Impact on Sydney Property as Global Share Market Falls?

Thenarrator on 25/08/2015 - 17:17

Hi

Been reading news lately and apparently global share markets are plummeting especially China. Probably another global financial melt. What are your thoughts on how this will impact on Sydney property prices?

In hindsight, I'm hoping it crashes so I can buy however I've went on abs and found that even at GFC, sydney property prices have barely dropped!!!!!

85.3
88.2
87.0
84.4
84.2
84.8
83.2
82.6
81.4
81.8
80.8
82.3
82.0
82.7
81.9
85.2
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84.5
83.9
87.5
91.1
96.0
98.9
101.4
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101.4
99.9
98.4
100.3
101.4
100.9
103.7
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108.7
112.8
119.0
121.7
126.0
128.8
133.4
137.6

For

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Financial

Comments

  • retiredfeline on 25/08/2015 - 17:24
    +3

    FGS format that table properly, or better still, make a graph of it and post the picture.

    Any effects, will take a while to filter through. I mean c'mon we live in an instant age, but it still takes time for the auctions.

  • CanadianBeaver on 25/08/2015 - 17:31
    +8

    The prices might go up tbh, insecurity in China = Rich Chinese ppl moving their investment overseas.

    • gottacatchemall on 25/08/2015 - 17:32
      +2

      Exactly plus local chinese also like buying properties.

      • zealmax on 25/08/2015 - 17:55
        +3

        and Aussies, Lebanese, Greeks, Italians, Vietnamese, Russians, Indians, and people of every colour of the rainbow. If it is your primary property, look for affordable areas, and buy there. I had a friend, who was saving to buy a house in a popular suburb. He was living with his parents to save money. I on the other hand, just bought something out west. Now I have upgraded to a fancier suburb, and he is still with his parents. There is no right time to buy or sell. The best time is when you are ready.

        • gottacatchemall on 25/08/2015 - 18:10

          Yeah I agree 100%. I'm chinese so didn't mean it in a negative way but just wanted to point it out as I know so many people who buy multiple properties and renovate them before renting/reselling.

        • zealmax on 25/08/2015 - 19:08

          @mark96: The friend was Chinese too, he wanted to buy a place in Eastwood.

  • zealmax on 25/08/2015 - 17:51

    Share prices go down, investors move their money to something less volatile like property.

    • Thenarrator on 25/08/2015 - 18:09

      why did property fell during gfc ? so property move indepdently to share prices and global turmoil? how will syd property ever fall??

      • zealmax on 25/08/2015 - 18:56

        GFC was not just about share markets, it was about finance. It was people losing their jobs and defaulting on their loans which brought down the banks with it. Will we ever have another GFC? Ask an economist, I have no idea. Was there that much of a fall in Sydney property prices during the time? Probably not.

        If this is your first home, why do you care about price fluctuations? You have to live in it anyway. Everybody needs a place to live, whether the prices go up or down.

      • KaTst3R on 25/08/2015 - 19:18
        +2

        The last 2007 GFC was due mainly to the property market. US banks were too lenient in lending out money to low credit people and then repackaging this loan to investors as high yield low risk instruments (read on Collateralised Debt Obligation and Mortgage Backed Securities). So because the US economy was bad, people lost their jobs and defaulted on the loans. So basically these CDO /MBS investments became almost worthless and unknown to the investment industry, the exposure to CDO/MBS was more widespread than expected (thanks to the greedy investment bankers). So house owners were basically handling the keys to the banks and wiping their hands off the mess, which then the banks had to do a fire sale and that lead to the fall in global property prices and shares.

        This global share sell off is expected to have minimal impact on Australian property prices as it is fundamentally unrelated to property.

        • Thenarrator on 25/08/2015 - 19:21

          "This global share sell off is expected to have minimal impact on property prices."

          Whys that, maybe people are losing their wealth from share drop, companies lose profit, sack people, people lose jobs, they cant finance, they fire sell, property price fall

        • KaTst3R on 25/08/2015 - 19:34

          @Thenarrator:

          Your Super will shrink that is for sure…but how many people are 100% invested in the stock market? Not everyone I suppose. You have two sides of the equation. One you reckon fire sale will happen if people lose their jobs. Yes you are right. On the other hand, you have cheap AUD, lower interest rates which makes property buying attractive to foreigners (I also imply students with backing from overseas money) and also locals who can afford it. You have to look at it holistically from a supply and demand perspective.

          Im not a real estate agent so I cant comment on a specific suburb in Sydney, but looking at your data above, it looks like it will continue to trend upwards in general. House prices is also expected to move with inflation and the average salary of the population. ABS website has these data on excel sheet.

        • Thenarrator on 25/08/2015 - 20:46

          @KaTst3R: but foreigners will be too poor to invest in aud because foreign shares going down and foreign companies will do bad and sack their employees

        • asrey1975 on 25/08/2015 - 21:01

          @Thenarrator: Given that today the China market dropped another 6%or so even though the ASX rebounded 2.5%, I would imagine that if you were a Chinese investor and you lost all your money in the China market collapse, you may think to yourself, gee I still have an Aussie house or two, maybe I go sell that to get cashed up again.

          Would this pop the Aussie house market bubble? If lots of China market victims decide they want to sell some of their housing portfolio from Aus?

        • Thenarrator on 25/08/2015 - 21:02

          @asrey1975: hmm interesting theory, it could work this way too!

        • KaTst3R on 25/08/2015 - 23:24
          +3

          @Thenarrator:

          You are suffering from Confirmation Bias, you are looking for clues that will support your hypothesis. Im not saying you are wrong, just that you have to look at the big picture. The truth will be in the house prices in the coming weeks/months. So then maybe you can let us know again.

        • Jared17 on 26/08/2015 - 14:50
          +1

          Good anaysis on the 07 GFC, KaT

        • KaTst3R on 26/08/2015 - 15:27

          @Jared17:

          Thanks. I appreciate that.

  • t_c on 25/08/2015 - 17:53

    great, might as well buy a caravan then.

    • zealmax on 25/08/2015 - 18:00

      My previous comment stated buy somewhere affordable, but it is very hard in Sydney. Even if you go to the edges of Sydney, Penrith and Campbelltown you are looking at 500-600K for a basic house. I guess units and town houses are the ways of the future, just like nobody lives on acreages anymore.

      If you live in any City other than Sydney, there are loads of affordable areas in the middle and outer rings. You are far more lucky than us Sydney folk.

  • momov3 on 25/08/2015 - 18:42
    +2

    Just read that many of those investors who bought off the plan apartments may have to pull out even before one matchstick is up because they lost in the share market. But also read on the other hand that others will be pulling their money out of China where real estate is unaffordable and since their market has plunged, they will have plenty of money to invest elsewhere and it will be Sydney, Melbourne, UK, USA. If you ask me, I am almost certain there will be another property boom from foreign investors. I do not see house prices falling. I feel for the younger generation and this is odd to have happened just as we were getting news that the market had cooled down a bit and auctions were slowing down. I thought Sydney had reached the peak median that homebuyers were willing to tolerate.

    • Thenarrator on 25/08/2015 - 20:48
      +1

      so if economy is booming, syd property prices rise. if economy is melting, syd property rises "even faster". Hence concludes property will always rise, never fall..

  • MondaySleeper on 25/08/2015 - 19:55
    +1

    I read all the comments - But the sad question is how can someone afford to buy when prices are skyrocketing? How normal non-rich people will ever have their own home? Why Govt is not at all interested in solving the problem? Why I, who have no house and cant afford now, have to subsidies a rich persons investment? How is it any different from investing in shares? I just don't understand this? All i can see is - rich becomes richer at the cost of poor. Looks like worst than a underdeveloped country.

    Is there any political party who supports housing affordability and listens the cry of normal people?

    Sorry for the rant, but i cant keep my eyes shut towards this. :(

    • KaTst3R on 25/08/2015 - 20:10

      The RBA knew this would happen when they decided to lower interest rate in order to devalue the AUD to kick start the economy again. Lowering the interest rate will obviously push house prices higher.

      And they went "sorry mate, the economy comes first"…

      • Thenarrator on 25/08/2015 - 20:52

        well, lowering the interest rate aint working is it.. now they have non of both worlds.. (unless you tell me the effects of rba strategy is normally felt X period after being implemented). Find X

        • KaTst3R on 25/08/2015 - 23:17

          Let us know when you find X.

    • zealmax on 26/08/2015 - 00:08
      +1

      Dude every generation goes through this. There used to be a time when I thought Strathfield was in the middle of no where, and Penrith was a different state. Now even Penrith feels doable. Lower north shore moved up towards upper north shore, and west went even further west. Same goes for South and North, but East stayed still, because you can't go any further east.

      Government is looking into the problem, by releasing more land and give DA. However the only free land is further out. Sydney 2030 plan has many regional precincts to service the people that live out further. Not as good as living at Double Bay, but better than being homeless.

    • Wonka on 26/08/2015 - 07:33

      I think the term that broadly encapsulates what you are describing is "Social responsibility"

  • Diji1 on 25/08/2015 - 20:17
    +1

    found that even at GFC, sydney property prices have barely dropped!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    Why do you find that so astounding? Australia was seen as a safe haven during that period.

    • Thenarrator on 25/08/2015 - 20:54

      i didnt have that many exclamation marks

  • momov3 on 25/08/2015 - 22:16

    Oh well, at least we know who's able to afford the $6m homes. This news just out and it looks like Melbourne is not far behind Sydney where skyrocketing property prices is concerned.

    http://www.heraldsun.com.au/leader/realestate/glen-waverley-…

    The China stock market crash is going to bring in more developers from China with plenty of cash to buy up ordinary residential properties and turn them into multi-million apartment/unit complexes. Both buyers (the first in April 2015 who made a whopping $1.3m profit in 4 months)and the second buyer are Chinese nationals. And if the commentary letter below this article is true, they get to buy their Permanent Residency status by bringing so much $ into the country. We are ransoming our nation off to foreigners and the government cares not because it's all about money coming into the country. Imagine that 10 years ago, this 3 bedroom house would have been purchased by a couple with children for a few hundred thousand $XXX,XXX.

  • Flet on 26/08/2015 - 09:18

    There are more millionaires in USA, Canada, and China than there are Australian citizens so there will be plenty of foreign investors to keep the property market up in Sydney and they are wealthy enough not have to bother with tenants. Australia is bound to look good to many foreigners as it is relatively free of pollution and civil unrest.

    Wealth disparity is such that in USA the top 400 people own as much “wealth” as the bottom 50% of the population (or about 115 million people). Another GFC would be a buying opportunity for the extremely rich and further concentrate wealth. This happened in the last GFC.

    All this could be changed through the tax system with land value tax. A start would be to substitute stamp duty with a broad-based land value tax of 1% as the Henry review recommended. Won’t happen of course precisely because the likes of the wealthiest 400 would be paying about 50% of it as land holdings would be a very significant part of the “wealth”.
    Read this article for the rationale for land value tax:

    http://www.progress.org/article/economic-depressions-what-ca…

    • momov3 on 26/08/2015 - 13:34

      The FIRB laws have to change even more. I believe you can be a foreigner and invest in Australian real estate if it's a new dwelling, not established one. Guess who are buying up the $1m- 2m penthouses and apartments that the Chinese developers are setting up in these prime suburbs? Our younger generation cannot afford the apartment prices anyway. Prior to purchasing the block, these developers have already liaised with their local agents in their countries to sell to their own investors who have plenty spare cash.

  • [Deactivated] on 27/08/2015 - 08:54
    -1

    No one really knows. However I will say this. I believe politicians do all they can to fill their own wallets - only - and if it benefits us too, that's just spin-fodder for them, for the next election. Due to that innate greed, I've seen many changes over the years that unsurprisingly favour property investors - and politicians are a very uncreative lot. Therefore, I expect it's no coincidence that many own investment properties.

    So… the thing I know? They will do all they can to prevent any crash. For their own good first, and everyone else can… "Um, who!? Oh you mean the sheeple that voted for us. Well, yeah - I suppose we can put our spin on it, tell them we did it to save mr & mrs' home, even though I couldn't care less, as long it's not my 15th property that drops in value."

    They may not succeed in preventing a drop in property values, but they will do all they can to TRY and prevent it. (Printing money from thin air is their favourite tactic. If we did it we'd be counterfeiters - and gaoled.)

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