Jump to content

SMH are stirring the house price debate


monsta

Recommended Posts

OTTG,

I found the Residex reports to be invaluable. Before purchasing I looked at 100 properties across 8 suburbs, narrowed it down to 30, visually inspected 10 and called on my broker for the Residex "Comparative Market Analysis" reports on them as we narrowed it down to 3 before making our final purchase. A great tool to have in your arsenal before committing to a purchase, as well as an independent strata assessment/report for prospective properties.

Cheers

Matt

  • Like 1
Link to comment
Share on other sites

  • 1 month later...

They just sold another unit in our block of 36. Someone just bought a unit for $95,000 MORE than we paid a few months ago for ours (same size and finishes, building completed 2-years ago). I'm glad we didn't wait to buy now rather than 6-months ago... crazy times.

Cheers

Matt

Edited by AFreshStart
Link to comment
Share on other sites

4 hours ago, AFreshStart said:

They just sold another unit in our block of 36. Someone just bought a unit for $95,000 MORE than we paid a few months ago for ours (same size and finishes, building completed 2-years ago). I'm glad we didn't wait to buy now rather than 6-months ago... crazy times.

Cheers

Matt

Sounds like an ill informed buyer making a poor decision.

http://www.theaustralian.com.au/business/property/auction-clearance-rates-set-tone-as-melbourne-firms-sydney-withers/story-fniz9vg9-1227627544776

http://www.domain.com.au/news/property-sellers-in-lastminute-rush-to-auction-20151127-gl9qwe/

http://www.businessinsider.com.au/corelogic-falling-house-prices-in-sydney-and-melbourne-could-open-the-way-for-a-rate-cut-2015-11

Auction clearance rates in Sydney and Melbourne are falling, and recent data shows actual price falls of over 1.4% in both markets for the last month. This might not seem like much, but in Ireland the prices dropped by under 1% just before their big burst.

I've been seeing places being sold in Perth for $100k less than they were bought for in 2013, and here in Melbourne, places are selling at a discount too. I am glad I got out of the market before this, as I'd hate to have waited to crystallise those losses.

http://www.domain.com.au/news/sydney-house-prices-fall-in-november-report-20151130-glc03x/

  • Like 1
Link to comment
Share on other sites

On 12/3/2015, 11:46:15, Donovan83 said:

I am glad I got out of the market before this, as I'd hate to have waited to crystallise those losses.

But everything is cyclic. Have you bought with the initial intent to sell again in an upmarket - called flipping! If you stayed in it, it would have made no/little difference but again it depends on the appetite for risk!

I'm currently looking at QLD, NSW, WA. What I gathered from various free reports and confirmed with Residex reports:

WA: Mining directly accounting for approximately 30 per cent of the state economy. Although growth is negative, it looks as if it is starting to trend upwards. Number of sales in both houses and units also decline since 2013 and now at the same lowest level as in 2011. This may be an indication that correction has past and at end of contraction cycle.

NSW: has solid momentum. Received the bulk of migrants (39%).  The next 12 months should see slowed or negative growth rates in Sydney.

QLD most optimistic in next 1-2yrs. Moderate growth of 5-8% based on different scenarios

Global deflation with Melbourne to grow between 8-13%, market correction in Perth of -7% to -4% and moderate growth for Queensland of 5-8% based on different scenarios with a 40% forecast accuracy. Nowhere I found reputable evidence of a looming crash EXCEPT in the newspapers.

It depends on the longterm intent and what you want to do - buy off-the-plan, buy PPOR, development to sell, development to keep etc. If you are looking for cashflow or growth etc.

  • Like 1
Link to comment
Share on other sites

10 hours ago, ottg said:

Nowhere I found reputable evidence of a looming crash EXCEPT in the newspapers.

 

So if we ask the question what could cause a crash in Sydney?

- Hikes in interest rates?

- Real slow down in economy?

- Over supply?

 

There is talks that the US will be raising rates and my understanding is the AUS banks have a lot of money owing to the US banks and a hike in rates there could cause Australian banks to raise rates.  (Maybe my understanding of this is completely wrong)

 

All talks seems to indicate that the Australian economy is still slowing? Which indicates job cuts.

 

Sydney market is slowing - this is obvious from the clearance rates which some say is even lower than reported. But everywhere they are building units because there was a huge demand for them but it looks many might be late to the party

 

Everything is set up for a crash - but will it tip over...

Link to comment
Share on other sites

6 hours ago, Tiermelk said:

 

So if we ask the question what could cause a crash in Sydney?

- Hikes in interest rates?

- Real slow down in economy?

- Over supply?

 

It depends on the definitions (Investopedia) of "House bubble" -  A run-up in housing prices fueled by demand, speculation and the belief that recent history is an infallible forecast of the future. Housing bubbles usually start with an increase in demand (a shift to the right in the demand curve), in the face of limited supply which takes a relatively long period of time to replenish and increase.
Definition of "House market crash" -  A crash is a significant drop in the total value of a market, almost undoubtedly attributable to the popping of a bubble, creating a situation wherein the majority of investors are trying to flee the market at the same time and consequently incurring massive losses. Attempting to avoid more losses, investors during a crash are panic selling, hoping to unload their declining stocks onto other investors. This panic selling contributes to the declining market, which eventually crashes and affects everyone.
We have had a similar debate in June here: http://www.saaustralia.org/topic/45194-house-prices-again/?do=findComment&comment=410183

There I mentioned its better to measure what the market is doing for Sydney over their long term medium house price. There I suggested to use the data from 1995 till today. Perform least square fit on median house price over the past 20 years (long term). Calculate the annual average price growth rate and plot on same graph. When the deviation from the mean is below the long term trend line then the risk is lower and vice versa then the risk is higher. Till I haven't done that I wont know! 

 

I have done something similar using data from ABS (1970-2014) and plotted those graphs some time ago. 

 

5662fc8564980_sydneyhousing.png.85a026a9

 

As a benchmark look at 2008 during the GFC where the market was. Today the Sydney house price is above the longterm polynomial fit line of the data, which means there is a risk for a CORRECTION but not a crash.

However, while difficult to believe, it is still below the longterm exponential growth line which means possible still some growth to come.

 

  • Like 2
Link to comment
Share on other sites

I also like the word "correction".  

 

At the end of the day houses in Sydney are over priced when you look at what they can be rented for. Houses are worth what people can pay for them.  Rentals give a much better indication of what people can truly afford to pay.  You can't loan money from your parents to pay your rent ;) 

 

The ABC talks about Sydney's property obsession.  That's what it is.  There are plenty of foreigners and locals who are willing to pay more for properties than they are worth. They all want to exploit the situation to make money.  But as @ottg has pointed out,  that cash cow has been exploited a bit too much lately and is running out of milk. 

Edited by monsta
  • Like 1
Link to comment
Share on other sites

  • 1 month later...

Sydney house prices drop 3 per cent

“Last year we sold three apartments in the same building in Double Bay, at an average of $4.35 million. We just traded one now for $4 million. It’s much the same as the other apartments,”

 

http://www.domain.com.au/news/sydney-house-prices-drop-3-per-cent-domain-group-20160127-gmd7pl/

 

Now we wait for the bull trap... :)

 

Money-Week_clip_image001.jpg

Link to comment
Share on other sites

5 minutes ago, Donovan83 said:

OMG I better rush out and buy 5 properties on 95% loans before I miss out!

 

:rolleyes:

 

Yes, please do!   I`m waiting for the "despair" stage ;)

Link to comment
Share on other sites

  • 1 month later...
On 23/09/2015 at 5:54 AM, Donovan83 said:

 

I find that people that own property lorde it around as if it's some massive achievement to have shifted money around between asset classes (and incurred costs to do so). I'd far rather sit, for example, with cash and investments in diversified assets and no liabilities while taking advantage of the cheap rent than ONE asset in ONE area that cost me lots of money to buy, cannot be easily sold, is risky, restricts my freedom to move around, etc... no thanks.

 

Couldn't agree more! Living debt free is extremely liberating.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
×
  • Create New...