Will the Sydney median house price reach $1 million by the end of 2015?

[RetireRich101]

Right and it's working well for me so far

Are you saying you don't have any properties, and your last owned property was your PPOR in Adelaide 4 years ago?

Am I correct to assume your current interest/investment vehicle is gold/silver coins/bullions?

 

[Intrinsic_Value]

It may come down below that in the next correction which will come at some stage ( Just not for a while IMHO ) but in a decade or two we'll be having a debate as to whether Sydney median prices will hit 2 mill ......


Cliff

In a decade I very much doubt it. In fact if there was a liquid hedge against it (such as put options) I would bet against it.

The bet being $2m in a decade.

Two decades, well, I am not so confident. That's 20yrs away, much can happen in 20 years.

But then I notice from your previous posts, that you are not a strict 'buy and hold'. Whatever your views now, if you see the season repeating, you will partially sell, reduce debt, rinse and repeat.

Actually not so different from myself

 

[Richard Feynman]

The bet being $2m in a decade.

Two decades, well, I am not so confident. That's 20yrs away, much can happen in 20 years.

In two decades, I'd be pretty damn confident Sydney median house prices will have eclipsed $2mil by a significant amount.

But as you said, a lot can happen.

I think this biggest object to realising the $2mil median will be the astonishing changes the exponential growth of technology may have. No one seems to notice how quickly everything is changing. I'm quite a nerd for this stuff so I keep a close eye on progress in science, medicine, tech, nano tech, space, genomics etc and the changes we will see by 2035 are huge. Some of them may massively disrupt the value of both land and housing. Or maybe they won't.

 

[see_change]

Two decades ago we bought our first PPOR for 585 k .

Older style 4 bedder , Half an acre in pymble , high side of the street , gentle slope to the road . Walk station and about 200 m to grey house walk ( short cut to PLC )

If that still existed today it would be well over 2 mill .

Now it's subdivided into two blocks , each with a substantial house worth around to 2.5.

Cliff

 

[MichaelW]

83% auction clearance rate again in Sydney yesterday. Not slowing down.

The Northern Beaches had a 97% clearance rate last week.

Hi Shadow,

Long time, no post from me... I've kept an eye on this board though as I still like the community here.

Good to see my Northern Beaches stomping ground coming along nicely. I know that the Inner West lead this boom which then stepped outwards and hit the North Shore recently. I figured it was only time until the ripple carried it to the Northern Beaches (sorry Seech for stealing your ref. )

I remember, not too long ago, all the negative posts around my Northern Beaches development and the potential of the Sydney market at the time. I recall arguing a boom was on the way but admit I was a year or so early in my predictions. But as a long term buy and holder, those three premium units in Mona Vale are certainly looking after me now. I knew they would eventually as I was looking at the long term trendline See Change refers to.

I think each of those would probably value over the $1M mark now but at completion were around $850K ea and cost me about $650K each to build all in. They're cash flow neutral, now moving into positive based on my circa 65% LVR and ongoing rental increases. Set and forget, with equity growing at around $300K pa at present and my net take home income from them increasing at the same time. Won't be selling any of them any time soon.

Building in Brisbane now. That house is costing me about $650K all up as we bought the land at the bottom of the Brisbane market. Conservative valuation at completion on this one will be around the $1M mark too. Must be something in the $650K to $1M transformations for me!!

I'm 44 now but am talking to my banker about my transition to retirement plans. I am equity rich but now need to think about how to transition to an income effective investment mix. I'll work on a 10yr plan and likely retire comfortably before my 55th birthday. Others may aim higher, but that'll do for me and mine...

Cheers,
Michael

 

[see_change]

Interestingly , the vote was around 25 % yes a week or so ago but is gradually creeping up since then

Cliff

 

[Shadow]

I remember, not too long ago, all the negative posts around my Northern Beaches development and the potential of the Sydney market at the time. I recall arguing a boom was on the way...

Yep, do you remember all the bears who were here in 2008 telling us Sydney was about to crash 40% (Yieldmatters, FHB, MBL, nonrecourse, Evand, Token Funder, Piston Broke, warmed_cockles etc).

Instead Sydney is UP by more than 50% since then, and all those bears have vanished without a trace.

Token Funder was here earlier this year mocking me for predicting the Sydney construction boom, but then he disappeared too.

 

[MichaelW]

Yep, do you remember all the bears who were here in 2008 telling us Sydney was about to crash 40% (Yieldmatters, FHB, MBL, nonrecourse, Evand, Token Funder, Piston Broke, warmed_cockles etc).

Yep, remember it all too well. There's still a few around here that I can tell but the bear crowd have quieted down a bit of late.

But that's all part of the herd mentality. I think this boom is now building momentum as the herd get on board and the bull voice starts to outweigh the bear. It will probably overshoot then correct, but unless you "trade" real estate that should not bother you. I buy the trend and the market has been lagging the trend for the last few years in Sydney. Good to see it catching up and looking forward to the momentum carrying us beyond that $1M median.

Cheers,
Michael

 

[Oscar]

great to hear from you MichaelW. I haven't bought any property in Sydney since 2007 but loving this boom and seeing my Sydney portfolio grow. Atlanta is still growing, shares doing nicely, and just netted over a mill in a job change over.

many ways to make money...

On the question of Sydney median at $1MM. I'm hopeless at predicting short term so don't have a clue about end of 2015 but it will definitely get there no question.

As an observer of Sydney RE prices from a base in Europe for the last 6 years, the prices seem not high, but absolutely ridiculous, especially given Australia's distance from EU, US etc.. In the VERY long term will Sydney keep it's pricing aberration status such as new york, london?? It seems unreal to me from a EU perspective but I'm very glad I have a substantial holding there and won't be selling any in the near or medium term..

 

[see_change]

Although it's not the figure being debated in this thread , the median price of an auction in sydney today , 13th sept was $ 997,500 .......

Cliff

 

[Deltaberry]

great to hear from you MichaelW. I haven't bought any property in Sydney since 2007 but loving this boom and seeing my Sydney portfolio grow. Atlanta is still growing, shares doing nicely, and just netted over a mill in a job change over.

many ways to make money...

On the question of Sydney median at $1MM. I'm hopeless at predicting short term so don't have a clue about end of 2015 but it will definitely get there no question.

As an observer of Sydney RE prices from a base in Europe for the last 6 years, the prices seem not high, but absolutely ridiculous, especially given Australia's distance from EU, US etc.. In the VERY long term will Sydney keep it's pricing aberration status such as new york, london?? It seems unreal to me from a EU perspective but I'm very glad I have a substantial holding there and won't be selling any in the near or medium term..

Only leads me to believe proximity to Asia is far more important than US or EU in this century? HK and Singapore have long eclipsed prices in all US and EU capitals.

As someone who travels Asia much more extensively than EU, everytime I look at Syd prices from Hong Kong, Shanghai or even Guangzhou, I think it is cheap.

 

[antistar]

In the VERY long term will Sydney keep it's pricing aberration status such as new york, london??

Sydney is getting more and more international attention which will open the city up to much larger markets. If you look at New York, London - real estate in these cities thrives on international buyers. Especially at the higher end. This is how projects like 432 Park Ave, One57 or 1 Hyde Park become possible.
Sydney has every predisposition to attract more global buyers and ultimately end up in the pricing vicinity of other global cities.

 

[Oscar]

As someone who travels Asia much more extensively than EU, everytime I look at Syd prices from Hong Kong, Shanghai or even Guangzhou, I think it is cheap.

Good point.

As an inside, in 20 years time you might not even be able to tell the difference between these cities.

 

[Intrinsic_Value]

.

Time will tell who is right , not a circular debate here

Cliff

yes agree totally, its each individuals capital on the line. Just the way I like it.

As to who is right? well as stated I think it will depend on the time frame.

 

[Intrinsic_Value]

Good point.

As an inside, in 20 years time you might not even be able to tell the difference between these cities.

maybe some should look at the long term GDP growth of ALL these cities before one starts comparing an Australian city to them.

But just like the resource cycle, there are cycles within cycles.

I do agree with one point throughout this and other threads, the positive effect of Asian immigration into Australia.

 

[my03]

Interesting topic for a newb to investment like myself. For the bears who say there will be a correction or period of decline, what are the drivers of this? Obvious the sydney market is diverse, but are we talking about macro economic factors that drive employment in our financial sector/mining etc and international investment, or other factors such as oversupply, interest rates etc?

I just want to know the reasoning behind your predictions.

And we all know you can make money in a bull or bear market, so if a correction is on the cards, where would you park your money in a buy and long term hold strategy? The cheaper houses out west? or the more premium stuff in the inner city, eastern suburbs, northern beaches and north shore? what I'm asking is what type of property would be most resilient to such a predicted correction?

 

[Intrinsic_Value]

Interesting topic for a newb to investment like myself. For the bears who say there will be a correction or period of decline, what are the drivers of this? Obvious the sydney market is diverse, but are we talking about macro economic factors that drive employment in our financial sector/mining etc and international investment, or other factors such as oversupply, interest rates etc?

I just want to know the reasoning behind your predictions.

And we all know you can make money in a bull or bear market, so if a correction is on the cards, where would you park your money in a buy and long term hold strategy? The cheaper houses out west? or the more premium stuff in the inner city, eastern suburbs, northern beaches and north shore? what I'm asking is what type of property would be most resilient to such a predicted correction?

Firstly I am not a perma-bear. But I think the markets as a whole are in for a period as you said it well of 'decline'.

I am not predicting this on any short term time table. The momentum in the short run should continue upwards given the excitement of property at the moment and no immediate catalysts to change the trend.

As to my predicted drivers for the decline:
(a) historical low interest rates, they cant come down much further. So lower interest rates wont give the kick that is has over the last 30 years.
(b) lower wage growth going forward.
(c) declining terms of trade
(d) higher taxes/lower middle class handouts as the government incurs continuous government budget deficits.

 

[Deltaberry]

Interesting topic for a newb to investment like myself. For the bears who say there will be a correction or period of decline, what are the drivers of this? Obvious the sydney market is diverse, but are we talking about macro economic factors that drive employment in our financial sector/mining etc and international investment, or other factors such as oversupply, interest rates etc?

I just want to know the reasoning behind your predictions.

And we all know you can make money in a bull or bear market, so if a correction is on the cards, where would you park your money in a buy and long term hold strategy? The cheaper houses out west? or the more premium stuff in the inner city, eastern suburbs, northern beaches and north shore? what I'm asking is what type of property would be most resilient to such a predicted correction?

Just part of cycles. All markets have cycles. The only question is timing and how big is the decline, and how long before the next leg up.

On the topic of median price, the only reason Sydney would not hit $2m median price is if they start building more and more smaller units, dragging down median prices (ie a new generation of Australians will have to aspire for and eventually settle for 2 bedroom 60 sqm apartments and be happy in life).

 

[antistar]

Find it surprising that there is so much time spent on the subject of whether prices are going up or down on a forum with so many seasoned property investors.

If anything can be stated as a fact and if history has thought us anything it is that prices will always fluctuate and take a jolly ride up and down the economists graphs. So yes there will be a correction and then major growth then another correction and then more growth. My grandparents thought me this before I could even read. And they were no nobel laureates in economics.

Let the economists and theorists bang their heads against the wall with all of that stuff and let us investors spend our time on finding good properties / deals instead. Unless the supposed boogeyman recession wipes out the entire economy / market completely there is really nothing to fear.

 

[Deltaberry]

That's true. Prices go up a lot, come down a bit, then go up more. History rarely changes. All these Australian titans like Gonski, Stevens and Costelwho trying to tell you otherwise is quite funny, because their predecessors have all go it wrong