Yep. There is still the issue of supply/demand in Australia that makes it different to the UK bubble
The Crash
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Yep. There is still the issue of supply/demand in Australia that makes it different to the UK bubble
There is also a huge supply/demand imbalance in the UK.
It will correct at some point, but prices in London will remain very expensive in the foreseeable future. The London boat had sailed away in 2011, when AUD was high and London prices were low.
It will correct at some point, but prices in London will remain very expensive in the foreseeable future. The London boat had sailed away in 2011, when AUD was high and London prices were low.
Out of curiosity, Is ur current IP in Sydney ?
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It's very hard for participants in a market to say whether or not it's in a bubble. Usually it only gets called after the fact.
For example, there are debates over London's market, despite hearing a garage just sold at auction for ?550K (about $980K).
If you fancy digging into old articles on the web, you can see that in 2007 low interest rates made Irish property more affordable than the price / earnings ration would indicate.
Outsiders looking at the Irish market frequently look no further than the loan to income multiple and recoil in horror when they learn that it is now five or more. However, this fails to take into account the more sophisticated affordability measures now employed by Irish lenders. Monthly outgoings as a percentage of after-tax income are now the standard measure. This allows for the dramatic fall in interest rates that accompanied EMU entry as well as lower taxes and longer annuities. In addition, lending is stress-tested to allow for a further 2% increase in mortgage rates.
Or that there were predictions of slow growth for the next five years.
Figures released on Friday show property prices have dropped by 2.1% this year and Mr Power said: "My own belief over the next five years is that we will see annual house price inflation at about 3% per annum.[/I}
And population growth will but a floor under any falls...
The IHBA does not accept the recent talk of doom and gloom about the housing market. The fundamentals of the Irish economy remain very strong. The Central Bank predicts that 71,000 new jobs will be created in the economy in 2007. Population continues to grow at a rate far in excess of the population projections in the National Spatial Strategy and Regional Planning Guidelines and the Central Statistics Office now believes that Ireland's population will reach 5.2 million by 2020, an additional 1 million people over the next 13 years. With even the most pessimistic predictions of economic growth in 2007 and 2008 putting Irish growth rates well in excess of the European average, there is no basis for the negativity that pervades much of the commentary on the market.
That's not to say things are going to go south. The same factors are present in the UK and Australia, and there have been different outcomes.
What does strike me is that there are a number of bulls and bears who are making predictions that are more wistful thinking than likely outcomes. Continued growth way above inflation? A crash without knock-on effects for the economy? Neither are going to happen. Sorry.
For example, there are debates over London's market, despite hearing a garage just sold at auction for ?550K (about $980K).
If you fancy digging into old articles on the web, you can see that in 2007 low interest rates made Irish property more affordable than the price / earnings ration would indicate.
Outsiders looking at the Irish market frequently look no further than the loan to income multiple and recoil in horror when they learn that it is now five or more. However, this fails to take into account the more sophisticated affordability measures now employed by Irish lenders. Monthly outgoings as a percentage of after-tax income are now the standard measure. This allows for the dramatic fall in interest rates that accompanied EMU entry as well as lower taxes and longer annuities. In addition, lending is stress-tested to allow for a further 2% increase in mortgage rates.
Or that there were predictions of slow growth for the next five years.
Figures released on Friday show property prices have dropped by 2.1% this year and Mr Power said: "My own belief over the next five years is that we will see annual house price inflation at about 3% per annum.[/I}
And population growth will but a floor under any falls...
The IHBA does not accept the recent talk of doom and gloom about the housing market. The fundamentals of the Irish economy remain very strong. The Central Bank predicts that 71,000 new jobs will be created in the economy in 2007. Population continues to grow at a rate far in excess of the population projections in the National Spatial Strategy and Regional Planning Guidelines and the Central Statistics Office now believes that Ireland's population will reach 5.2 million by 2020, an additional 1 million people over the next 13 years. With even the most pessimistic predictions of economic growth in 2007 and 2008 putting Irish growth rates well in excess of the European average, there is no basis for the negativity that pervades much of the commentary on the market.
That's not to say things are going to go south. The same factors are present in the UK and Australia, and there have been different outcomes.
What does strike me is that there are a number of bulls and bears who are making predictions that are more wistful thinking than likely outcomes. Continued growth way above inflation? A crash without knock-on effects for the economy? Neither are going to happen. Sorry.
Yes two other ones in Syd.
I've just started doing something new with interesting results.
When a friend tells me that they are certain that 'property WILL crash by 30-40%' I tell them that they are in luck! I have just found about a property investment fund that has shorted property and will profit from such a downturn! I then ask them how much money they'd like to invest in it...
When a friend tells me that they are certain that 'property WILL crash by 30-40%' I tell them that they are in luck! I have just found about a property investment fund that has shorted property and will profit from such a downturn! I then ask them how much money they'd like to invest in it...
Its Interesting to read the difference between what people say on here and on Australian Property forum. Im not whinging but all i no is that the cost of living is ridiculous. Eg $10 for a beer in Perth and $8 for a bacon and egg roll from all theses hipster cafes that arent even good. Some people say that its all relative to the old days but im very confused when people say this because these days most normal people will be a slave to the bank for there whole life in some way or another. not like back then when you could buy a house for 100k and pay it off in ten years. my Mate from work was showing me the type of houses you can get in Ireland for your money. Wow. All i no is its going to be a struggle for the younger generation to afford house and pay it off with a normal wage. Somethings gotta give sooner or later or maybe not.
Yeah its called going to cash.
But here is where its rather funny,
The 'smart' bears will know when to deploy that cash, mainly because they tend to be lone wolves, they don't run with the crowd, but have a very good understanding of what something is 'worth' rather than 'paid'.
The 'dumb' bears will probably just act like a rabbit caught in the car lights, stand there and freeze and dear not deploy that cash at the right time.
So its not just the 'alternative' but how you intend to deploy that alternative.
For myself, I am just happy to hold onto property in Melbourne at the moment. Definitely not buying, but nor do I see the need to sell. Just hang tight and watch.
But then I also have my buffers, after several good years of investing in the US stock market, I am holding 60% cash over there (of the US portfolio).
The Thailand share portfolio is 35% cash.
And the Australian portfolio margin debt is down to around 25% (from my normal 50%).
So I am quite blazei about everything
If anything drops in Sydney I'll be standing by with 1mil cash to buy up. But...so will about 1 million other people I know.
Demand in Sydney is just so strong and so stable. It's a gorgeous city. The whole world wants to live here.
I think the only time property actually depreciated seriously was during WWII when there were grave fears over a real Japanese invasion; subs were spotted between the heads and a sub came into Sydney harbour.
A few extremely clever people bought extremely cheap houses in Dover Heights and Vaucluse as these suburbs dropped for a few years...
So -- if there's a geopolicital event comparable to this, or to the Holocaust, or...mass executions in Martin Place then yeah maybe property will go down...stand by.
Demand in Sydney is just so strong and so stable. It's a gorgeous city. The whole world wants to live here.
I think the only time property actually depreciated seriously was during WWII when there were grave fears over a real Japanese invasion; subs were spotted between the heads and a sub came into Sydney harbour.
A few extremely clever people bought extremely cheap houses in Dover Heights and Vaucluse as these suburbs dropped for a few years...
So -- if there's a geopolicital event comparable to this, or to the Holocaust, or...mass executions in Martin Place then yeah maybe property will go down...stand by.
Great.....then I can assume you are veteran who bought agressively during 2003 thru 2006....and then again in 2007-2008 whn the market dropped?
Aren't you buying 2 OTP ...one in the city and Lane Cove? Have you got an exit strategy for 2017?
Also have you read the OTP contract....can you get your deposit back if the developer fails to complete the contract? Did you do a deposit bond or paid cash?
Aren't you buying 2 OTP ...one in the city and Lane Cove? Have you got an exit strategy for 2017?
Also have you read the OTP contract....can you get your deposit back if the developer fails to complete the contract? Did you do a deposit bond or paid cash?
If all I did in life was listen to negative people, I'd be as poor as them.
Do your own research and don't listen to the 'noise' from those who have no idea.
I disagree! I feel there's still some room in this current market, however expect rents to soften some more.
This area has been known to move up, then drop back at each upswing, however the upswing is still, well, swinging, IMHO. I'd be expecting that potential $350k property to reach at least $400k, maybe $450k before any correction.
We've got a couple to offload & will be doing so in Spring. Prices should still be moving forward by that time.
Anyway, do your research, and work out what your gut feel is. Don't listen to armchair investors.
Agree with sash. It appears the Sydney boom is over and coming to an end. Rates will start to rise soon which will soften the market and there will be a pullback. This article thinks prices have peaked and property price growth has slowed.
http://smh.domain.com.au/real-estat...oom-appears-to-have-ended-20140423-374in.html
If you read what they basing the article on is a decrease in the rate of growth from the dec quarter from annualised at 20 % growth to a march growth rate annualised at 12 % . No suggestion of a pullback in those figures .
Th actual growth over the two quarters was 8 % and given sydney has been flat for the last seven years anyone who sits on the sidelines waiting for a pull back in order to get into the market is doing a keen ,mane we know what happened to him....
If you are looking for a PPOR in sydney I'd keep on looking . If you're looking for an investment I'd look elsewhere ( we did ) .
Cliff
Agreed! Although I think there's still some steam in the market, I'm not buying in Sydney at the moment either.
+1 - Exactly, you can get articles that contradict each other and released on the same day on occasion.
I wouldn't base any decision solely on what the media says. Many times the articles will not give the full picture, basing their info on a few items of information, yet this may be unrelated to your own strategy.If you can buy a distressed sale etc, or anything underpriced by a relative %, then what the market dropped or rose by makes no difference.
Skater is right...DD. Analyse each deal on it's own merits.
Same thing in Melbourne and everywhere, totally agree with Skater. In some suburbs there are
sub-markets within the same street.
