Sydney property prices faltering as new home 'tsunami' hits; Homes are 20 per cent overvalued, according to Goldman Sachs, which is seeing a one in three chance of a recession
I think that just looks the sort of typical, vanilla, run of the mill type stuff that starts to happen after a big demand driven price-spurt in the Sydney property market, as the market peaks and then runs out of puff? Hardly anything unusual? Certainly IMO nothing that's going to precipitate a 25%+ price fall across the whole market in < 3 months? I mean do you think these auction sellers are "forced sellers"? Or are they just people getting a bit greedy and seeing if they can secure a ridiculous price in a hot market? If the latter, why would they suddenly start offering to sell at a huge discount? They will just pull their properties from the market.
I think that just looks the sort of typical, vanilla, run of the mill type stuff that starts to happen after a big demand driven price-spurt in the Sydney property market, as the market peaks and then runs out of puff? Hardly anything unusual? Certainly IMO nothing that's going to precipitate a 25%+ price fall across the whole market in < 3 months? I mean do you think these auction sellers are "forced sellers"? Or are they just people getting a bit greedy and seeing if they can secure a ridiculous price in a hot market? If the latter, why would they suddenly start offering to sell at a huge discount? They will just pull their properties from the market.
Hmmm, you're right - it could all be just a storm in a teacup.
You seem to be getting a little flustered though - are you sure you're not exposed to any potential downturn in the Sydney property market?
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
Hmmm, you're right - it could all be just a storm in a teacup.
You seem to be getting a little flustered though - are you sure you're not exposed to any potential downturn in the Sydney property market?
I'm not flustered - not sure why you would see that? Doesn't worry me at all - even if you turn out to be right, it wouldn't particularly bother me. If anything I would probably buy an IP in this scenario!
I'm not flustered - not sure why you would see that? Doesn't worry me at all - even if you turn out to be right, it wouldn't particularly bother me. If anything I would probably buy an IP in this scenario!
So you think that's what's going to happen this Saturday, with an extra 25% of stock going under the hammer - guys like you will charge in to snap up a bargain or 2?
A surge back to 80% on the clearance rate?
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
So you think that's what's going to happen this Saturday, with an extra 25% of stock going under the hammer - guys like you will charge in to snap up a bargain or 2?
A surge back to 80% on the clearance rate?
I'll tell you one thing John, it's become a whole lot harder to get investment loans over the last few weeks, much more so than I expected.
I'm really having to work very hard to secure deals that would have been easy not long ago.
Any expressed market opinion is my own and is not to be taken as financial advice
So you think that's what's going to happen this Saturday, with an extra 25% of stock going under the hammer - guys like you will charge in to snap up a bargain or 2?
A surge back to 80% on the clearance rate?
No that's not what I am saying. I am saying that *if* your catastrophic event / trigger scenario plays out, and prices drop 25% across the board by the end of the year, that there will likely be a lot of bargains / value around, so then I would consider an IP purchase. But not just because the markets drops off and plateaus a bit - I'd want more than that, as I already have 2/3 of my net worth exposed to Sydney property, and my main strategy is to continue to build wealth in other asset classes. But a Sydney property "blood in the streets" scenario would be too tempting to stay away from I think!
PS to Peter - yes I would expect finance to be challenging in such an environment, however I already have the facilities in place to jump at any opportunity that arose (unused LOC accounts secured with my PPOR, cash etc), so I think that might give me an advantage.
PS to Peter - yes I would expect finance to be challenging in such an environment, however I already have the facilities in place to jump at any opportunity that arose (unused LOC accounts secured with my PPOR, cash etc), so I think that might give me an advantage.
Smart man - people underestimate the value of having access to finance when everyone else doesn't.
Any expressed market opinion is my own and is not to be taken as financial advice
I think that just looks the sort of typical, vanilla, run of the mill type stuff that starts to happen after a big demand driven price-spurt in the Sydney property market, as the market peaks and then runs out of puff? Hardly anything unusual? Certainly IMO nothing that's going to precipitate a 25%+ price fall across the whole market in < 3 months? I mean do you think these auction sellers are "forced sellers"? Or are they just people getting a bit greedy and seeing if they can secure a ridiculous price in a hot market? If the latter, why would they suddenly start offering to sell at a huge discount? They will just pull their properties from the market.
Ordinarily I'd agree with you but the present episode seems very unusual:
1. The market is hopelessly beyond ROI fundamentals and in need of a correction. This is not the same as a fire sale. Usually there is an overshoot downwards, a Newtonian reaction to the previous irrational boom.
2. Its possible that we are (unknowingly, for now) entering a new paradigm and that the 20 year property experience is finally over. Lower growth is the new RBA normal, they have given up on stimulus, and the macro-prudential controls are an unprecedented response to the economy being sucked dry by pointless housing over-investment. Some politician has to make the call: such housing prices can no longer be afforded. We are yet to see how much the new prime minister will nail his flag to this apparently changed ideological framework. Any Malcolm Turnbull changes that favor innovation above dead-loss existing-housing investment will exacerbate the new trend. This might also plunge the broader economy for a while but, well, you have to make an omelette some day ...
3. Big correction, to a new lower normal, is plausible but the outcome of the present episode is hard to predict. Watch Malcolm's spectacles wave about, right hand.
I'll tell you one thing John, it's become a whole lot harder to get investment loans over the last few weeks, much more so than I expected.
I'm really having to work very hard to secure deals that would have been easy not long ago.
Which means ipso facto, less demand.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
Yes but it's only affecting investors. I think the investor market in Sydney was cooling anyway - there are no yields anymore in that market. But you're right it will dampen the market to some extent as some won't have the access to finance that they once had.
Any expressed market opinion is my own and is not to be taken as financial advice
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