Sydney house prices tumble as Chinese flee

As usual, it is only form the international press that we can get a decent take on what’s happening at home, via Bloomberg:

Chris Carr, a real estate agent in Sydney’s northwestern suburbs, has had to convince sellers to drop prices on at least six homes in the past two months to complete transactions.

Such price cuts sent Sydney home prices 1.4 per cent lower in November, the most in five years, as Chinese demand slows, banks raise mortgage rates and buyers balk at record home prices. The first open inspection of a home now attracts on average about six groups of prospective buyers, compared with as many as 30 three months earlier, Carr, an agent with Gilmour & Orley, said in an interview.

“Sellers have had to accept up to 10 per cent price reductions,” said Carr, who sells homes in the Hills District about 30 kilometres from the CBD. “There is a lack of international buyers, particularly those with a Chinese background now, who were behind the price rise. Local demand is still there, but they are price-conscious.”

…”I expect prices to fall 5 per cent to 10 per cent next year assuming we don’t have an interest rate cut,” said Martin North, a principal at Digital Finance Analytics, which has partnered with JPMorgan Chase & Co. to produce mortgage reports for more than 10 years. “Salary growth is subdued and is just not enough to support the housing momentum.

Precisely.

Comments

  1. And that is from a real estate agent – so likely worse

    I work very close to that area both geographically and career wise and would say it is more like 15% off in North West Sydney (and have heard anecdotes of no offers after weeks after the discounting)

    • ErmingtonPlumbing

      I know a number of individulals who live around the hills district and a few referal customers there to and have to say that this area (more than most) is full of working-class people deluding themselves that they are middle-class.
      Cheap and below average private schools, flashy new SUVs and oversized houses miles from the cbd, paid for through wage slavery and debt servitude do not make this part of Sydney “Middle-class”.
      It will be nice to see the masquerade ended and hopefully people will re-embrace their working class values and start voting accordingly,…but probably not as the area is also Sydney’s bible belt and their faith in consumerism is strong.

      So many of them would tell me how the new rail line and the chinese were going to double their house prices to above northern beaches prices!
      , it was like I droped a fart when I would always reply “not in a working ckass area like this they won’t”

      • I’ve never understood how the hills district could have million dollar homes? Miles from the city. No beach in sight. What’s out there? Meh call me a snob but it ain’t worth peanuts.

      • Plumber … I guarantee you 110% the Chinese will be back, but when they return they will be sellers, another big leg down.

      • It might be closer to the beach if sea level rises happen.
        The beach is a personal preference thing and cultures that desire a pale look are not big on sunbathing.

      • Yes you are right. The hills is trying to be a middle class part of the world, but there is nothing there to make it so. CBD 35km away, no beaches anywhere close and public transport is laughable. Roads are clogged so getting anywhere is a challenge. Yet, thousands of units being built, schools full to the brim. The average income in the hills is about $74000, so while it is going ok, there are houses that carry $2 million price tags that are just not worth it.

      • Know Idea: if you’re an outdoorsy/active type, absolutely being near a beach is a positive attribute.

        As a runner, cyclist, surfer I absolutely prefer being near a beach than not.

      • “if you’re an outdoorsy/active type, absolutely being near a beach is a positive attribute.

        As a runner, cyclist, surfer I absolutely prefer being near a beach than not.”

        For some, not all. As a runner, cyclist, hiker I absolutely prefer being near the hills and mountains than near a beach (not many places in Vic near both).

      • The hills residents are not working class ….They are upwardly mobile aspirationals who work in shopping centres, realestate offices and banks and mortgage insurance companies as clerks ….the working class live in 10 to a room CBD apartments and work at 711 ………..this is the progress straya has made on its great fair go egalitarian journey …….go straya ! Halleluja and praise be Hillsong and real estate !!

      • Met a guy last year from the Hills area, mortgaged to the hilt in a “million dollar” home, wife went on maternity leave and couldn’t return to work as planned due to health issues. So on one income, they are in arrears $40k. His idea was to set up a SMSF and borrow the funds to meet the shortfall, my suggestion was to sell up and rent whilst they still had equity and there were plenty of buyers. Another year could send them under for a decade and losing their super would only add to the health issues in the family. Point blank he stared at me angrily and said, “No way I’m selling. It’ll be worth $2m in 10 years”. We don’t talk any more. Only one story but I know there are plenty of others holding on using everything else they have just to stay invested in the possibility of further growth. Gonna be ugly

  2. Tiliqua scincoides

    That’s exactly what I’ve been seeing on the ground over the past 8 weeks. I have just sold my house in Sydney and in my area would estimate that price falls have been at least 5-10%.

    I feel fortunate to have found a buyer as the stock on market has spiked and auctions have been cancelled. The majority of houses I was competing with at the time remain unsold (excluding only one or two).

    We had two weeks where nobody even turned up to our open house. Vendors will have to lower expectations further in my opinion.

    My agent has told me that investors are nowhere to be seen and are waiting until they smell blood. Makes sense as they obviously aren’t using for yield and when the prospect of capital gains goes away what incentive is left?

    Feel very lucky that I was able to get out when I did and that only happened because I was willing to be slightly more realistic re price than my competitors and probably beat them to the punch.

    • I hope you realised 100% equity return on that sale! You are likely to need all you have if you need a ‘top up’ from a lender if you decide to take advantage of being ‘homeless’ and re-buy into a falling market ( if that happens!). My experience from London years ago is the old “bankers give you an umbrella on a sunny day and take it away when it rains”. Getting a mortgage of any use is unimaginably difficult when a market is falling….

      • Tiliqua scincoides

        Thanks H&H, I kept thanking my lucky stars for Dr Andrew Wilson throughout the whole period and hoping that my buyer didn’t stumble across this blog! Was sweating on the 10% deposit for sure.

        Wasn’t 100% equity Janet but it was a profitable 18 months even after stamp duty and costs). I’m living interstate now in a competitive rental market so I see no need to buy another property anytime soon. Just need to work on investing the proceeds which should keep me busy enough.

      • Janet

        Mega-brill statement “bankers give you an umbrella on a sunny day and take it away when it rains”.

        With your permission I would like to use that in a planned weekly update on the Gold Coast for early next year.

        Keep up the sound comments

        Michael

  3. It doesn’t really matter what happens with property prices now. Whether they stay put, go up or fall our economies are going to suffer with each. That debtors believe that they are the ones on the right side of the equation will come home to haunt them when they either have to stump up for their next place or have to watch as their disposable income is eaten up by living costs that have little capacity to be offset by lower interest rates. All the economic bullets have been fired, and they have all missed their mark – which was the wrong target in the first place!

    • I agree completely, over the short to medium term, it doesn’t much matter what policy makers do because the growth engine of our Aussie economy is broken, it’s like a mechanic’s quote that starts with, the big-end is shot, the cam shaft is bent, 3 of the pistons are burnt-out, most of the valves are cracked however there are no replacement engines available so we have to rebuild….btw we’re likely to discover other problems as we rebuild…it’s like Australia will suddenly realize that they need to earn what they spend …..but what do you for income while the engine is in pieces and the mechanic wants extra money for parts.

      It doesn’t matter if you’re old or young, liberal, labor or Green, a debtor a creditor or a newbe to the whole credit game ….this is gunna hurt….it hurt in Spain, it buggered Ireland and it practically killed Greece.

      • “It doesn’t matter if you’re old or young, liberal, labor or Green, a debtor a creditor or a newbe to the whole credit game ….this is gunna hurt….it hurt in Spain, it buggered Ireland and it practically killed Greece.”

        Very true, but isn’t that part of life? Boom/bust cycles are as old as the market economy itself. We’ve hard a particularly long boom, it’s not surprising that we’ve cultivated some nasty bubbles and engaged in some irrational behaviour (e.g taking on way too much personal debt).

      • Absolutely Pf great information for those that dont know Shenzen. I couldn’t agree more wrt the bypassing of the whole US patent system. the Shenzen production machine is primed to produce anything and everything, in this day and age of internet sales through Alibaba you don’t even know who makes it or who really sells it even if you try to sue you’ll find that the companies phoenix quicker than a doggy Aussie house builder, within Shenzen they all know each other and work with each other on a variety of other products, what name / logo you stamp on your product is irrelevant
        There is this whole cooperative development culture that came out of the Shanzai cell phone (bandit cell phone) companies, I know lots of these guys and yea they do drink way too much and they do bang idea off one another at late night KTV sessions, often in some really doggy back street KTV’s where idea’s aren’t the only things getting banged off the walls.

  4. During a recent trip to the mid north coast of nsw I was amazed to see the number of properties advertised for + $1m in port macqurie and ballina. I imaging towns like that will be hit hard as finding work that pays enough to support a loan at that level would be difficult.

    • Tiliqua scincoides

      That area is a haven for Baby Boomer retirees. I suspect that’s what’s been driving the ridiculous prices.

    • Maaaaate …..who needs to work ?………….buy for a million and sell for 1.2 million …………easy pleasee Chineeese ………..straya mate !………beauuuuty !

    • I live near the latter. Some of the places by the river – and some are quite lovely – make my eyes water.

      HOWEVER, it pays to remember, not everyone is an indebted buyer. Plenty, plenty, are cash buyers. Plenty. There are a lot of people with a lot of cash money – sometimes people forget that.

      Byron prices are running amok – it doesn’t mean they’re all indebted morons. Please believe that.

      Ballina too, is an identified high growth area of the NSW govt, it’s got one airport, plus an international one 70-80mins north (less once the highway duplication is complete) and is quite a nice area on the whole. It’s near the GC, not far from Brissy…Prt Mac on the other hand – the prices are frightening and if you are relying on retirees only…

      I’m not a bull or bear, just making observations.

      PS: if you have a secure job in the area – local or state govt – then those wages usually can support a loan in loads of different areas in the broader area. Don’t let a few expensive places fool you.

      • ErmingtonPlumbing

        That was a good spruik marshie, what real estate do you work for?

        But seriously it is one of the best places in Australia. I’ve got friends and family up there and have been a regular visitor since the early 90s and find myself “feeling happier” from nothing more than just being there.

      • I have no great inclination to see property prices drop nor rise beyond inline with inflation. I keep saying that.

        But making observations not inline with the crashnikkery that pervades a great number of MB comments seems to infer I am a property bull/spruiker/specufestor/selfish/whatever.

        I worked briefly in an agency in marketing/graphic design for a short period and it was horrible. Cognitive dissonance. But a great insight into the bullsh%t the industry largely engages in.

      • Being a cash buyer just means you’re (whether knowingly or not) risking 50% of your stack, instead of up to 500% of it. Less risky, for sure. Smart? I don’t think so.

      • Life is about risks.

        You can put that money to work in a business: risky.
        Cash: poor ROI
        Stockmarket: risk

        Some people might adjudge that property is a less risky purchase (note avoidance of the term investment) than elsewhere.

      • Really not seeing people who avoided the hysteria of rising property markets, and just sat quietly amassing a big wad of cash are going to jump in the moment prices start falling. Not in numbers sufficient to move the market the other way, at any rate.

      • My observation is that although there are always more than zero buyers for stocks on any given trading day, when a stock market crashes, it tends to keep falling for a while.

        Hence, stockmarkets seem like a perfect example of there being insufficient numbers of people waiting on the sidelines with cash AND willing to jump in at the first sign of a fall, to turn the markets around.

      • Put it another way:

        A group of people sitting on the sidelines through this boom with cash in their pocket sounds a lot like a group of people who are sceptical of RE markets.
        I’m not seeing how a crash or correction is going to change their minds and get them to jump in, at least until prices fall from the ‘unreasonable’ prices they weren’t prepared to buy at previously to their idea of ‘reasonable’, which seems like it must be a number that is at least ‘noticeable’ (more than one or two percent)

        In general, I’m struggling to see what could motivate people in this group to change their behaviour short of retracing at least 2015’s gains.

      • Friedrich Nietzsche

        Byron prices are running amok

        No, they are tanking

        Over what period?

        Down 3.5% over 12 months, so they have been tanking for a long time.

        Don’t miss the broader point I made.

        That was your point. It was ENTIRELY your point, you are wrong, and can’t admit it.

      • Based on industry on the ground knowledge Byron has jumped significantly over the last 18mths with approximately 60% of the buyers from Sydney and a large proportion of them from the northern beaches. The buyers are definitely drying up now but listings are tight also. The shortage if supply may keep prices up for a little while yet.
        Not sure of Marshies “$3.5m on Kingsley $500k above reserve”. The ‘White House’ just got $3.25m, middle of the range.

      • approximately 60% of the buyers from Sydney
        It is hard not to wonder about the effect of a correction or worse in Sydney that persists longer than a couple of months would have on any locale where buyers from Sydney are such a big factor.

    • Bauer, im near coffs, there has been 4000 or so new houses built in last few years, and up till recently everything was selling quick. Prices way to high even without 4000 new ones. Massive investor %. No jobs, heaps returning from mines, i cant see how they wont halve

      • It was posted in a WeChat Group – members in the group (800 at last count) have been sharing it with other groups they are members of. Not really a news service, but the link and a translation are shared around the place.

  5. “As usual, it is only form the international press that we can get a decent take on what’s happening at home”

    Sounds familiar……

    Oh I know!!!! We are East Germany.

  6. this is not tumbling yet but it always starts this way

    tumbling will start once we get news of auction sale without reserve and only one bidder

  7. But, but they told us the Chinese buyers were only having an insignificant effect on the market. Australia’s media is a trustworthy source of public information and analysis. Balanced and Independent. Always.

  8. I’ll bet there is political pressure being applied to the ATO to ease off on spooking foreign buyers…

  9. Got a Christmas flyer from a local real estate agent …….”Lang and Simmons would like to thank the community for their support in 2015…………..”

    I think what is missing is the bit about ……….We have enjoyed selling you out to all the foreign non citazens that have contributed so much to our commissions this year and we look forward to continuing to sell your community in 2016 ……………..
    I’m sure this Christmas message would be applicable to many real estate agents …………lets hope a few of them get a present from the ATO early in the new year .

    • Yeah I’ve started to hate my local RE Agents, always letters in the mail box telling me how they sold another house for a record price. I feel like sending them articles from MB in return. Especially articles about price falls. With a big picture of my grinning face.

  10. Ahahahaha… foreign media always getting it wrong on Aussie housing. It’s sad, they should give up.

  11. Poor little baby boomer investors Their 60 years old shack now sells $200,000 less than 2-3 months ago….Nah, the fun will begin and I will be popping champagne when I see a house in this far far away island is no more than $250-$300K maximum. and the nasty greedy selfish rent-seeking narcissistic baby boomer vampires are facing what the whole working class Australians families facing.

      • Yes, from a bank …And he prescribed me a million dollar loan to live in a shack in the middle of nowhere with my kids for the next 30-40 years and working poor . Why you’re asking? 🙂

      • There needs to be a group session. Maybe if these guys all pooled their dole cheques they could get a discount?

    • ROFLM.. $250-300k.. That’s like saying wages will crash to $400/450week and a big mac meal will drop to $4.95. I’d say more realistically, a 35% max drop… e.g. $1mill -> 650k. There’s heaps of people like you waiting on the sides for a drop and the price will be supported by them on the way down, thus limiting the massive drops.

      • So Here we go again, ….What is wrong with sustainable competent low wages and productive economy ????? What is exactly wrong with having $200-300K housing and all the extra incomes spent in the actual economy instead of locking it up in a massive mortgages leaving nearly nothing for anything else??? Why Australia is so accustomed on being the FATTEST nation on earth and there is nothing wrong with that ??

        This nation is having an overdue economic DIABETES that is actually killing it..

      • @curious2 – Isn’t it the nature of transactions that each party tries to extract maximum value? Lower wages doesn’t magically make for a more productive economy. The business man who sees his wages as a cost centre that needs reducing to increase his margins is overlooking the fact that if all business owners accomplished that feat, asking prices would have to drop. Governments should limit the ability for capital to be loaned with really long payback terms (to individuals). 30 years is a huge chunk of time to be paying something off. But politically speaking there is a lot of people who would argue that government controls/regulation impedes trade and hurts the economy/productivity. I don’t know the answer myself. I think “just pay everyone less” is a little simplistic though.

      • “What is wrong with sustainable competent low wages ”

        Because the aspiration as a nation, as a society, as a culture, is to greater higher and higher real wages. it’s called a higher standard of living.

        The last 30 years have seen most of us sacrifice income gains equal to our productivity component, for a supposed greater payback in the future.

        That is why wage share has shrunk from 62% to 53% in Australia.

        That is why aggregate nominal payrolls have increased about 480% in the last 30 years, compared to aggregate profits soaring 1100%.

        It’s time for other parties to shoulder a greater proportion of the burden, and if they don’t, then f*ck it, they can come down to zero with me.

      • “There’s heaps of people like you waiting on the sides for a drop and the price will be supported by them on the way down, thus limiting the massive drops.”

        We truly are the Lucky Country to have such people that so many other countries didn’t.

  12. This is called karma.

    Still, a long way to fall before any sense comes back.

    Let the prices fall fall fall fall fall.

    Baby boomers buying up and now being stuck with an overpriced piece of s@_t!

    Good luck with that.

    Common sense might just prevail over those gluttons who felt so entitled to deny their younger counterparts a fair go.

    But then again, that aint surprising is it.

    • BBoomers? AS an out priced BBoomer myself, I am going to auctions (I will never buy at an auction until its totally ‘distressed’ as they say) where I am seeing 70%+ of sales going to younger GenX and older genY types along with the odd Chineese indeterminate types who do not look like owner occupiers (no wife, family present and an important studious look on their faces) and very few so called Boomers. This is in mid outer SE Melbourne along the seaside, family territory and $700k++ houses. So far I see no let up in enthusiasm.
      . AS for the run down units, some BBoomers as self managed super fund types but a whole mix of age and race groups, young tradies (who by the way are the big buyers of real houses around here) but absolutely no fixed ‘type’ of buyer with the one aim in mind it would appear.

  13. Can’t it just happen already… I’ve amassed enough cash to buy the house I want now outright, but I don’t want to be left with half of it should I need to sell.

    So frustrating!

    • Start making offers at the price you want, real estate agents don’t tell you how far some house prices drop when the market isn’t clearing.

      After your purchase, don’t be surprised if the real estate agency decide not to publish the result 😉

      • True. Although I recently had one agent on the GC telling me I’d get such and such a property for 1.2 when it was advertised at 1.6+. They don’t get advertised…..if they sell. This was in an Integrated Tourism resort where foreign buyers have carte blanche, but are nowhere to be seen despite the ATO nets closing on the outside. Just proves the Chinese are absent due to forces in China as opposed to anything we’re doing.

      • Thanks Swizzy – didn’t really think of that.

        I’m in Melbourne, and auction clearance rates are a little higher, but I think in 3-6months I’ll be sending out such offers.

      • Ive been trying this with zero result, no replies or feedback from agents and seeing the places still go for silly money way beyond what local wages would dictate as per SOLDPRICES online. Need to widen my search area but where I am stock on market is thin and has been for years.

  14. TheRedEconomist

    There seems to be some punters still keen get there own slice of Sydney Northwest.

    This place looks like it sold at Private Treaty by Mr Carr a few week later after being passed in

    http://www.realestate.com.au/property-house-nsw-castle+hill-120990254

    At least the auctioneer got his coinage despite it failing to sell at Auction

    See my earlier post below

    November 9, 2015 at 9:32 am
    I attended an Auction in Sydney’s Northwest (Hills District) and here are a few of my observations.
    House was 4 bedder (albeit one very small room which was presented as a study) 3 car garage on 700 Sq/M Block in a quiet culdesac
    House was once lemon brick in colour and had been rendered with new kitchen and bathroom with polished floor boards. Garden was low maintenance with nicely trimmed grass
    You could pretty much just move in … nothing to do
    Price guide online was 1,099,000.00
    Before the auction started the auctioneer mentioned you needed to be a registered before you could bid
    You had to provide a license or a passport as ID. Also if you were representing a company or SMSF you had to show document stating this before the auction started.
    They then called out for bids and everyone kept their hands down.
    There was one early bid at a an even 1m… but then the auctioneer said they wanted to start at $1.2M. This being $100K over price guide.
    Still no one put their hands up… So there was the normal spruik of close to “new train line and bus services.” There was also recent spruik of recent capital gains in the area of 25% on the last year and 12% the year before.
    The auctioneer also suggested that property prices never drop and that any buyer would be “happy in Feb 2016 that they bought in Nov 2015”… and “in Nov 2016 they would be even happier they bought 1 year earlier”… “You could be in by Xmas”
    With no further bids… he then advised the crowd that the vendors have been in negotiation with a prospective buyer but the buyer was pending FIRB approval. I reckon it was rubbish to get other bidders interested.
    So after this $1.1m was bid… the auctioneer said they could only accept $25K increments. 3 bidders started showing interest
    It hit $1.5M… then one bidder who wanted to increase by $5K and was told no. He pulled out.
    $1.175M was offered and a $1.2M bid was offered.
    With no more bids… the place was passed in or put to private negotiation at 1.2m.
    My question is … Is the auctioneer allowed to suggest there has been early negotiation which is pending FIRB approval? Can they suggest property prices only go up?
    Overall the market has turned in the Northwest.. this place would have got $1.25m easily a month ago.
    The Agents and auctioneers desperation seem palpable and the vendors are being overly optimistic.

    • you are right to question the agents assertions and the price guide (although you won’t be the first)…report the Auction to the NSW OFT (office of fair trading) and they will investigate….too many people just take the agents process as given and do nothing about it…if you want to make a change, give the government the ammunition, make a complaint.

    • Castle Hill railway station? The North West link is due for completion in 2020, but I don’t think the NSW government will have any money to build it when it’s suppose to commence in 2017.

      • Gavin..Yep.. A lot of coin for shelter

        Ronin8317.. Not sure what you mean

        They started building the North West Rail link (now Sydney Metro) last year or so

        http://nwrail.transport.nsw.gov.au/Home

        Most of the tunnel boring is complete and they have commenced the skytrain part west of Norwest Business Park

        They still have to fit out all the stations and convert the line between Epping and Chatswood to the smaller single deck metro trains

        Hopefully it will remove some cars off the roads But the M2 will remain a car park I reckon and could be worse when they build the Northconnex Tunnel

        http://northconnex.com.au/about.php

        Back to the NWRL. Most commuters will have to get off the new Metro trains at Chatswood and then get on the old congested network to the city. This is going to be trouble I reckon.

        The existing bus services (M61/610X) from Castle Hill can be as quick as 30 minutes with no traffic. Add up to an hour or more if there is an accident on the M2.

        Once the NWRL is in service travel time to the city will be close to an hour from Castle Hill. There NWRL website says 44 minutes which I reckon is optimistic

        The real improvement though is when they extend the Metro line under the harbour.

        It will be construction nightmare… but will cut travel time I reckon by a 10 minutes due to less stations (only St Leonards and Milson Pt then under harbour to Barangaroo and Martin Place) and the less dwell time of the metro trains

  15. “Such price cuts sent Sydney home prices 1.4 per cent lower in November, the most in five years”

    Doesn’t sound like a big deal at all – its only 15.6% fall in a year, isn’t it?

    Not enough to debunk the myth that Australian house prices double every 7 years!!!

    • 1.4% is the weighted average of all the prices sold in that time frame – ie. it will be a function of rises in some parts of the city, and larger falls in others. Anecdotes suggesting falls of 5-10% in some areas seems about right to me.

    • Data companies are reliant upon the sales information provided to them by the agents. No agent is going to submit prices to a data company that shows a dramatic drop. The figure of 1.4% will be based upon 20 results per 100 as agents will be selective with the data they provide in order to maintain their listing values. It is all a rort.

  16. in my area of Oz( country Vic) for years people have had a laugh at how much ‘ those city people’ pay for a house. When you ask if house prices are to high in the country area’s at 5x income all you get is a blank stare or its ‘different here in the bush’ I just nod and shake my head.

      • ErmingtonPlumbing

        Yes, my 5 year old boy just can’t his head around the fact that infinity +1 just does not trump the call of infinity.

        He does understand that house prices only ever go up, they taught him that at pre school.

  17. Wollongong for some reason still doing well, clearance rates ok… more affordable I guess, beaches everywhere

  18. I’m not seeing any end to the insanity on the lower north shore. House behind was only on the market 2 days before it sold. Recently reno’d 4 bedder, 2.6mil with hopes of nearer 3 at auction. I imagine it was in the 3 ball park to sell so quickly. In Crows Nest/Naremburn area, distant sounds of the freeway, no views, great buying!

  19. Overseas buyers can only purchase off-the-plan properties, and obviously the real estate agent in this article who had to convince sellers to drop prices is selling 2nd hand and that is completely different scenario. Buyers now have more negotiation power because the market is cooling compared to a few months ago, so what? These buyers are mostly owner occupied buyers and they still need a home to live, there is still short supply in these areas with good transport, schools and houses.

      • Michael..have u noticed much change in agent behaviours with these new laws here in Brisbane?

        RE agents should demand to see passports, relevant visas, TFN etc etc..how hard it is

    • “Overseas buyers can only purchase off-the-plan properties…”

      You might want to spend a little longer browsing this site.

  20. Due to the logic from the domainfax article, prices falling = suggestion of poor quality = Chinese no longer interested.

  21. Dan

    Not really – as not that many established properties in Brissie are selling o/s illegally.

    Off-the-plan inner Brisbane and Gold Coast apartments in large complexes – yes, they don’t even bother selling locally i.e. in Australia- but that is legal – it shouldn’t be – me thinks and have written about it many times – that new stock should only be sold to a maximum of 50% offshore and then with caveats

    Brisbane isn’t going to boom – a lot against it – low wage growth; fewer jobs; oversupplies etc. – it is going through an recovery phase, from a low base – nothing much to really see

    Agents of course are running around like heroes – bigger pictures of themselves, new cars etc. – locals are selling because they haven’t been able to for yonks – they are making hay whilst the sun shines so to speak – agents, for mine, get paid way too much in Queensland – 3%+++ – should be a flat fee, say maximum of $10k – it is coming, the delegation of the RE industry a few years ago, was applauded to most, but RE agents and the RE remoras should be careful what they wished for

    Anyway – I have rambled a bit, and in short – not much impact, for there was little to be had

    Cheers

    Michael

    PS yes – no passport/no buy – now that is a election winning slogan if you ask me

    • As someone who funds development projects up in Brisbane, I can tell you that it is very uncommon to have a significant proportion of legal offshore buyers in a new development because the banks usually impose a limit (eg max 25%) on the number of offshore buyers that make up the pre-sales before construction commences. So if you need to pre-sell 80% of your apartments to get finance, and only 25% of those can be offshore, that’s 20% at the start.

      Of course they can do what they like with the remaining 20% but often that’s the higher priced owner-occupied stock – it’s easier to pump the lower priced units to local and foreign investors. So maybe 30% to 40% offshore as a maximum?

      That doesn’t say anything about whether local Asian buyers are conduits for offshore money as everyone suspects, but we’ll never really know the answer to that question.

      • Peter

        Thanks for the comments.

        Much more than 40% maximum – as a lot of it is via local Asian connections (really offshore monies) as you point out.

        Also quite a few players out there don’t go to the banks but source funds by other means. Or fund via own reserves.

        Big bad bang coming here.

        Major suppliers and a hell of a lot of investors are in for a real shock.

        It is not about sales risk – but settlement risk. Go chase the o/s or locally washed offshore monies when it comes to settlement. Good luck.

        Many overseas buyers are looking at major falls in values – like 30%+ – due to currency fluctuation, poor valuations and price/rent falls on resale. Rents will be artificial initially, and then they will hit reality.

        This is why I have left this major apartment ‘assistance’ space.

        Smaller, infill projects, which are sold locally and have all the supports – priced at valuation, owner-resident interest, well proportioned – look much safer than those big ugly boxes popping up across inner Brisbane.

        But hey, that’s just my opinion.

        Cheers

        Michael

      • @ Michael thanks for the insights regarding Brisbane. I train it into Roma Street every day and see the sheer number of units going up and wonder
        a. who the hell is buying them at this point and
        b. what will happen to all the construction workers when these projects are completed? It’s pretty slim pickings going forward based on new home finance and the resources sector CAPEX is all but done.

      • Yes, however you’d better hope they do keep building units, tier 1 and tier 2 builders are bleeding cash like you wouldn’t believe, on a recent tender were asked to submit financials, 4 out of 5 including one tier 1 builder were losing significant sums of money on their annual finances and had been for a number of years. There is nothing outside of resi at the moment, I’m working at one of the only places that is spending money outside of state govn. and it is pretty bleak outside of residential. I would say this has been the case for the past 5 years. We’ve seen a number of decent sub-contractors go bust in this time also, and nothing on the horizon once the unit boom goes away.

      • In Brisbane and gc a v high % of the large development s are entirely offshore funded. Some are vanity works and the clients aren’t to bothered about big profits

    • The big agents are the aggregators being paid 6% in commission to pass the 3% onto the accountant or mortgage broker and keep the rest for themselves. The developer usually budgets 8% in selling costs so they have 2% to share with the buyer in rental agreements or stamp duty discounts. Its all priced in but when you have a mortgage broker, a slick agent and a big carrot from the developer usually a sale is made to Mum and Dad Super Fund.

      I like your explanation for Brisbane Michael, Brisbane has nothing, it is merely just coming off a low base and seems cheap to interstate investors.

      • Labrynth

        Thanks for the comments.

        I am in Sydney this Saturday – from Brisbane – running a property master class in which we outline over a four hour open workshop, how the property market really works, what’s worth measuring and how you can do it yourself, quite simply.

        But enough of the ad – I will go to great lengths to explain to the audience – almost always they are investors – that Brisbane isn’t cheap and one should not look at property prices/rents with a Sydney or Melbourne mindset.

        And despite my efforts, much of this part of the day, if history is any guide will be ignored.

        Michael

      • Michael, I am in no position to give you business tips, however…… it they are ignoring your advice then you are not charging enough! 🙂

  22. I’m waiting to see an RE agent take the lead and introduce Dutch Auctions. If you were serious about clearing out stock that would b a good way to trick people they are getting a bargain on the way down.

  23. Whether property prices have fallen by 1.4% or 14%, this is just the start. If prices halved, they would still be overpriced. But the question is, would the government allow property to crash? They can always reverse the new foreign investor laws or continue as before and simply not police them at all. Or bring in a new FHOG. Or turn that immigration tap on more. There are plenty of other options. All in the name of preserving the wealth of Australians. And most Australians would welcome these bubble-inflating measures rather than lose equity in their property portfolios. So I think it’s far too early to be counting chickens yet.

    • md for any of those strategies to work, it will involve more lending, likely to higher risk borrowers. The banks are big borrowers so the lenders wont like that very much. No any rescue via greater lending is going to be quite difficult I believe, but I get your point and yes they will try.

  24. The pool of qualified buyers is quite simply drying up. It does not matter what measures are put in place to stimulate the market, if no one can afford to buy, no one can sell. Sure, some choice properties will always sell in the eastern suburbs of Sydney and similar locations but elsewhere, once the tail end of the ponzi millionaires have spent their money from the sale of their homes…..and we are only a couple of months away from this now, then who is left to buy at these ridiculous prices? – First home buyers? – not a chance, foreign kleptocrats? – yes, they will still break the law, but not in numbers needed anymore, – investors? – hard pressed to raise the funds for a deposit now and to get a loan….any pyramid scheme needs mugs to come in at the bottom and to enrich the top….there is fast becoming no one left to feed this rip off scheme. Anyone with any sense will sit tight now until 2017 and wait for the lowest prices rather than buying on the way down. Fear will drive the change.