During the current doom and gloom sentiment that is pervading Sydney at the moment, there are still investors out there who are going against the grain, the expert opinions and the forecasts and making up their own mind about what constitutes a good investment With Spring coming up (busy time for RE due to increased numbers of listings) I expect to see even more bargains due to supply, in my own area at least Sydney, as I've discussed before, is a huge market and making generalisations about it as a whole doesn't do it justice at all. There are still areas that are falling, others that are picking up or stablising and yet other suburbs that don't seem to have suffered much at all from the downwards trend of the last two years. Interesting times... What I'd like to know, however, is who is investing in Sydney at the moment, where they're looking and how they're finding the market. Any takers?
Not me - yet. But waiting for the bargains to start appearing again. Another interest rate rise and we could be in for some fun.
Jacque, You know my answer already... I've just bought in Mona Vale but will probably take my cheque book and put it in a deep drawer for a while now. I'll develop that property first and then go dust off the cheque book. I'm happy with the price I paid and my 10% discount to asking, so think its pretty much future proof regardless of where rates head, particularly when I allow for the higher use I'll be putting that land to. The market has softened and there's a lot of doom and gloom in the press about property now. It won't take much positive sentiment to turn that around really quickly though. It is possible to wait too long and miss the bottom because you stubbornly held out for that extra 5% drop or whatever you're targetting. I like the Northern Beaches as I still reckon they're under-valued. I've bought 500m from the beach near the centre of town and on a multi-unit zoned site. Its also right next to Pittwater High School and Mona Vale golf course. A short stroll around the corner gets you to Bayview on Pittwater and all the boating that goes with that. Sydney has already done most of its dropping IMHO, so now is not a bad time to snag a bargain and buy well. Just my opinion of course, Michael.
Disagree re amount of sentiment it takes to change the property market . We're not talking about the share market that changes with the latest rumour. My observation is that it takes a lot to turn the property market . If you go back to 2002 / 2003 every one knew that the market was going to high , but did it stop ... No it kept on going . Purchase prices of 200K for a basic house in rocky are illogical , but it keeps on going. It takes a lot to change the direction of the property market , otherwies we wouldn't have a cycle every 7 -10 years ( the fact that the last cycle was 14 years seems to be conveniently ignored by most people - 1989 - 2002 is 14 years ) . I know, we bought in 89 and saw our house go sideways for six years , and then move veeeery slowly . Wouldn't want to be holding a negatively geared property for that long with no growth, unless I'd got an absolute bargain. Michael , you may have picked the bottom , but it's a risky proposition . I'll be happy to leave it untill I see signs that the market is moving , or I do see a real bargain. See Change
See Change, Good point regarding how slowly property markets move and sentiment turns. My crystal ball is a bit tarnished so I can't tell you whether we've hit the bottom in Sydney, or when the market is likely to turn back up. I bought my IP because of its potential, and it will take me a couple of years to build that potential into the site. A flat market is not a bad place to be doing a development, so onwards I go. I reckon I've bought well but time will be the ultimate judge of that. Cheers, Michael.
Picking the bottom (or top, for that matter) of a property cycle is certainly a skill that I only wish I had, if only to avoid making some errors of my own And, Seech, you're so right when you point out the lengths of cycles being so varied. The old 7-10 yr theory is really only a rough guide, as the last boom has only indicated too well. If you'd purchased in 99 and subsequently sold 3-4 yrs later, it wasn't too hard to have doubled your money.
I have a few simple rules to keep track of which way the RE market is travelling and one of those is that while ever the number of forced sales keeps rising (and this can be in any area) the market has not turned. A high profile example that comes to mind is a Wahroonga based developer-now bankrupt- working on the next election campaign from a garage in Pennant Hills, filling in time waiting for the next property boom.
These anecdotal measures are certainly useful. A mate of mine reckons increasing numbers of empty retail shops in the "high street" are a leading indicator of residential property in the doldrums. But what about quantitative measures? I reckon Kieran Trass' book was a real breakthrough in trying to apply some objective measures to identifying where we're at in the property cycle. I have a dream of having a model where I can put in all the historical figures for interest rates, population growth, GDP, rental yields and it predicts annual growth rate . I'm sure I could get it to work historically . but whether it would truly forecast???
Data alone won't work as you can't factor in taxation changes and govt policy that are beyond our control; think land tax alterations, vendor exit stamp duty, FHOG. There will always be other variables thrown into the mix to make the statistical forecasts incorrect.
Course you can. Just have a "wildcard" variable where you add the first number you think of and divide by 3... Seriously though, you make a very good point. What I guess you'd be looking for is a range of predicted annual CG %. Better to be approximately right than precisely wrong...
