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Smurf1976

Sydney Is Crashing Now

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As various links posted previously on this forum have explained, Sydney house prices are falling by just over 1% per month in recent times and now appear to be about 13% below the peak.

These are nominal prices not adjusted for anything. It is also known that the middle suburbs have been hardest hit in recent times with price falls approaching 3% per month. It has come to the point where economic commentators and even the media are using the "R" word - Recession.

In fact it is arguable that the New South Wales state economy, home to about 30% of the Oz population, is in fact in recession right now. Depending on which statistics are considered it either already has the required 2 consecutive quarters of negative growth (shrinking economy) or is damn close to doing so with growth being negligible at best.

Now, my thinking is as follows. Does anyone have a sensible argument to shoot this down?

1. Sydney is experiencing a HPC right now. The evidence for this is overwhelming and nobody, not even the real estate VI's, even attempts to deny the obvious. The denial phase has passed.

2. Sydney has been ahead of most other significant population centres in this house price cycle. That includes the UK, US and the rest of Australia.

3. These other regions are with very minor variances following Sydney's path with a time lag. The UK appears to be closest behind Sydney followed by the other Eastern states of Australia. Western Australia and the US are considerably behind.

4. Unless there is a very major change in the pattern visible in these other locations they too can expect a HPC in the relatively near future.

Flames? Thoughts?

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As various links posted previously on this forum have explained, Sydney house prices are falling by just over 1% per month in recent times and now appear to be about 13% below the peak.

These are nominal prices not adjusted for anything. It is also known that the middle suburbs have been hardest hit in recent times with price falls approaching 3% per month. It has come to the point where economic commentators and even the media are using the "R" word - Recession.

In fact it is arguable that the New South Wales state economy, home to about 30% of the Oz population, is in fact in recession right now. Depending on which statistics are considered it either already has the required 2 consecutive quarters of negative growth (shrinking economy) or is damn close to doing so with growth being negligible at best.

Now, my thinking is as follows. Does anyone have a sensible argument to shoot this down?

1. Sydney is experiencing a HPC right now. The evidence for this is overwhelming and nobody, not even the real estate VI's, even attempts to deny the obvious. The denial phase has passed.

2. Sydney has been ahead of most other significant population centres in this house price cycle. That includes the UK, US and the rest of Australia.

3. These other regions are with very minor variances following Sydney's path with a time lag. The UK appears to be closest behind Sydney followed by the other Eastern states of Australia. Western Australia and the US are considerably behind.

4. Unless there is a very major change in the pattern visible in these other locations they too can expect a HPC in the relatively near future.

Flames? Thoughts?

Very interesting. Can you put a figure on how far ahead of the Uk the Sydney market is? And has there been any identifiable 'trigger' for the falls?

Edited by HappierDreams

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I have always maintained and believe that Australia is 1 housing cylce ahead of the UK. This is apparent in 2-3% yields in Aus & 5-7% yields in the UK.

So keep dreaming Smurf, but it ain't gonna happen.

Last housing cycle Australia slowed down, then took off again. I strongly believe that this will be mirrored in the UK this cycle - and seems to be playing out very nicely - and Aus which has been so stimulated in this cycle by the Olympics in 2000 and various Aus Govt measures to boost the market, will crash. And that seems to be playing out nicely as well.

Edited by Time to raise the rents.

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Very interesting.  Can you put a figure on how far ahead of the Uk the Sydney market is?  And has their been any identifiable 'trigger' for the falls?

The real estate VI's like to blame the "Vendor Tax" - a state (NSW only) tax on property sales that has recently been scrapped. But economists and commentators seem pretty much agreed that scrapping this tax will not reverse the price falls. Indeed some are even arguing that the removal of the tax will lead to increased supply in a market lacking buyers and lead to additional price falls.

So the tax is unlikely to have been the trigger. Realistically, I think the Sydney house price boom basically toppled under its own weight when it became obvious to FTB's that buying there was simply not an option. They looked for alternatives and found them in Brisbane especially and to a lesser extent the other Oz cities as well. This has lead to a physical building boom in these cities and in some locations, notably Hobart, a large amount of speculative "investment" from those still living in Sydney hoping to make a quick profit.

It doesn't take too much immagination to see how this could all unravel. Many of the "investors" in other cities live in Sydney and will be seeing the Sydney price falls first hand. No doubt some will decide to sell their properties in these other locations thus boosting supply in those markets. And of course the interstate migration will head wherever is most favourable and thus tend to transfer any bust around the country (Perth is a bit of an exception since many Aussies from the Eastern states wouldn't seriously consider moving there - too far.)

Basically, it ended because it just couldn't keep going.

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As various links posted previously on this forum have explained, Sydney house prices are falling by just over 1% per month in recent times and now appear to be about 13% below the peak.

These are nominal prices not adjusted for anything. It is also known that the middle suburbs have been hardest hit in recent times with price falls approaching 3% per month. It has come to the point where economic commentators and even the media are using the "R" word - Recession.

In fact it is arguable that the New South Wales state economy, home to about 30% of the Oz population, is in fact in recession right now. Depending on which statistics are considered it either already has the required 2 consecutive quarters of negative growth (shrinking economy) or is damn close to doing so with growth being negligible at best.

Now, my thinking is as follows. Does anyone have a sensible argument to shoot this down?

1. Sydney is experiencing a HPC right now. The evidence for this is overwhelming and nobody, not even the real estate VI's, even attempts to deny the obvious. The denial phase has passed.

2. Sydney has been ahead of most other significant population centres in this house price cycle. That includes the UK, US and the rest of Australia.

3. These other regions are with very minor variances following Sydney's path with a time lag. The UK appears to be closest behind Sydney followed by the other Eastern states of Australia. Western Australia and the US are considerably behind.

4. Unless there is a very major change in the pattern visible in these other locations they too can expect a HPC in the relatively near future.

Flames? Thoughts?

This is all interesting stuff, but before i get all excited, is there any hard facts to go along with this post, or is it just your opinion.

Sam

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This is probably the best exposition of it on the net:

http://www.financialsense.com/transcriptions/Gordon.htm

Unfortunately it makes a lot of sense.

thanks, he was executed by the tyrant Stalin.

I am an anti-war opponent of the govt but I am appaled at the SWP idiots who still think Lenin was a good idea.

Lenin was a monster and so was Trotsky.

The sooner these two are exposed as the anti-democratic brutal dictators they were the better.

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This is all interesting stuff, but before i get all excited, is there any hard facts to go along with this post, or is it just your opinion.

Sam

The 13% down (average down from AU$570K to AU$495K) and 1% monthly falls are hard facts. Likewise the falls of nearly 3% per month in some suburbs are also a hard fact. I don't have the link but it has been posted on this site recently. I'll post it again if I can find it.

The notion that Sydney is ahead of the UK and other markets seems to have been an informal consensus on this and other forums for quite a while. I'm not aware of any firm proof with respect to the UK market but Sydney certainly did lead the rest of Australia up and so far is leading it in the down phase of the cycle as well. Western Australia still seems to be booming, most of the rest is flat (as Sydney was a year ago) and Sydney is quite clearly falling. There is hard evidence that most auctions fail on the Gold Coast and have died out almost completely in Hobart (only one auction (of a single property) is listed for the next few weeks in Hobart).

The notion that 1% a month constitutes a crash is based on the last UK market crash in the early 1990's with the info coming from this site. It seems to be a factual record of an historical event. Whether or not a similar rate can be expected this time and in a different country could of course be argued.

The part that is my opinion is that other locations are following the same trend and therefore can be expected to follow Sydney with price falls. I think this is fairly likely in other parts of Australia. Australians are used to the idea that Brisbane, Melbourne etc. are significantly cheaper than Sydney. If Sydney crashed and other parts of Oz didn't then it's likely that significant numbers would move to Sydney in search of cheap housing thus spreading the crash to the other states (more supply, less demand). The point is more arguable as far as the UK is concerned since we are dealing with different countries, different policies etc. Likewise the US is simply an observation that so far they are following the same pattern but of course there is no guarantee that will continue.

In short, I've used hard facts about what is happening in Sydney to form an opinion about what might happen elsewhere.

Edit to add links: http://www.smh.com.au/news/national/lost-p...4562804309.html

http://smh.com.au/articles/2005/07/18/1121538922257.html

Edited by Smurf1976

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The 13% down (average down from AU$570K to AU$495K) and 1% monthly falls are hard facts. Likewise the falls of nearly 3% per month in some suburbs are also a hard fact. I don't have the link but it has been posted on this site recently. I'll post it again if I can find it.

The notion that Sydney is ahead of the UK and other markets seems to have been an informal consensus on this and other forums for quite a while. I'm not aware of any firm proof with respect to the UK market but Sydney certainly did lead the rest of Australia up and so far is leading it in the down phase of the cycle as well. Western Australia still seems to be booming, most of the rest is flat (as Sydney was a year ago) and Sydney is quite clearly falling. There is hard evidence that most auctions fail on the Gold Coast and have died out almost completely in Hobart (only one auction (of a single property) is listed for the next few weeks in Hobart).

The notion that 1% a month constitutes a crash is based on the last UK market crash in the early 1990's with the info coming from this site. It seems to be a factual record of an historical event. Whether or not a similar rate can be expected this time and in a different country could of course be argued.

The part that is my opinion is that other locations are following the same trend and therefore can be expected to follow Sydney with price falls. I think this is fairly likely in other parts of Australia. Australians are used to the idea that Brisbane, Melbourne etc. are significantly cheaper than Sydney. If Sydney crashed and other parts of Oz didn't then it's likely that significant numbers would move to Sydney in search of cheap housing thus spreading the crash to the other states (more supply, less demand). The point is more arguable as far as the UK is concerned since we are dealing with different countries, different policies etc. Likewise the US is simply an observation that so far they are following the same pattern but of course there is no guarantee that will continue.

In short, I've used hard facts about what is happening in Sydney to form an opinion about what might happen elsewhere.

Edit to add links: http://www.smh.com.au/news/national/lost-p...4562804309.html

http://smh.com.au/articles/2005/07/18/1121538922257.html

Thanks Smurf for taking the trouble to reply, my own opinion is that Australia will fall first, followed by the UK then the USA.

If what you are saying is true, and i have no reason to doubt you, then yes, Sydney is now crashing.

Sam

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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