Shocking real estate losses in Sydney
After hosting the 2000 summer Olympics, Sydney Australia has seen some astounding losses on real estate speculation. The outer suburbs are seeing median price drops between $100 to $450 per week since early 2004. In Sydney property prices peaked three years after they hosted the games, will Vancouver’s market hold on that long?
One of the obvious differences between Vancouver and Sydney (asides from the summer / winter games hosting) is that their games took place at the beginning of a global credit boom, whereas ours seem to be happening at a time of contracting credit. This will likely have an effect on when our local market peaks.
The MVS Valuers analysis shows that anyone who has bought as long ago as January 2002 and resold recently in Sydney’s west and south west is likely to have copped a loss.
Prime Minister Kevin Rudd is today expected to unveil a plan to help families battling housing stress in a move designed to take the heat out of the latest Reserve Bank rate hike. Last month, on the day before the central bank increased rates to an 11-year high of 7 per cent, Mr Rudd announced the government’s $850 million first-home saver accounts scheme.
Mr Rudd’s announcement comes after new research shows 1.1 million low to middle income households are now spending more than 30 per cent of their income on housing. To present an accurate picture, anomalies such as upgraded homes, sales within families and vacant blocks that have been built on were removed from the analysis.
Among some of the worst losses studied, a home in New Cambridge St, Fairfield West bought for $780,000 in November 2004 sold in July last year for $415,000, a loss of 46.8 per cent.
At Bond Place, Oxley Park, a unit bought for $455,000 in August 2005 sold last May for $250,000.
At McAndrew Close, Lurnea, a house bought for $420,000 in December, 2004 sold last June for $267,000.
On average houses actually bought over the past five years and then resold have resulted in losses of $20,912 in Sydney’s west and $20,435 in the south west for their owners. MVS Valuers director Peter Raptis said there was little likelihood of a recovery in prices in the short term. He predicted more possible losses ahead, or at best nominal growth.
The full article can be found on news.com.au
There are some areas of eastern Sydney that are still booming, so this slump has not hit their entire market equally. There are some interesting comments on that article as well.
Thanks to Visio for the link.
update: a more positive interpretation from 2006 can be found here
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March 7th, 2008 at 10:48 am
I didn’t bring up the subject, my co worker did….. he got the news about Brio from his girlfriend. Someone asked him why he was so happy about a project going under, and that started the ball rolling.
Most of the people at the table weren’t from Vancouver and everyone had a thoughtful opinion about what was going to happen to the market.
Interestingly, NOBODY claimed “everyone wants to move here” or “it’s the best place on earth” or anything like that. Everyone had opinions founded on data perceived to be relevant.
The people at the table either had bought years ago or hadn’t bought at all, there weren’t any “new owners” so… the conversation was pretty interesting.
March 7th, 2008 at 8:37 am
Believe it or not I was at a work function last night and the subject of this blog came up.
Ha! What was the context and did you bring up the topic? I pretty much keep my strong bearish opinions on the market to myself. I have many friends that bought in the last year or two and I don’t want to offend them.
This blog is my dirty little secret, I never mention it to anyone.
March 7th, 2008 at 8:20 am
Krrish, your ears should be burning.
more like a rectal itch!!
March 7th, 2008 at 6:36 am
Thanks Evergreen and Blueskies,
You guys would have died had you read the essay I once wrote comparing Hamlet to Great Expectations. I was a big Twin Peaks fan at the time so I used a chess analogy to tie them together. The prof gave me a 97 on the exam and said it was the best essay she’d ever read. My hand was bruised from writing when the essay had finished.
Believe it or not I was at a work function last night and the subject of this blog came up. Krrish, your ears should be burning.
March 6th, 2008 at 3:27 pm
scullboy, blueskies,
I must read those books. I don’t really care whether property prices move up or down; it’s only money. Now, English literature…this is the stuff that dreams are made of (not some building on a piece of land). Btw, scullboy, it’s never too late (and I don’t mean buying property)!
March 6th, 2008 at 7:44 am
There were much glare and glitter and piquancy and phantasm
EAP! it has been 5 decades since i’ve read that story…
thnx for the nostalgia trip!
March 6th, 2008 at 4:34 am
I missed my calling. I should have been an English prof. I used to get in the high 90’s in university
.
March 6th, 2008 at 2:11 am
I can’t figure out if Vancouver is fiddling while Rome burns or I’ve walked into the Masque of the Red Death.
Ingenious metaphor! I’m astounded.
March 6th, 2008 at 1:20 am
Are you talking about THIS Kevin Rudd?
Chasers War on Everything…Must watch, then ask why can’t we get these geniuses to come over here and give our pollys a workout.
Stairway to Kevin
Lastly would Harper please look at this and ask himself who cares if he can speak french, this is a Chinese country now
March 5th, 2008 at 9:41 pm
I have respect for most posters. Some people don’t seem to be capable of rational thought.
That being said sometimes it seems like everything that needs to be said has been said a million times before so why not post something silly…
Meanwhile things get even crazier here while everywhere else is collapsing.
I can’t figure out if Vancouver is fiddling while Rome burns or I’ve walked into the Masque of the Red Death.
Hell, even in that story eventally reality came crashing in…
March 5th, 2008 at 5:58 pm
Uh evergreen, unless you’re the person who posted this:
No, scullboy, I can’t claim authorship for that. I have respect for all posters. I visit this Blog to seek information about the property market, not to play games. The bears are very sincere in their outlook and advice and I guess I trust my money more with them. Some bulls are irrationally exuberant and I don’t want to be landed with the baby (a beautiful but worthless house). The evidence is not yet compelling for a big crash…but I can wait.
I would prefer to buy in the US which is now fairly priced, but my family loves it here. You should move around more when you’re still young…go to Miami.
March 5th, 2008 at 2:18 pm
“after new research shows 1.1 million low to middle income households are now spending more than 30 per cent of their income on housing.”
Will somebody tell me why this is significant? Where were those studies when I rented my first apartment which cost over 50% of my gross? Or the basement suite I rented as a student at 70% of gross?
Why don’t they put the money into co-ops? Oh, let me guess, it’s because the developers, big banks and realtors want a piece of the pie and to do that you have to sell houses to people who can’t afford them.
March 5th, 2008 at 1:31 pm
Just a thought…
Why would a drunken 40 year old hooker play with a 23 year old? That doesn’t make a lot of sense. I mean, hookers get paid right?
I could see a drunken 40 year old try to pick up a 23 year old hooker. I could see a drunken 23 year old try to pick up a 40 year older hooker.
But why would a 23 year old pay for a drunken 40 year old hooker?
I’d think if someone is going to write an insulting post they’d at least try to make it coherent.
March 5th, 2008 at 1:24 pm
Uh evergreen, unless you’re the person who posted this:
scullboy,
you are such a dweeb!you remind me of a drunken hooker at fourty playing with 23 year old toy. you are not even from vancouver you are from toronto and that idiot above,I mean that mohican’s whore is also from prairies,both of you idiots don’t know anything about my city,you don’t know, I will throw all of your vibrators with remote control in the gutter you fucking fringing idiot. I won’t utter a bad word for vancouver and won’t let the hookers spit their filth on my city.
I wasn’t addressing you directly. Your posts are usually pretty lucid, and this looks more like Krrish’s to me. I’ve never seen you post something like that but I could be mistaken.
Vancouver really is unique in some ways. You say the real estate market’s out of whack and people seem to think you hate their city. The fastest way to rile people in this town up is to suggest that while it’s a great place to be, it’s not the best place on the planet and it has its own problems. Weird.
Then again, it certainly goes a very long way toward explaining why people pay 500K for a leaky Yaletown shoebox, doesn’t it?
I’ve never lived in a city as emotionally isolated from the rest of the country and indeed the rest of the planet as Vancouver. Even Montreal in 1993 was at least actively engaged in the nation, if only because they were deciding if they were going to leave. They at least seemed aware there *is* a “rest of the country”.
I dunno… I used to think the people here were cooler than the people in Toronto but at least Torontonians can handle criticism of their city.
Miami’s starting to look pretty tempting.
March 5th, 2008 at 12:02 pm
The Sultan of Brunei is a parasitic absolute monarch who skims off the oil wealth of the country for himself.
True. Problem is he’s got the dough.
Drachen, appreciate your post.
I feel positively stalked, since apparently you’ve been reading my posts for a while.
Don’t flatter yourself. I read everyone’s posts and enjoy best Freako’s, -A-’s and the Pope’s. And no need to try on me those cute bits of psychoanalysis you picked up hitchhiking from Toronto to Vancouver.
I’ll use your advice on overindulgence if I buy one day.
March 5th, 2008 at 11:55 am
I’m hungover the Lions is Alberni and Jervis
March 5th, 2008 at 11:52 am
Scullboy, you’re exactly right.
Forget Krissh comments, using a different name, he’s never had anything relevant to contribute and is probably not a resident, since he’d clearly fail the LPI.
The rental market is already flooded and it’s going to get much worse. This means that rents cannot go up anymore.
The class of renters has declined in the last twelve months.
A year ago there were young trial lawyers and CGA’s applying for the Lions building (Alberni and Bute, 8 year old building) and now it’s international students and waiters with pets.
This proves rents cannot increase and if anything they will decrease as the vacuum is created by the next 9,000 new units.
Spectrum has crashed the market and that’s only 10% of what’s coming!
March 5th, 2008 at 9:59 am
“Firefox 2.0 under Linux is not good enough for their website!”
Well, if you can’t afford to pay for your OS you probably can’t pay for a condo
March 5th, 2008 at 9:22 am
scullboy:
as our resident guru “freako” points out it is a zero sum game … eg. for every person taking possession of their new live-in unit at the Elan there will be a corresponding vacant unit elsewhere, including the apartments you have noticed that are now for rent.
March 5th, 2008 at 9:12 am
It’s totally relevant Scullboy. There have been numerous studies on the relationship between rents and purchase price. One method used is the 150-200 rule. Which says that prices normally rest around 150x the monthly rent and if prices go over 200x the monthly rent they ALWAYS return to sub 200 ranges eventually. This has been true for the entire recorded history of real estate.
March 5th, 2008 at 8:39 am
On an unrelated topic, is it me, or are there a *LOT* of West End apartments coming up for rent? Almost every building seems to have one or more suites available lately. It could be my imagination but it certainly seem like the case.
I’m not going to say the rents are sane, but at least they’re affordable. You can get a nice 1 bdrm with a fair amount of space 1 block from the ocean for about 1300 bucks.
What do you guys think? Unrelated data point?
March 5th, 2008 at 8:19 am
Gosh Anon / Krrrish / Sat
You’re definately Krrsh’s evil twin brother. I feel positively stalked, since apparently you’ve been reading my posts for a while.
Given your dubious skills in English, I’d have to say you are pretty new to the country. If I were a jerk, I’d say “you’re new to the country. It’s full. Please leave”. By your logic the fact that I’ve been in the country longer means Canada is “mine” not “yours”.
I’d also argue I know Canada whole lot better, since I grew up in Halifax (not Toronto). I’ve lived in Toronto, Ottawa and Montreal as well.
It’s pretty obvious you’ve never lived anywhere else. You don’t really understand any city other than Vancouver, and you don’t really understand Vancouver well either.
Sorry honey, it’s a nice little town but the locals condo / home owners have lost their minds. Their homes aren’t worth what they think. Homes are worth what you get the day you sell them. The party’s ended…. those who overindulged are going to have a hell of a hangover.
You might want to teach your kid to deliver papers or stitch clothes in a sweatshop or pick-pocket or something. YOu’re probably going to need the money to pay for your “best place on earth” home.
March 5th, 2008 at 8:18 am
Evergreen
That was a nice rant. But you didn’t tie any of your gibberish to Vancouver real estate. All you did was blather on about rich people. I can see that you’re TRYING to make a rational argument but you simply have nothing.
You’re also mistaken on quite a few points. Not all developed countries have a widening wealth gap although most do. This condition is also not a long term trend, last century up until the ’70s the reverse was true.
Middle income earners are THE most relevant group when discussing overall RE prices, because if they can’t afford to buy then it is inevitable that prices will fall. (simple supply and demand, look it up)
March 5th, 2008 at 8:16 am
Get rid of “them” and the oil will still be there.
this is exactly why the Americans are in Iraq and eye balling Iran….
“them” gots the goodies
and we wants it
March 5th, 2008 at 7:55 am
So they are considered real assets to their economies and other economies (Sultan of Brunei)
Are you serious? The Sultan of Brunei is a parasitic absolute monarch who skims off the oil wealth of the country for himself. He does nothing productive, just like his counterparts in the Gulf.
Get rid of them and the oil will still be there.
March 5th, 2008 at 7:51 am
I work for one of Toronto realtors and although I watch the real estate situation abroad, I am not that familiar with the situation in Australia. But I don’t think that we have to worry about that know. We have very strong real estate market right now and when the crisis in the United States hasn’t affected us much I don’t think that olympics will start a crisis now.
March 5th, 2008 at 5:54 am
THE MARKET IS ON FIRE
THANKS TO ROB CHIPMAN FOR THIS INFO.:
Febuary Sales Results
Benchmark Price Febuary 1 month change ($) % change
Detached $761,342 +18,852 +2.54%
Attached $472,147 +9,520 +2.1%
Apartments $387,032 +8,696 + 2.3%
February sales volume rose in comparison to January, to 2,676 compared to 1,819 (+47.11%). Sales were lower than February 2007, however, (2,676 vs 2,859 = -6.4%).New listings rose substantially in February, to 5,260, compared to 4,675 in January (+12.5%).
Compared to February of ‘07 the benchmark price is up 14.1% for detached properties, 12.9% for attached properties and 12.7% for apartments.
January’s numbers were 15.7%, 12.4% and 13.8%, respectively.
February increases were 11.4%, 15.1% and 15.3%. Like last month, price growth is slowing, but it’s still growing, and YOY we’re still in double digits.
The sell/list for February was 50.87% (counting backwards the numbers were 38.9% in January, 111.91% in December, 85.37% in November, 62.83% in October, 69.05% in September, 76.77% in August, 78.66% in July and 76.7% in June).
We did not see significant price growth in November or December. That changed in January and has continued through February. Inventory has continued to rise, (a negative for prices), but it hasn’t exploded. Despite wishes to the contrary, the market continues to defy.