Sydney house prices

The asking price means absolutely nothing. The only price that counts is the market price, ie the price that a buyer is willing to pay at that moment in time.

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Storm Ahead said..

evlPanda said..
^ For f...

Man, the Goldy hasn't gone up in value since 2002.

May be true for most apartments but not true for houses in sought after areas in GC. I have been speaking with REs, fellow windsurfers in the GC and also doing a lot of homework and leg work.

Houses are still selling well especially in sought after areas. They are asking about 100k+ (15% to 20%) on prices paid 12-15 months ago for houses.

Lots of old houses bought by developers are being demolished and turned into Duplexes, with a 30% to 45% markup on cost. The developers are now struggling to sell Duplexes as Banks tighten lending and I am watching 6 closely as thay are in the process of being completed. I think the interest rate they are being charged is something like 15% (can anyone confirm).
I am seeing the market for duplexes weakening and apartments sales stalling.

My agent did the 3 montly inspection on Tuesday (as we are renting atm), Talking about buying and she said that agents are overquoting on house in GC in order to get the listing. Told us to wait another 6 months. Then sent us a lease renual notice for a further 12 months. Hmmm.....

Overall, I think the choke is starting to tighten but houses in good areas are still selling atm.

Monaco through to the back of the Casino seems to be a few demos /duplex rebuilds , drive past most days .

Pure sensationalism. These simplistic analyses assume everything else stays the same. Attention-seeking analyst.

Are people really going to default on their mortgage due to a $60/month mortgage payment rise? Might need to cut out Netflix, or read a book instead of streaming TV shows on their mobile phone while catching the train to work. There's $150/month of savings available to every office worker in Sydney if they are willing to give up their 2 latte's a day.

These strategies sound reasonable, except they don't quite work that easily.

Traditionally when there is a crunch, people stop living by themselves and start sharing with others, or move back home. So, when this happens, rents have to fall, because demand has already fallen. If you see that you can't rent out your investment property, you need to lower the rent, because someone else will.

Even now, I have a friend that is finding that his investment property can't sustain the same level of rent as thousands of similar apartments come on the market. So, in order to keep it rented out, he will need to drop the rent. I suspect that he will try and avoid it though and assume that its a short term problem. Despite me pointing out that 4 weeks of missed rent make a big difference, I think he will try and get the same rent, and then lose weeks worth of potential rent. I guess some of these things you can really only see clearly in hindsight though.

I think all of these reasons will meant that the government of the day has a lot on its plate to keep the economy chugging along. Allowing people to default on their loans will bring the whole lot down, so it needs to be very careful.

I do hope people are positive about property though, as that alone will keep things a bit more steady. If they become negative about it, or if the banks become negative about it, it could be a problem.

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Adriano said..
If only we all had a pair of those rose coloured glasses Formula.

Unfortunately, the property market is so over-inflated that the only way to correct it will mean that many people will lose out big time. It's the last thing we want, but it may well end up out of control if the negative vibe sets in and panic takes control, or a if a financial crisis triggers the inevitable defaults.

The fundamental issue is that the current prices don't represent the real value of property. They represent pure speculation and demand. Historically, these bubbles have always corrected. To believe it won't happen again is foolish. Only in property or risky stock market products are such levels of price inflation viewed as acceptable.

That's why the current situation is utterly unsustainable.

Yeah, I wonder. I agree that the prices are unsustainable, and in addition I think its really poor that any government has let these things become investment vehicles. It looks great on paper, with some people getting windfall profits, but it moves investment to something that is not a great way to improve an economy.

I hope that the government lets things fall gracefully and not in a heap. If the government let banks get away with raising interest rates too much, investors will start dumping and then any value will fall dramatically, which is good for almost no one.

On the other hand, if they let lending controls tighten gradually, most people will hang onto their properties, and things will naturally slow down instead of crash.

I can accept that the bubble will be corrected, but the speed in which it is done will make all the difference.

The government does review all foreign real estate investments but generally takes the flawed view of investment increasing the supply of housing to reduce pricing.

You are correct Japie, the plan might work if all investment was limited to new houses, but as we can see with negative gearing it just introduces more buyers/demand and so the price increases accordingly. The rules need to be tightened up, but if they do too much right now it might trigger a crash which is in no-body's interest.

wolfstreet.com/2018/07/11/sydney-house-price-bubble-mortgage-market-royal-commission/

It "Hit the Mortgage Market Over the Head with a Baseball Bat"

Australia's housing market is getting rattled. The mortgage industry is in turmoil. Banks are battered by incessant revelations of misconduct. Home prices in the Sydney and Melbourne metros, after surging to an astounding degree, are deflating. And the once splendid and vast game of real-estate speculation just isn't fun anymore.

.....But Lindsay David writes: "It is our view based on all the resources made available that house prices in the Sydney area have broadly fallen somewhere between 11% and 15% over the comparison period."...

....We stand with the view the Sydney housing bubble appears to have been pricked, and we are confident that house prices will continue to fall at a moderate to fast pace over the coming months.....

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japie said..
You're right, correction usually takes place but in this instance is the situation not being exacerbated by foreign buying?

Are there any reliable statistics which show the quantity of property owned by non Australians?

I don't follow it much but the scuttlebutt I do hear says that the prices are elevated because of this. F^cking typical of our politicians to create a situation where Aussies can not afford to buy and are forced rent from foreigners!

The short answer appears to be "No".

www.lfeconomics.com/analysis/does-population-growth-cause-rising-dwelling-prices/

Foreign buyers do not have much effect on the market .

Banks creating and lending vast sums of cheap money is/was the problem.

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We managed by buying a 100 year old federation house that they don't like.

Probably aren't permitted to bulldoze that.

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psychomub said..That can't be much different to being outbid by an investor buying his 15th house. Outbid is outbid.

Harrow said..

psychomub said..
The short answer appears to be "No".
www.lfeconomics.com/analysis/does-population-growth-cause-rising-dwelling-prices/
Foreign buyers do not have much effect on the market .

When you watch local families being constantly outbid by someone who can't speak English talking on the phone to someone who is overseas, it makes this a little hard to believe. It might be true in some areas, but in other areas you don't stand a chance against the foreign money.

My friendly only managed to beat them by buying street number 44, which is a terribly unlucky number in a certain culture. We managed by buying a 100 year old federation house that they don't like.

I bet that investor can "live on $40 a day" and votes Liberal too..

you'll need to change your name to evlandlord

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psychomub said..

evlPanda said..

Haircut said..
And again only 4 sold for gc. The number of auctions for qld has now nearly halved too.

I just put all my GC rents up by 2.5%.

Good luck with that.

I've had three calls today from agents after I looked at half a dozen Sydney houses on Saturday.

One wanted my cheeky lowball offer in writing, and the other two were ringing to inform me that the price guides of the houses they were selling had dropped- both around 10%.

He was talking about the Gold Coast, and maybe that's different when it comes to rents. I think Sydney will have low house prices and low rents to match.

Don't worry about the Real estate agent wanting your offer in writing. That's what they do and will just present it to the owner hoping that they will take it. A sale is better than no sale and the difference in commission is not that important.

That said, I think prices will drop, and expectations accordingly. I wonder what it would be like as a new buyer. How long do you wait before you think it is time?

"Desperation"? .............. not yet ............ right now sellers will be experiencing "Hope" .............. "Desperation" is still on the way.

Great timing to get yourself into your position psychomub, time is definitely on your side

Sydney house price crash 2001 2003 2005 2007 2008 2010 2012 2014 2016 2018

It's a terrible situation; if house prices crash the economy crashes with it. See: of course, the 2007 Global Financial Crisis triggered by U.S. house prices.

The RBA can't raise rates much without stifling the economy and destabilizing the property market, thus destabilizing the economy, the property market, the economy... They have painted themselves into a corner.

If the economy booms interest rates go up with it, destabilizing the property market, which undermines the economy, etc. etc.

The Australian property market has become too big to fail.

I blame foreign investors, which were 25%+ of the NSW market last year. There has been too much capital injected into it. Too much demand generated. www.abc.net.au/news/2017-10-11/foreign-buyers-not-deterred-by-rising-stamp-duty/9038014

BTW The GC until recently had a rental crisis with vacancy rates below 1% and people forced to sleep on the beach. It's quite different to Sydney. 5%+ returns are the norm. I'm even getting 7.5% on one-bedroom apartments.