It's happening all over Sydney- buyers who purchased 2-3 yrs ago, now having to take losses on resales in 2006. I'm sure that, at the time, their belief in property was so strong a loss was never an option. Another example today was a lovely house in an historically strong growth area of Sydney, Artarmon, with a recent resale of $819K from a vendor who paid $865,000 back in May '04. Ouch! It may not seem like a significant amount, but add those costs and fees in, and it must hurt these sellers....
Jaq do you think there is further to go? Can we pick the bottom of this market? And what should one look for? N.
Ah, the golden question..... Alas, if only I could pick the top and bottom of the market- in which case, I think I'd be sipping Pina Coladas on some white beach in the Mediterranean... rather than speculating on a forum But, for what it's worth, and based on my experience, wisdom (or optimism?!) and observations (call them what you will!) I know that the upcoming probable interest rate rises will be extremely telling on what is already a fragile Sydney market. I've heard various opinions, ranging from 'the market is improving' to 'it's in the doldrums and still has further to go', but it depends on who you speak to and in which part of Sydney Everyone has an opinion (naturally) but for me, it's all in the buying. Just because you can purchase today for less than what someone paid in 2003 doesn't necessarily mean you've picked up a bargain. Sydney is a big city and made up of different micro markets, as I've discussed previously. I'm a fan of Rod Cornish's opinions (Macquarie Bank) most of the time, and his theory is that prices are still being held back by affordability issues. No surprise there. He also points out, however, that in 2003 it took almost 40% of a double income to meet mortgage payments. With that figure now dropping to 34% we are getting closer to the long term average of 29-30%. Does this mean that we are not yet at the bottom of the market? It's a difficult question and even trickier to pick, but it's true that the softening, particularly of the last two years, has resulted in a return to "normalcy", if you can put a tag on buyers and their emotions when it comes to housing! The boom is well and truly over and buyers are definitely going to have to shop smarter to acquire an asset that will provide them with real equity over the next few years, especially if they don't do their homework and buy in the wrong location or overpay based only on the little information they glean from the REA. I don't believe in "picking" the bottom of the market. I do believe, however, in purchasing a good value property for a great price And, as for what to look for, the sound fundamentals (as outlined in my Due Diligence article in the Education section of this site) haven't changed. It's still about location, historically strong areas, planning and new infrastructure dvpts that change demand in an area (think M2, M5, M7!) virtually overnight, as well as basic demand and supply. Let's not also forget that Sydney still remains (despite what the beatup in the press might state) the preferred destination for the 145,000 odd migrants accepted into Australia each year. Population shifts to the outerlying parts of Sydney will also have a further effect on prices, as they already have. I didn't think I'd see so many $1.2m+ properties in a suburb like Bella Vista Waters, which is still a 35-40km trip from Sydney's traditional CBD. Amazing! There are opportunities out there, for those who have the time, the diligence and the "go against the herd mentality" to go out there and start looking. Doom and gloom won't last forever and we're all still so young
