Who has a 'Housing Market' crystal ball then?

[millholl]

We're (2 adults + 2 kids) contemplating the move to Sydney. I have a job offer (ENS 121 so no school fees required and also qualify for Medicare) for $100k.

 

The one thing preventing us from jumping in with both feet is the property market. I think a lot of people on here will agree houses in Sydney are unrealistically priced. They have to come down in price and I thought I'd read somewhere recently that this has started to happen.

 

Anyone have any thoughts on this?

[fish.01]

Sydney is a city of extremes. The "beautiful" area's are extremely expensive and the areas most Australians think of when they decide they could never live in Sydney. On the other hand much of plainer jane Sydney has not boomed over the last 10 years as much as some other cities and some prices are quite low in comparison.

 

So it really depends where you live in Sydney, probably more than any other city in Australia.

 

The house prices have been dropping for almost 2 years here in Brisbane so I doubt it is a new thing in Sydney so either:

 

1. the market will drop slowly/stagnate/stay soft until some unknown future year when wages catch up with prices again and another boom happens; or

 

2. the market will deflate a lot more/bust and many pimply gen Y's will woop and holler and say told you so and then promptly all be sacked just before they are preparing to get the deal of the century :laugh:

[ozziepom]

Having lived there and sorry to sound harsh but on $100k you won't be able to buy much in Sydney, unless you have a humongous deposit and/or like living in a small, run down house or apartment in a not-great (maybe terrible) part of Sydney miles from the CBD. There really are some horrible dives for sale/rent in Sydney at undeliverable prices. In that respect QLD, VIC, WA and just about everywhere else are better.

 

TBH, it doesn't matter what the market does, the above is unlikely to change by a big enough amount to make a difference.

[northshorepom]

The market has softened and declined slowly in most parts of Sydney over the past 2-3 years. Mostly this appears to be people sitting tight and not moving unless they have to, or trying to payd own debt, or due to a lack of appetite for increasing their debt levels, or due to a general belief that prices aren't on an escalator so no need to jump on to it whilst it's moving. A bit like many places in the UK, although prices haven't declined as much. Maybe 10% or so. Again as in the UK, this apparent price decline is amplified if people have to sell - they are having to drop further to secure a quick(er) sale, just as in hot markets people end up paying over the odds of what is a fair market price because they bid each other up, if you see what I mean

 

As to what's going to happen in future? Well, the fundamentals of lack of housing supply in Sydney still exist, and the population keeps increasing, so it's hard to see prices plummeting unless the backside falls out of the Australian economy. Whilst there are some hidden weaknesses in the Aussie economy, the fundamentals of that are still pretty strong too unless resources demand suddenly falls.

 

One of the things that concerns me from a macroeconomic point of view is that (just as in the UK) there is way too much personal wealth tied up in property, so the government can't afford to take policy decisions that would lead to substantial falls (corrections if you like) in the housing market as it would cripple consumer confidence and therefore provoke a recession. It's even worse than the UK in this respect to be honest, there are an awful lot of Aussies with an investment property or six. In some respects the bes thing for the long term for the economy as a whole would be for lots of these investors to lose their shirts and house prices to drop right back - it would take a lot of pressure off wages, it would stimulate people into saving and investing in other areas that are more beneficial for the economy as a whole (like shares) and it would get rid of some of the short-termist, "I'm all right Jack" mentality in the private rental sector. But don't expect it to happen any time soon, any government that provokes such a fall is committing political suicide. Witness the recent change in tax relief on super contributions, whereby you only get tax relief on the first $25K a year. A stupid move for the economy as a whole as all it will do is stoke alternative investment strategies - like housing - and limit the capital available to domestic equity markets, but it keeps a few punters happy and allowed them to fudge their figures to attain a "surplus" that they had hung their hat on, even if they won't achieve it

 

But enough of me ranting about the cr@ppiness of the current government's behaviour. If you can wade through all that above, I'd say you're reasonably safe buying property in Sydney, although equally you should feel in no mad rush to buy a pig in a poke either. You won't lose your shirt if you buy, I'm pretty sure, but don't expect to make mega-bucks either. Just buy a home (what we should all do anyway when it comes to houses) that suits you and your budget, if you can.

[Graemsay]

Prediction is hard, especially when it's about the future.

 

Sydney property falls into the sodding expensive category on pretty much any metric you can think of. Economists talk of mortgage stress as being when a household has to pay more than 30% of its gross income to cover repayments, and this is considered a precarious place to be. For it to get back to the point where the average (median) house merely causes an average earning family to be in mortgage stress, prices would have to half.

 

Northshorepom highlights a lot of the problems in Sydney. The list that I've seen include increasing population, poor mass transit systems, restrictive planning, government levies on developing land, and generous tax breaks for property investors. I read a report a while back that concluded that the worst choices had been made in virtually every area by the government, and that this witches brew had inflated prices.

 

The question is how much of the rise is down to speculation. There are innumerable property investors, and many are running a loss (known as negative gearing) in the hope that they'll see above-inflation price rises. If the market does take a turn for the worse then I could see those with a portfolio yielding 3% against mortgage costs of 6% to 7% heading for the exits.

 

My guess is that if the Australian economy runs into recession then there could be a serious slump, in the same way that there was in the US, Ireland or Spain. And we all know how that turned out. Or there could be a slow deflation, as we're seeing in the UK. (I'm puzzled by the London property market, which continues to defy all logic...)

 

Personally, I wouldn't buy just now. But that's a gamble, and there are a lot of people who sold up in the early-to-mid noughties in the UK in anticipation of the crash that never came. Or buying in Sydney now could be the same as Florida or Dublin in 2007, which possibly ended even worse.

[fleabo]

Personally, I don't think the market is going anywhere fast - neither up nor down. The one key advantage buyers have at the moment is that more houses are sold outside of an auction.

 

Around our way, at the beginning of the year, there were 6 houses on the market. In the last couple of months all but one has been sold at a negotiated price (so not 'unrealistically' priced), and the one that hasn't sold has come off the market. So the market is soft, but Estate Agents are still cruising around in beamers talking shiite.:wink:

 

Good luck with your deliberations. If you are sensible and realistic there is a nice life to be had out here. You have to give some stuff up in order to gain in other areas.

 

 

 

We're (2 adults + 2 kids) contemplating the move to Sydney. I have a job offer (ENS 121 so no school fees required and also qualify for Medicare) for $100k.

 

The one thing preventing us from jumping in with both feet is the property market. I think a lot of people on here will agree houses in Sydney are unrealistically priced. They have to come down in price and I thought I'd read somewhere recently that this has started to happen.

 

Anyone have any thoughts on this?

[Candygirl]

Personally, I don't think the market is going anywhere fast - neither up nor down. The one key advantage buyers have at the moment is that more houses are sold outside of an auction.

 

Around our way, at the beginning of the year, there were 6 houses on the market. In the last couple of months all but one has been sold at a negotiated price (so not 'unrealistically' priced), and the one that hasn't sold has come off the market. So the market is soft, but Estate Agents are still cruising around in beamers talking shiite.:wink:

 

Good luck with your deliberations. If you are sensible and realistic there is a nice life to be had out here. You have to give some stuff up in order to gain in other areas.

 

:biglaugh::biglaugh:Not just the ones in Sydney!