Increasing numbers of Sydney property investors selling up, starting to think market may be at top; Some investors are beginning to question if this current market growth is sustainable
Tweet Topic Started: 22 Nov 2013, 11:35 AM (4,155 Views)
I missed you margaret, hows my favourite set of oversized chompers going today? You'd think if they really wanted to know, they'd find out right? How hard is it to add a box?
Despite the idea that investors are in for the long haul and you should never sell I don't think this is often the case. I'd be curious to know the average holding time for investors compared to OOs. Shads could you do me a favour and find that chart for us.
The ones selling are the investors who have figured out they were lied to, and buyers are probably investors who still believe the hype from the last decade.
Shadow was hopelessly wrong about the Gold Bull Market. What else is he wrong about?
The ones selling are the investors who have figured out they were lied to, and buyers are probably investors who still believe the hype from the last decade.
Whatever the case, the only important thing now is that the banks 'maintain prudent lending standards'. When this thing goes pop, its important to ensure that the people who swallowed the last lot of hooks can be forced to cough it up no matter how severe the downturn is. We have some over-exposed banks to protect after all.
Despite the idea that investors are in for the long haul and you should never sell I don't think this is often the case. I'd be curious to know the average holding time for investors compared to OOs. Shads could you do me a favour and find that chart for us.
It would be an interesting stat to know. I guess the only way it could be found out is through some kind of survey, and even that would be hard because what people expect to do and what they eventually do do will no doubt be different. Common sense would suggest that at some stage investors would cash out and go into more liquid assets, but I wonder if that is what most people do?
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
The ones selling are the investors who have figured out they were lied to, and buyers are probably investors who still believe the hype from the last decade.
I think that's a good possibility. I was listening to 2GB for a few minutes the other day, and some bogan rings up to get advice about where to buy using his SMSF.
These people have probably sat on the sidelines for years feeling like they are missing out and thinking it's a sure thing etc etc.
stinkbug omosessuale Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments. Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck! See here Property will be 50-70% off by 2016.
I guess it comes down to the individual investor and whether they are in for capital gains or yield. As Miw pointed out, that would often depend on the age of the investor.
The Sydney property market is starting to lose some of its heat, some agents say, with just a month of auctions to go for the year. Yet others say buyer enthusiasm is as strong as ever.
There are 757 auctions scheduled this weekend and almost 900 for what will be the biggest day of the year the following week.
''I think it's still a hot market, but buyers are standing back and having second thoughts,'' McGrath Coogee agent George Faris said. Dr Andrew Wilson.
''Buyers are a little bit more cautious,'' Mr Carrozza said.
It is not showing up in the auction clearance rates yet, with the Fairfax-owned Australian Property Monitors recording a still-strong 80.6 per cent for last weekend.
Even the revised data, when more results come in later in the week, was showing 80.1 per cent.
That amounts to 17 of the past 19 weekends now being above 80 per cent.
Starr Partners chief executive Douglas Driscoll said there had been a surge of investors selling in the western suburbs.
''They feel we're getting close to the top of the market, so with people obviously prepared to pay over the odds, why wouldn't they cash in their chips?'' he said.
''They'll reinvest in a different location - not Sydney but other capital cities - or sit on that money to reinvest when the market cools.
''What goes up must come down, so when it calms may be a better environment for the long-term strategist or investor.''
House price falls destroy the asset value of two thirds of the adult population who have been working hard to pay off debt over the years.
Price falls also impact the children of the adults who own the properties that fall in value. Their dependent children will suffer on any sale of the current home when the parents possibly lose some or all of the equity in their existing home. Their children who inherit will not get as much, so they too will lose, possibly doubly as they also lose equity in their own homes.
Renters will probably also lose in two ways. There will be less new property as there is less incentive for people to buy additional properties to rent if there is less likelihood of capital gain. They may also face increased rents due to falling supply of rental property and as existing landlords with losses of equity and asset value take advantage of any situation which enables them to increase rentals to make up for the shortfall in expected capital gain.
And who benefits? About 3% of the population each year at most as they will be the ones who get cheaper entry prices than otherwise.
The orderly market will be destroyed if housing values are allowed to fall as there is no incentive to catch a falling knife. Deflating asset prices always leads to a further withdrawal of buyers who retreat to the sidelines to wait for the values to stop falling, or at least to have fallen so far that there is a good chance of a near term rebound.
House price falls would be a lot worse for society than continued house price rises.
The demand for properties in inner city Sydney is at an all-time high. Properties are selling at record prices upon first inspection, and the huge influx of investors returning to the inner city property market, means there is a shortage of quality stock available – particularly for properties priced up to $1.2 million.
Many vendors are holding on tight; refusing to part with investments they bought years ago that are now yielding rental returns as high as $800 per week, on a property they purchased for just $400,000 10 years ago.
There was a time during the early 2000s that investors shied away from purchasing properties in the inner city. Banks tightening their lending requirements and only financing between 60-80% of property values meant that many investors were cut out of the market and properties under 50 square metres were very hard to finance at all.
This was a tough period for investing in inner Sydney. Hundreds of new apartments were released to the market each year, but heavy finance restrictions fuelled lots of bad press about investing in city apartments. At the time, many experienced city agents were managing 30-40 listings simultaneously, and the time-frames to sell these apartments would span up to 12 months.
How times have changed! If anything, the financial crisis has helped the city market by giving buyers the confidence to invest in property again, as opposed to other high risk investments and shares and stocks which can be volatile.
New developments have been selling out in just hours upon release, and command exuberant prices – including Barangaroo, which completely sold out in hours despite prices starting at $1 million for one-bedroom apartments, and most recently York & George, another inner city development which sold almost 90% of its apartments on the first day of release.
Self-managed super funds have also gained momentum, buying up investments in the inner city market; yields are so good with the guaranteed reward of long-term capital growth.
We’ve also seen a growing number of tenants who have chosen to buy into the market so as not to pay the ever increasing rental prices. It’s all part of the shift toward more and more local and international residents embracing our fabulous inner city lifestyle, and just wanting to be in it to enjoy it. It’s no wonder why the city of Sydney is one of the most in demand property markets in the world.
While it is encouraging to see our once tough inner city market experience such a boom, properties at the higher end of the market are still harder to move. This is particularly true for those who bought off-the-plan for properties priced over $1.8 million in the past four to five years.
These properties are still averaging 12 months on the market and there is a much smaller pocket of people who can afford to spend $2-$6 million on apartments in the city. The higher end is predominantly owner occupied and over time we look forward to this end of the market picking up.
As we say goodbye to 2013 we are excited for the year ahead and once again look forward to a buoyant inner city market place.
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