August 22 2006
Sydney Housing Market: Crash and Burn?
posted by Ana Samways at 9:01 amThe Sydney Morning Herald reports that a three-bedroom house in St Clair, which sold for $450,000 in 2003, sold for $260,000 at the weekend – down about 42 per cent.
First-home buyers in New Zealand will be doing a jig over news that the Sydney housing market is on the skids. Is Auckland next? If buyers can squirrel away a bit of cash into a vulture fund from their low wages, they might be able to take advantage of someone else’s property investment misfortune.
The St Clair property above was a mortgagee sale, forced after the owners could not meet the interest payments on the $405,000 they borrowed to buy the house at the peak of the market.
More evidence of dropping prices here.
And check out today’s story…Home owners find equity a spent force.
August 22nd, 2006 at 4:11 pm
No, no, Auckland houses will continue to rise for the next five to seven years still. There’s plenty of steam left in the market, and it won’t start levelling off until the median doubles again to above $800k.
By that time, home ownership will have settled at its natural level, which is about 8.56 per cent of the population, most of whom are overseas absentee landlords.
December 28th, 2006 at 9:58 am
In responses to the response that the Auckland market will continue these massive increases for another 5 to 7 years, what planet are you on? Who would invest in a market where hardly anoyone is going to be able afford the rents to make those properties a viable investment? I believe the underlying economics suggest the cost to rent should not be that significantly different to the cost of ownership. Do some basic maths on the economics and work it out from the 3 perspectives, owner occupier, landlord and tenant. If the investor is solely looking for capital gain, rather than investment return then the current market could be compared to a pyramid scame, and the bigger it gets the bigger the fall as the growth is not driven true underlying economic activity or even inline with the average rate of inflation of income and expenses. I predict the Auckland property market will drop 10% to 20% during 2007 and that will hurt a lot of investors looking for a cheap and easy capital gain to live off. Those investors will be forced to sell as the cost to service those loans is out of step with rental return and there are no new capital gains to sustain it. As Bollard says, the current property market is a very high risk investment. And if you can’t see the message in that, look out!!
February 8th, 2007 at 9:52 pm
I tell an Aucklander that he US and Sydney are slumping and Auckland got the housing boom bu harder and longer than anywhere else in the world and they look at me as if I farted in the middle of a party “Baa !”they go ..couldn`t happen in this paddock and they run off somewhere else to eat their grass .
May 11th, 2007 at 4:02 pm
As a Sydneysider who is in the market for a house on the north shore of Sydney, I can definitely tell you that properties in ‘St Clair’ and surrounding areas are a totally different story to everywhere else.
These a very undesirable areas and run with their own price fluctuations different to other parts of Sydney.