Would you buy in Sydney now?
- Thread starter eastside
- Start date
LOOK at the market. It ain't exactly full of buyers knocking each other over to get to a deal
Gee Cee
After the last interest rate cut Sydney property started moving again.
There are many buyers but they want to pay as little as possible.
Cheers
SC - agreed re they might get more distressed, but I'd say there are ways and ways of getting this concept across.... saying someone is 'keen to sell' or 'open to offers' or any other type of language suggesting a deal can be done is one thing. Actually saying that vendors are "distressed" is, I think, vastly different and I'll stick to my position that it's not in a vendor's interest. Maybe we'll just agree to disagree
There's a separate issue (maybe for a wet long weekend...) about whether you should take advantage of someone who's that distressed, but that's a whole other discussion.
There's a separate issue (maybe for a wet long weekend...) about whether you should take advantage of someone who's that distressed, but that's a whole other discussion.
Agreed.... that's what's happening in the commercial market ATM. NO-ONE is buying distressed properties because they KNOW the liquidators will be selling at fire sale prices within 3 months.
Significant IRs falls & excessive relative rent rises will help tip some renters (like the OP) into ownership (provided they can raise the deposit).
Problem is we might not get "significant IR falls" and "excessive relative rent rises"(great use of adjectives by the way) real soon. It takes a long time for that to play out.
Rents can only rise as fast as people can pay for them. I have already seen a slowdown in the growth of rents in areas of Sydney. So the rent increases can take many years to overtake the cost of home owner ship as in the 90s.
It's still great value to rent (circa 5% pa of property value) compared to buying (10% - 11% pa of property value) ) and will be for a long time yet, again, as in the 90s.
Rents can only rise as fast as people can pay for them. I have already seen a slowdown in the growth of rents in areas of Sydney. So the rent increases can take many years to overtake the cost of home owner ship as in the 90s.
It's still great value to rent (circa 5% pa of property value) compared to buying (10% - 11% pa of property value) ) and will be for a long time yet, again, as in the 90s.
Sure..... however the OP IS experiencing significant rent rises. Many commentators are expecting a further 1%-1.5% IR fall within 6-9 months. Not going to make much IP c/f +ve, but it will tip some into ownership.
Those 2 paragraphs don't add up. Are you saying it's currently cheap to rent (good value) or that rent's can't rise any more because they are to expensive ?
Recent OOs can afford to pay 10%pa (P&I & expenses), why shouldn't renters be able to afford it too ? The answer is always 'but I can afford to rent better for less'. Which comes back to the issue of discretionary spending - renters are choosing to 'fritter away' their discretionary $$ on shelter, rather than rent a house they could probably afford to pay P&I on, while they direct their discretionary spending towards a deposit (or invest in shares
).So another way of putting it is that a house/shelter is a mandatory expense, but a 'nice' house/shelter is a discretionary expense.
Sorry, whats OP?
I'm saying renting is currently still great value compared to buying and will be for quite a while. The rise in rents is constrained by peoples ability to pay for it so will still be good value for quite a while yet.
I think part of the reason property prices have gone south is peoples inability to pay 10% P&I plus ownership expenses. (possibly another 2%)
If the majority could afford, they would and demand wouldn't have dropped right off in the recent past.
Your past statement is probably true...as most people don't know the meaning of the word 'budget'.
Are you saying they can afford home ownership if they ate baked beans on toast every night?
I'm saying renting is currently still great value compared to buying and will be for quite a while. The rise in rents is constrained by peoples ability to pay for it so will still be good value for quite a while yet.
I think part of the reason property prices have gone south is peoples inability to pay 10% P&I plus ownership expenses. (possibly another 2%)
If the majority could afford, they would and demand wouldn't have dropped right off in the recent past.
Your past statement is probably true...as most people don't know the meaning of the word 'budget'.
Are you saying they can afford home ownership if they ate baked beans on toast every night?
Sure..... however the OP IS experiencing significant rent rises. Many commentators are expecting a further 1%-1.5% IR fall within 6-9 months. Not going to make much IP c/f +ve, but it will tip some into ownership.
Those 2 paragraphs don't add up. Are you saying it's currently cheap to rent (good value) or that rent's can't rise any more because they are to expensive ?
Recent OOs can afford to pay 10%pa (P&I & expenses), why shouldn't renters be able to afford it too ? The answer is always 'but I can afford to rent better for less'. Which comes back to the issue of discretionary spending - renters are choosing to 'fritter away' their discretionary $$ on shelter, rather than rent a house they could probably afford to pay P&I on, while they direct their discretionary spending towards a deposit (or invest in shares
So another way of putting it is that a house/shelter is a mandatory expense, but a 'nice' house/shelter is a discretionary expense.
OP = Original Poster ... in this case, eastside who in post#32 said
His post prompted my great use of adjectives when I used the phrase "excessive relative rent rises".
Check my previous posts (all 2 of them) - you'll find no references to the eating habits of renters. Not sure what point you're attempting to make. I did suggest that renters of flash places could better direct their discretionary spending towards a deposit on a PPOR or other investment, while renting a cheap dump.
This is not quite correct. Rent rises are all about supply and demand. With inadequate supply and rising population you get rent increases. If people can't afford to pay they have to move somewhere else which, while it does moderate demand it doesn't stop the trend towards rich people renting in the area instead of poor people. Resulting competition among richer people keeps driving rent rates up.
People need to live somewhere and if they need to be in Sydney for employment or other reasons then you may well see these rent rises as just the beginning. If you can't afford it you will have to move to make way for the people who can (and that can include higher density living options). An unfortunate fact of life in a market economy when construction stalls.
Ability to pay impacts on the price of property - agreed because if you don't buy you can always rent and there is a direct reduction in demand, providing rentals are available at a reasonable price. When that changes though...
It just amazes me that some people think rent rises of 100% in ten years are too much? Even if most of that has happened in the last few years. To me that doesn't keep pace anywhere near the replacement cost of housing and ultimately it has too otherwise us investors won't be building anymore!
This is a timely reminder of the traditional reason for buying property - a hedge against rising rents. Our parents were well aware of that advantage and this generation is just starting to feel it now.
Rents will only stop rising if Sydney stops growing or when investors start building again... whenever that may be - could be awhile...
Thats a lot of rent he's paying but i bet its still a low multiple of earnings for the owner of the property. (5%?)
I'd say he'd be paying a hell of a lot more if he bought the place.
Must be a nice house in a nice area.
I'd say he'd be paying a hell of a lot more if he bought the place.
Must be a nice house in a nice area.
Dont forget that the higher the income level the less people earning at that level. Sort of like a pyramid. Or maybe a bell curve, but you get my point.
So as the income levels rise there are fewer and fewer people therefore less and less demand.
I'd say most wealthy people own rather than rent anyway, but thats a different debate altogether.
So as the income levels rise there are fewer and fewer people therefore less and less demand.
I'd say most wealthy people own rather than rent anyway, but thats a different debate altogether.
This is not quite correct. Rent rises are all about supply and demand. With inadequate supply and rising population you get rent increases. If people can't afford to pay they have to move somewhere else which, while it does moderate demand it doesn't stop the trend towards rich people renting in the area instead of poor people. Resulting competition among richer people keeps driving rent rates up.
People need to live somewhere and if they need to be in Sydney for employment or other reasons then you may well see these rent rises as just the beginning. If you can't afford it you will have to move to make way for the people who can (and that can include higher density living options). An unfortunate fact of life in a market economy when construction stalls.
Ability to pay impacts on the price of property - agreed because if you don't buy you can always rent and there is a direct reduction in demand, providing rentals are available at a reasonable price. When that changes though...
It just amazes me that some people think rent rises of 100% in ten years are too much? Even if most of that has happened in the last few years. To me that doesn't keep pace anywhere near the replacement cost of housing and ultimately it has too otherwise us investors won't be building anymore!
This is a timely reminder of the traditional reason for buying property - a hedge against rising rents. Our parents were well aware of that advantage and this generation is just starting to feel it now.
Rents will only stop rising if Sydney stops growing or when investors start building again... whenever that may be - could be awhile...
This is not quite correct. Rent rises are all about supply and demand. With inadequate supply and rising population you get rent increases. If people can't afford to pay they have to move somewhere else which, while it does moderate demand it doesn't stop the trend towards rich people renting in the area instead of poor people. Resulting competition among richer people keeps driving rent rates up.
People need to live somewhere and if they need to be in Sydney for employment or other reasons then you may well see these rent rises as just the beginning. If you can't afford it you will have to move to make way for the people who can (and that can include higher density living options). An unfortunate fact of life in a market economy when construction stalls.
Ability to pay impacts on the price of property - agreed because if you don't buy you can always rent and there is a direct reduction in demand, providing rentals are available at a reasonable price. When that changes though...
It just amazes me that some people think rent rises of 100% in ten years are too much? Even if most of that has happened in the last few years. To me that doesn't keep pace anywhere near the replacement cost of housing and ultimately it has too otherwise us investors won't be building anymore!
This is a timely reminder of the traditional reason for buying property - a hedge against rising rents. Our parents were well aware of that advantage and this generation is just starting to feel it now.
Rents will only stop rising if Sydney stops growing or when investors start building again... whenever that may be - could be awhile...
These are my thoughts too. If you assumed one area did not change the sure rents may track wages. But in a growing city where incomes in medium and high bands are growing too. Then this may go out the window. It may become just a geographical thing. Higher rents the closer to the cbd and lower rents further out. If your wages dont follow then you may have to move further out. ( Unless you decided to buy). This is understandable. The CBD is a given size and if you want to live close you will pay a premium. Average wages dont come into it. And as bigger business moves out and residential and retail move in. I can only see this increasing the problem as the trendy factor kicks in.
Thats kind of right in that the percentage of wage earners drops as the wage increases. But if you looked at a certain wage bracket over the last ten years i bet the actual number earning that amount has grown( Even allowing for inflation). And many of the people who no longer do have probably moved up to the next bracket. So you have a larger amount of people on that higher wage still wanting to buy from a pool of properties that is increasing at a slower rate that the outer suburbs. Makes sense.
