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Sydney property, good time to time?

Discussion in 'Real Estate' started by TradingEd, 18th Feb, 2009.

  1. TradingEd

    TradingEd Guest

    Sorry, should read, time to buy?

    What are peoples thoughts on this, there seems to be very mixed opinions?
    Thanks
     
  2. dudek

    dudek Well-Known Member

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    “Be scared when others are greedy and be greedy when others are scared.”


    IMO best time to buy was about a year ago when everyone was sitting on the fence. If you worked out your budget and purchased with higher interest rates you have all reasons to feel comfortably today. I think few people who are getting in to market today may get exposed to higher rates in the future. It may take some time for rents to off set their payments to come close to comfortable levels.

    Saying that I believe it is more about YOUR time not market timing.
     
  3. Chomp

    Chomp Well-Known Member

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    Just my opinion but I dont think people are as scared as what they will be when the job losses start happening in earnest, but if your job is safe happy days.

    Chomp
     
  4. Billv

    Billv Getting there

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    I think it depends on where you buy and what you buy.

    If you are buying at entry level you will be competing with first home buyers.
    The prices at the bottom will move up and will probably push the prices in their surrounding suburbs up as well.

    This should have a small ripple affect to other levels.
    The top end has been coming down so the way things are going we should have a smaller price difference between the cheaper suburbs and the more expensive ones.

    Perhaps this could be an opportunity for some to upgrade to a nicer PPOR in the nicer areas

    cheers
     
  5. Chris C

    Chris C Well-Known Member

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    Whether it is a good time to buy is obviously dependant on an individuals situation and what they are looking for.

    But for the sake of investment property I generally am in the "no" camp when it comes to buying right now.

    That said Sydney has already seen some significant house price falls and seems to be leading (along with Perth) the Australian property market in the biggest falls at this stage. Though like the stock market has proven over the last 12 months, just because prices have fallen and were cheaper than 6 months ago doesn't mean they can't fall further.

    I'm predicting that there is quite a bit of scope for further falls given the general contraction in borrowing that seems to be going on, despite the low rates and new FHOGs, in addition to the fact that the both reliable and unreliable sources of information are pointing towards significant growth in unemployment over 2009 and 2010, which won't exactly be stimulative for house prices.

    This coupled with the precedents that have been set in many other developed nations (who used to have high income to house price ratios like Australia and have since plummeted) to me suggests that whilst we may be marginally better off (at this stage) there is still a very large downside risk, given our highly indebted households, giving me little to no reason to "reasonably expect" good upside growth for a couple of years.

    That said, I don't have a crystal ball, and this is a very simplistic interpretation of what I think might happen. The reality is I think there are a couple different ways this crisis could play out, but I'm expecting that a good time to buy, whilst not now, might only be 12 - 18 months away, if things play out better than expected (though I'm not holding me breath).
     
  6. Jacque

    Jacque Team InvestEd

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    My thoughts exactly and I've said as much in several posts and articles. So many fence sitters last year who are only just now beginning to jump and make up their mind.

    Increased competition + less listings = more demand= higher prices

    Buy when you can afford it.
    Work out your costs and budget for this plus 2% interest rate rise on top.
    Do your due diligence to ensure you're not overpaying.
    Don't listen to everyone and give yourself analysis-paralysis.
    Have an exit strategy should bad things happen (like job loss/reduced income)

    Sydney has been in a flat/plateau zone now for some 5-6 yrs in many suburbs. In my opinion, it's now an opportune time to buy as real costs have decreased and rents are finally playing catch up. Who knows what the year will bring, however? Govts have a funny way of intervening and stimulating the market (FHOGs for eg) or putting the brakes on (think Keating and his removal of neg gearing) - it's a fickle world out there and one which we can't really be sure of anything.
    Just like any investment, remember that there's no guarantee or "sure thing". It's up to you to do your research, decide when and what product/asset to invest in, and monitor your investments on a regular basis to ensure they're performing as per your plan.
     
  7. dudek

    dudek Well-Known Member

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    Chris do you mean Sydney or some parts of Sydney?

    What was the average fall for Sydney and Australia in the last 12 months, again Chris?
     
  8. Chris C

    Chris C Well-Known Member

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    I just thought I'd chirp in on this comment. I would definitely be doing your sums on AT LEAST 2% higher interest rates.

    Whilst our cash rate can still fall much further I'd just like to point out that given the international climate, and the fact that our banks still draw a lot of their money from overseas, the RBA cash rate isn't the be all end all when it comes to itnerest rates, and just because the cash rate comes down doesn't mean the RBA can keep interest rates down. As we saw late last year the banks will raise interest rates irrespective of the RBA cash rate if they have to.

    Almost all the banks have already said that they probably won't be passing on the next rate cuts in full, and this is reflective of the cost of funds in the international markets, which I'm expecting to only get more expensive in the future. You only have to read the reports of the troubles that Ireland and many emerging countries are facing to realise that many lenders are asking for increasingly high interest rates to account for the increased risk of default. Even the yields on US Treasuries are starting to climb, the apparent safe haven.

    So as someone said on these forums the other day, use the bankers rule of thumb - if the sums don't add up on 8%, they don't add up. And in reality rates have potential to go much higher than 8% if shi*t hits the fan.

    I agree, but at the same time, make sure you try to get a broad view of the situation. There is no point just finding information that suits your conclusions. Learning requires considering the validity of alternative view deeply before discounting it.

    Well you can rest assured that the government doesn't have unlimited funds, and their won't be popular support for market manipulation indefinitely.

    Central banks on the other hand, they are another monster unto themselves, though they don't traditionally get directly involved in the property market. Though it looks like that precedent might be changed by the FED over in the US.

    Of course I'm talking in aggregate. I'm not one to get too caught up on specifics. I'm very much only interested in macro movements when it comes to future forecasting. So as such I'm more than happy to concede that there will be areas that will outperform the average dramatically, and areas that underperform - thus the principle of using the average/median when making sweeping statements about the direction of property prices.

    Anyway there is a plethora of reports out on Sydney and Australia's slight declines in property prices. I posted an article on these forums the other day...

    They aren't "OMG I'm in negative equity" falls in value, but I just come from the perspective that there is more of them to come, especially after these FHOGs increases and government handouts have run their course, and as unemployment rises, making these small falls very ominous for the future. That's just my two cents though...
     
  9. linkit

    linkit Guest

    I recently bought in Annandale in Inner west sydney and it was really getting quiet competitive, definately a different story to late last year.
     
  10. Chris C

    Chris C Well-Known Member

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    But what was the price range of the property?