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Sydney market jittery

Discussion in 'Real Estate' started by Jacque, 24th Jun, 2006.

  1. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Today's SMH article points to a jittery Sydney market:

    http://www.smh.com.au/news/national...property-market/2006/06/23/1150845381637.html

    With all the experts predicting a stabilization period for a while yet, Residex remains optimistic, despite the doom and gloom. Interesting to also read that migration to Sydney is at a four year high, and rents are likely to keep increasing, due to the falling vacancy rate.
     
  2. KevinH

    KevinH Well-Known Member

    Joined:
    6th Nov, 2005
    Posts:
    101
    I have to confess I don't get it.
    The vacancy rate was already low in Sydney, and now you have increased pressure on rents and accommodation with the increased nett migration rate ?

    At what point do you run out of rentals ?
    And how come it hasn't translated into increased property prices.

    I guess being in Perth and WA and seeing the result of all the pressure over there on prices as well as rents, its hard to figure out why Sydney is responding accordingly with the same pressures.

    A fundamental rule of thumb for me is to look for the population movement and demographic change, and invest in those areas.
    Follow the flow of the money and you can't go wrong, I believe.

    Maybe its just a confidence or negative sentiment thing with Sydney atm ??

    Kevin
     
    Last edited by a moderator: 26th Jun, 2006
  3. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Hi Kevin
    Don't forget that the impact of economic conditions can take time to affect the real estate market and consequently prices; think of it as a lag period. Rod Cornish, head of Macquarie Bank (whose opinion I tend to take more notice of above other analysts) predicted that, in 2005, Sydney would be the under-performer with price falls of 4-5%. His model predicted that Sydney would suffer more than other capitals from the increase in interest rates due to the vulnerability of Sydney households, most of which are more highly leveraged than the rest of the nation.

    Let's also keep in mind that the property market is not an exact science (unlike monitoring the share market) as there are so many factors that impact on the market, that may not be forecast. Think taxation changes in legislation such as the NSW 04-05 doomed vendor exit stamp duty
    (2.25%) and the recent alterations to land tax, and you begin to appreciate the nuances that can occur.

    Migration may well be up in Sydney and vacancy rates down but that may not be enough to make people want to invest just yet. Having said this, with the doom and gloom of the media, and the lack of property talk at dinner parties around the place, now may just be the very best time to snag a bargain and wait all over again for the good times to roll :)