I’ve been tracking a particular Sydney beach side suburb for 4 months and keeping a “dossier” of prices in streets am interested in in that suburb. It is a suburb that I have always liked and I plan to buy an IP, build up my equity, then buy a 2nd IP and move into one of them.
I’ve found that some places in this suburb have been on the market for 6-8 weeks and some places are now being advertised between $20,000 and $40,000 less than they were say 2 months ago. I suspect, you could haggle down a fair way more from these prices.
I am looking in the 1-2 bedroom unit market (possibly art deco style).
I am living abroad and am earning good brass. I plan on building a “war chest” so I have a nice big deposit. I should have around A$60,000 in the kitty by December and more into 2005.
I think I’m in a good position in the sense that it apears to be a “buyers market” in Sydney at the moment (at least where I’m looking). I would like to canvass forum members views on the Sydney market. I am planning on buying and holding. But I am always wary of buying in a down cycle. There are bargians to be had I feel with lots of folks over committed – but my concern is that if I buy into the market in say 6 months time and there is a lot more pain – I might be able to pick up more of a bargain in 2005. I am in no rush so time is on my side. Any opinions on “when to time my run”? I have my own views, but would like to hear from others.
Originally posted by Da Man:I’ve been tracking a particular Sydney beach side suburb for 4 months and keeping a “dossier” of prices in streets am interested in in that suburb. It is a suburb that I have always liked and I plan to buy an IP, build up my equity, then buy a 2nd IP and move into one of them.
I’ve found that some places in this suburb have been on the market for 6-8 weeks and some places are now being advertised between $20,000 and $40,000 less than they were say 2 months ago. I suspect, you could haggle down a fair way more from these prices.
I am looking in the 1-2 bedroom unit market (possibly art deco style).
I am living abroad and am earning good brass. I plan on building a “war chest” so I have a nice big deposit. I should have around A$60,000 in the kitty by December and more into 2005.
I think I’m in a good position in the sense that it apears to be a “buyers market” in Sydney at the moment (at least where I’m looking). I would like to canvass forum members views on the Sydney market. I am planning on buying and holding. But I am always wary of buying in a down cycle. There are bargians to be had I feel with lots of folks over committed – but my concern is that if I buy into the market in say 6 months time and there is a lot more pain – I might be able to pick up more of a bargain in 2005. I am in no rush so time is on my side. Any opinions on “when to time my run”? I have my own views, but would like to hear from others.
32 people have read this post – but nobody has responded! Come on boys and girls – share an opinion!
Hi Da Man
Like you – I am an Aussie living in London and watching how the real estate is going in Sydney. I already own a property in Sydney and in the past 5.5 years I have been away, have seen it grow dramatically. So much so in fact I demolished the old home and built new which means I will be returning to a lovely home built with overseas funds. Great earning sterling. In fact, I would encourage young people to work in the UK, save as much as you can and return to Oz with a nice healty deposit all thanks to the positive exchange rate. However, I digress. I have been watching the property market and prices are stabilising if not coming down. I have noticed this over the last couple of months in particular. I fear people who have gone in over their heads are about to feel the pinch as the mortgage rates creep ever so slightly up and up. No, I don’t believe the rates will ever reach the heady heights of the late ’80’s, the Government has too much to lose to let that happen again (any Government) but it will put the brakes on people for a bit as they ‘regroup’ and pay back some of the high mortgages taken out to own 2 or more properties. This, da man…give people like you and I an opportunity. We can offer ready cash as a hefty deposit and not extend ourselves too much and still end up with a nice property which will continue to grow in the next 5-10 years. If nothing else, we may have to do this to help our children who are going to find it almost impossible without taking out mortgages of $300K or similar! Wait another 3 months, I think it will then be time to make a move.
Chris
Thanks for those thoughts – I really appreciate it.
I pretty much agree with everything you say. It seems to me there are a few people who have “over extended” on a 2nd or 3rd investment property in the last few years to try and “cash in” big time in Sydney and even the slightest interest rate movement is hurting these people. This is mainly based on anecdotal evidence. Clearly if a slight interest rate movement hurts you and forces to sell – you couldn’t really afford it in the first place.
I know where I want to buy already. My strategy is to walk in, with my healthy deposit and buy…..come back to the UK again …….keep saving for a little while to bump up my stake in the property……then borrow against that equity….buy a 2nd property……and then live in one of them when I move back to Oz. I am praying that the Aussie dollar dives and dives and dives during this period.
It is a pretty simple and obvious strategy I know – but as I am in no rush to buy, I want to try and buy in when the market is a close to bottoming out as possible and this is where I would like to hear what people think about what Sydney will do in the next say 12 months. I think I’m in a strong position and if I can buy an IP at unders through somebody elses misery – this would please me no end. My thoughts are that there could be some more pain until early 2005. Then might be the time to pounce.
Originally posted by Da Man:2nd IP and move into one of them.
if I buy into the market in say 6 months time and there is a lot more pain – I might be able to pick up more of a bargain in 2005. I am in no rush so time is on my side.
Your answer depends on how many are thinking exactly the same thoughts as you.
yes it’s very easy to find yourself running with the herd.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Me personally thinks there will be better opportunities in the next 12-18 months.
But as Jan Somers says about timing whats important is –
1. Time in the market (ie. hold for as long as you can) and
2. Buy whenever you can afford it (ie. its financed correctly – got a decent deposit etc).So in other words it does not matter when you buy.
Originally posted by gmh454:Originally posted by Da Man:if I buy into the market in say 6 months time and there is a lot more pain – I might be able to pick up more of a bargain in 2005. I am in no rush so time is on my side.
Your answer depends on how many are thinking exactly the same thoughts as you.
Spot on gmh454. Do Man, if you run with the herd you risk either (a) getting trampled on, or (b) being passed by!! Either way, you may regret contemplating your navel; do what is right for you, and not what everyone else is doing!!!
Do Man:
Why are you waiting for a time when “there is a lot more pain”?????? You mean for vendors??? Why not buy because the price is right???? As an investor, I try to buy when prices are down (as they are now) but to hold off too long, may see you missing the boat altogether. A wise (and extremely wealthy) business tycoon once laughed when he told me “being smart is one thing, being greedy is another”
Don’t be a dreamer…..DO MAN !!!!! [laugh4][laugh4]
Hi Da Man,
I too am looking at beach side suburbs (one in particular) in Sydney. My advice is always be careful of buying units. They are easily replicated when demand gets hot therefore curtailing capital gains somewhat. My brother lives down at the beach in Sydney and cuts articles out of the local papers regarding real estate. It appears there are massive plans in the pipeline for more units down there (possibly to cope with all the baby boomers in a sea change frame of mind). Also the fact that you want to pick up an older unit might leave you with a difficult to rent property as most tenants are quite fickled in their choices and will always try to move onto the newest building in the area.
If you want a reality check get the Manly Daily newspaper and check the for lease section for Dee Why. This suburb has a particularly high density of units and there’s literally hundreds of units to let. My brother has a 1 bedder down there and it’s constantly a pain with high turnover and rent defaulters so much so he’s put it in the hands of a PM.
IMHO I would not purchase anything less than a duplex/ townhouse down there. Sure you might pay more but with its associated land content you’ll win on capital gain.
My thoughts of when to buy would be when you see the prices rising again. It’s way to difficult to pick the bottom of a market when it’s going down. The safest time, IMHO, is when you see them start to swing up again. You may pay 2-5% more than you could have a couple of months earlier, but at least you know the asset is starting to appreciate.
As for buying now, I really think the market is too unstable right now. It may stablise, it may go down, it may go up. No one knows so I’ll wait till there is a clear direction. What may seem like a great buy today could very well be a complete lemon in 5 years time. Just ask some of the Docklands OTP buyers in a couple of years time..
Yeah, I’m with you Baloo. I would keep an eye on vacancy rates, yield etc and make your move when the market is truly heading in the right direction. (Maybe 12 to 18 month wait IMHO though!)
I’d keep monitoring the area you are looking at for another 12 months. Prices are dropping and there is a saying from the sharemarket that is relevant here – “never catch a falling knife”. Another little gem is that “wealth is the transfer of money from the impatient to the patient”. So I would wait. interest rates will have to go up by 2-3% before you see any real pain. But you should also decide now what you think is good value for the property you want to buy. Then you can be comfortable with when you buy, regardless of the market cycle.
Originally posted by JasonBourne:– “never catch a falling knife”.
Jason, you took the words right out of my mouth.
Look back over previous down cycles. They have always lasted longer than a few months…usually several years. Prices are still at boom levels.
The traditional mantra is “buy in the gloom” right?
Well we ain’t got anywhere near gloomy yet!
FWIW
I’m new to this whole thing, but so far the comments that have made most sense are the ones along the line of “patientce” & “wait for the prices to begin to rise”. While patience isn’t one of my strong points – I’d be willing to hang on, watch & wait before making a relatively large commitment.
I just thought I’d add this for the benefit of fellow “Newbies”Thanks for all those thoughts guys.
I have my own views but am always keen to get other views.
I am not so sure about down cycles lasting years – there was suppose to be one a couple of years ago, so I sold up waiting for the big bargains in 12 months and then we had one of the biggest upswings in a decade. If only I could get hold of some of those commentators!! I have to laugh – a lady I spoke to at a party nearly 2 years ago was boasting to me how she was going to swoop into the market in a years time and grab bargains off all the poor first home owners who were being hooked onto mortgages they couldn’t afford with the $14k grant and the government was so irresponsible for doing it and and and. Well history is the only certainty. I wonder if her ‘war chest’ ever became a war chest or just a deflated sum of money in an interest bearing account earning 5%? Only thing I know is that trying to time the market is a mugs game – and that came from the biggest teacher of all; losses! I suggest: take a long term view and buy at a good price in TODAYS market – and I think there is some pretty good buying out there.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
The one difference between now and 2 years ago AR is that we are seeing a softening of the market at large and a reduction in prices in some areas.
Add to that rising rates plus the media flip from boom to bust and I would say the situation is very different now. While I see prices falling, and it’s only been a couple of months of that, and with the prospect and rates rising, I for one am willing to bet my savings on a time within the next 3 years where I will be able to purchase more with my funds.
3 years – wow, that’s a huge call! still it’s good to have buyers and sellers – else the world wouldn’t turn!
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Originally posted by AusProp:I am not so sure about down cycles lasting years –
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
John I’m sure it varies from area to area but here are real figures for the newbies to digest.
Had family 5 years before ‘we’ had planned, needed a house rather than a unit. In 1981 I snapped up a bargain for $110,000 that 6 mths before had been on the market for $129,000. Two years later we bought into a restaraunt and needed it valued, pleaded with the valuer but got a huge $127,500. It was probably generous.
In 1990 had same house value at $250,000 to $270,000 by three agents. (Don’t forget we had 10-14% inflation in this period ) A year later had it on the market at $210,000 for a no sale. Another 6 mths we had several buyers and sold for $212,000.
6 mths later at auction (and during a downturn they are good value ) owner had already bought (he made a killing elsewhere and had to unload) bought house and 5 acres for $410,000. Had been watching Glenhaven for years and it was over $100,000
below its value from 2 years before.Sorry for the detail, but for the newbies who think a slump lasts 3 mths before “taking off again ” relax guys it is not going to happen.
As I said all areas are different, but I think this will be the rule for Sydney again.
Wonder how much dough Kerry’s going to do on The Block this time. Has anyone been fired yet ??
Gee how do you think you will ever get ahead procrastinating as you are. Be realistic, buy something you can afford now, other states whatever, get something that is increasing in value as you save yourself, then gee wiz, 1/2 the time of struggling trying to save you are into the next one quicker.
Then woth 2 increasing and your cash injection the next seems easier etc etc. Just stop with this analysis paralysis and get your feet wet. I dont care what it is but I do think anything, then working off it, is a damn sight better than sitting with one finger in your starfish, and your head buried in analysis.
I went to an investors group meeting on invitation about a year ago now. what a misuse of the term ‘investors’. They sit round ad discuss 10 years of back data and pat each other on the back. I held my tongue for 2 meetings then asked to speak. Told them how much equity I had made in the two months of attending their meetings and challenged them to act not talk and analise. That was June last year as things were starting to slow in the market. I helped one lady get a $70k townhouse worth now $120k and another person buy a house for $125k now worth $170k.
Thsi is one example of just do something rather than twiddling the thumbs. For God’s sake you are doing the same thing all the time(talking/analising) and doing absolutely nothing.
Get A property NOW, keep it for 12 months, sell it then or cream out equity, buy in your “nice” suburb and have a “nice” deposit. Most of all, have a nice day.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
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