prices will come off the boil , but IMHO I expect Sydney to go up further for a while and in two years time you'll be kicking your self for not buying that property for only 1.2 mill or what ever it is .

I think there will be a further jump in the sydney market over the next year givne how little increase there has been over the last ten years ....

Cliff

 

[serendip]

The Sydney property market freaks me out. I moved back to Newcastle 3 years ago, mainly due to family support. At the time I kind of breathed a sigh of relief not having to take on such a big mortgage. Now I may need to go back for work and while things used to start with a 700-800K+ now they're 900-1000K+ which a handful still starting with an 8. I really do not know what to do. Do I suck it up & buy now if I can possibly make something work. I'm fine with renting for a while but within the next 5 years I would really like to be in my own home & one that I enjoy.

 

[see_change]

The Sydney property market freaks me out. I moved back to Newcastle 3 years ago, mainly due to family support. At the time I kind of breathed a sigh of relief not having to take on such a big mortgage. Now I may need to go back for work and while things used to start with a 700-800K+ now they're 900-1000K+ which a handful still starting with an 8. I really do not know what to do. Do I suck it up & buy now if I can possibly make something work. I'm fine with renting for a while but within the next 5 years I would really like to be in my own home & one that I enjoy.

Well , you could take a leaf out of what some forumites did in the last boom , and that is buy multiple IP's in " cash " flow areas , wait until those go up and then sell and buy in sydney . One regular bought in geraldton and from what I hear was able to pay cash for her house In the northern beaches .

You could also do what the previous generations did and that is buy in somewhere you can afford and then upgrade over time .

We're in our fifth PPOR . The first one had an outside toilet and was a renovators special . This one isn't ....

Cliff

 

[serendip]

First option is exactly what I'm looking at right now. Turning current PPOR into IP, buying another IP, both CF+. Then I'll rent. In a couple of years I'll consider if I should buy another IP or if it's time to jump in. Alternative is to see if I can jump into then Sydney market now but cash probably wont allow that. Just waiting on valuation on current PPOR before I start making some decisions.

Don't get me wrong, I don't expect to be able to buy my dream house right now but I have a small boy to consider too & I would rather avoid having him move schools if possible, which gives me 18 months to get into the suburb we want to live, even if that's renting in the short to medium term.

I guess my post sounded a bit whiny / spoilt brat-ish....I didn't mean it like that, but as a single Mum with no outside financial support sometimes this stuff is daunting.

 

[Propertunity]

Sydney is getting completely out of hand and I am finding even seasoned investors making excuses as to how this or that property in the sticks represents good value for money when clearly and in reality, ALL places are way 'overpriced'.

Oh please! The market has gone up 15% in the last 12-18 months. Do you forget that from 2003 - 2008/9 it plateaued and went nowhere for 5-6 years? There were some years prior to that , where we saw 20,30 & 40% pa growth, so 15% is no biggie.

I suspect what you are feeling though, is that a $750K house of 2 years ago, is now an $860K house - and $110K increase is a "biggie". BUT you'll get used to it.

Some will argue that this is what creates the market...though i think the current market is driven primarily by a false sense of security and a comfort zone with long term low interest rates, sheep mentality, and most importantly; FOMO mentality (fear of missing out)

The market drivers have always been fear and greed.

Personally I have a budget of $900k looking at a PPOR within 10km of CBD and I am perplexed as to how limited my selection is ...

You need to remember that you want to live within 10km of the CBD of the largest capital city in Australia, that has 4M people linving in it. It is an international city, on the world stage. And you fortunately can afford to live there for less than $1M. So good for you

The big question ofcourse is; will prices come down when interest rates start trending up or when there is a slight shift in confidence???

No, not in my opinion. AND especially not in your price range of under $1M. That is entry level stuff these days. The big end of town is the price range that gets hit in a downturn.

Even if the market merely plateau's at this stage, it is still completely unaffordable to the average citizen and unless they decide to replace national parks with houses and units, or everyone gets massive payrises across the board, I just can't see how the market is sustainable at this rate.

10kms from Sydney's CBD is not for "the average citizen". It is for above average earners. Besides which, the market is not being driven exclusively by locals.

Yours are the same arguments that we hear everytime there is growth. And each time, the market continues on an upward trend over time.

 

[see_change]

Do a search on townhouses under 700 in somewhere like marsfield. .

A search on upper north shore , town houses < 700 gives a few different options , even one in wahroonga . Admittedly on the pacific hwy , but there's some nice neighbours in the area

This one in Hornsby is in a relatively nice area . Good public schools in the area and a good shopping centre.

Cliff

 

[cadence]

The problem for Sydney property prices is that there is a lot of people who can still afford it.

I bought my first property 7 years ago on a single income. Loan was about $350k. Interest rate was around 8.5%. Mortgage a year was $30k.

If I were to buy the same property today, I'd pay almost double and I would be on a loan of around $640k. At 5% interest rate, mortgage a year is $32k. I actually pay 4.87% so it's practically the same as before. Also note rent is much higher than 7 years ago, so your net position might even be better.

If buying as a couple and assume both have ok jobs and incomes and have managed to huddled together a deposit, they can service the much larger loan due to the low interest rate so they are not afraid to take on the big mortgages and pay high prices. That goes some way towards explaining why there is still a relatively strong demand for properties (houses) of less than $1.3m within 10km of Sydney CBD.

Having said the above. I do think it's getting too expensive for me personally.

 

[Nemo30]

Easy fixed - move to Canberra

 

[Beau Lyon]

Australia is a big place, and within 10km of city centre is relatively small place. There are enough people with money here to sustain these prices. Buying is a good idea if you can afford to, just make sure you can afford rates if they go up. As said above, if $900k is a stretch, rent something like that and buy a cheaper investment prop, then use profits to upgrade in few years.

 

[blackenator]

Parts of sydney are still affordable but are often less desirable dew to location. I have recently purchased in Sydney my first investment property but will be lived in for 6 months to get the fhog and after all expenses the property will be neutral geared and be valued around 30 - 50k more then what I paid.

I find intresting that some people thing that western sydney is over heated when units and houses are going 1/3 for the prices to their inner city counter parts. Best of luck finding your ppor

 

[nhg]

You need to remember that you want to live within 10km of the CBD of the largest capital city in Australia, that has 4M people linving in it. It is an international city, on the world stage. And you fortunately can afford to live there for less than $1M. So good for you

As locals, we seem to forget Sydney is not some back alley hick town.

This place is one of the most beautiful cities in the world. It's dirt cheap compared to places in Singapore and Hong Kong.

Value for money in Sydney is over $1M (I saw $1.2M, can't remember where) for property.
$900k PPOR is NOT average.
The radius from Sydney CBD to the Greater Sydney metropolitan border is:
- over 70km to the north
- over 90km to the south
- over 120km to the west
10km is pretty damn close.

 

[D.T.]

Easy fixed - move to Canberra

Sure, change the climate there and I'll consider it.

 

[BayView]

Kochie gave the big "Be careful: it might not last much longer" statement this morning referring to the latest property buzz.

 

[depreciator]

I wouldn't buy in Sydney now. I especially wouldn't buy in Marrickville. Stay away.

 

[Newbieatlife]

As locals, we seem to forget Sydney is not some back alley hick town.

This place is one of the most beautiful cities in the world. It's dirt cheap compared to places in Singapore and Hong Kong.

Value for money in Sydney is over $1M.
$900k PPOR is NOT average.
The radius from Sydney CBD to the Sydney metropolitan border is over 50km.

NOt denying its a great place...but when it comes to population, density and infrastructure Sydney has nothing compared to the other major cities mentioned and also nowhere near as accessible globally....not really comparable.

Any non-local driving through some of the places you can buy in Sydney for $900k will immediately think "overpriced back alley hick town"

I agree Sydney is one of the most beautiful places in the world....lets think where though? Inner Sydney, Beaches, National Parks and Blue Mountains. Everything in between is just a sprawling suburban mess with terrible roads, terrible public transport, old fibro houses and the commute alone to any of these "beautiful places" will take up most of your weekend.

Maybe I'm being pessimistic. Who has a million to spend on an "average" property nowadays?

 

[nhg]

NOt denying its a great place...but when it comes to population, density and infrastructure Sydney has nothing compared to the other major cities mentioned and also nowhere near as accessible globally....not really comparable.

Any non-local driving through some of the places you can buy in Sydney for $900k will immediately think "overpriced back alley hick town"

I agree Sydney is one of the most beautiful places in the world....lets think where though? Inner Sydney, Beaches, National Parks and Blue Mountains. Everything in between is just a sprawling suburban mess with terrible roads, terrible public transport, old fibro houses and the commute alone to any of these "beautiful places" will take up most of your weekend.

Maybe I'm being pessimistic. Who has a million to spend on an "average" property nowadays?

Tried living in Adelaide?

New York has sprawling ghettos, LA is a s-hole outside of the hills (Venice beach was feral, they choose some pretty interesting angles when they show it on tv). Paris is pretty drab and very dangerous out of the CBD. I've been to most of the 'best cities' in the world, they are all the same. You have your Watson Bays, Surry Hills, Penrith's and Mt Druitts.

As tourists visiting, we tend to stick to the nicer touristy areas so don't notice it the way one would as a local. There's plenty of variety in Australia, I've been picked up by limos and driven to secret clubs after calling a number on the back of some flyer on the ground and stood in line for hours to taste 'the greatest coffee ever'. It's all here if one breaks out of their routine.

 

[Propertunity]

Sure, change the climate there and I'll consider it.

^ ^ and move the beach in a bit closer