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 4th, 2008 at 11:35 am
http://www.cknw.com/news/news_local.cfm … _local.cfm
Could affordability be an issue here in the best hype on earth?
March 4th, 2008 at 11:54 am
March 4th, 2008 at 11:56 am
The RE pumpers could say it doesn’t matter what the survey says because it polled locals and our market attracts international buyers.
BTW has anybody else noticed the make belief bears on Chipman’s site?
Sure seems like the same crowd but with new names, they seem to be posing as regretful bears who wish they had bought, and now are warning others to buy before they miss the boat.
March 4th, 2008 at 12:02 pm
You know - I bought a couple of investment properties a couple years ago. And it is difficult to make the mortgage payments - but i’m am scrimping and saving to make sure i can, for the benefit of my longer term financial well being. I am going to be seriously unimpressed if the state governments undertake strategies to make houses even more affordable for ‘low income earners’. My properties are my future - whos going to pay for my future when realestate prices are artificially lowered?
Ever think maybe you just bought at a time when prices were artificially pumped up? Ever heard of ’speculation’?
March 4th, 2008 at 12:09 pm
In plainer language, a plan to keep house prices from falling.
You can’t have it both ways. If house prices are unaffordable, that means they are too high, period. The solution is lower prices, not schemes to make it easier for people to buy at high prices.
Get out of the way and let Mr. Market do his job.
March 4th, 2008 at 12:09 pm
I personally find it interesting to see whats happening in previous host cities. Of course Sydney is on the other side of the world, if this story makes you uncomfortable all you have to do is make the standard hemispere adjustment.
March 4th, 2008 at 12:09 pm
Huge population, every rich Asian, Indian, Middle Eastern billionaire will mover here soon, small land mass, great weather, international IT center, extensive world trade-no dependence on the Americans, world class city, no crime, no traffic gridlock, manufacturing center, world class stock exchange, young workforce AND THE OLYMPICS,
Did I mention we ran out of land before Expo 86?
March 4th, 2008 at 12:09 pm
True. Just don’t think the 2010 Olympics will definitely cause future appreciation of Vancouver real estate. It might, but other Olympic cities have had varied experience on the matter.
March 4th, 2008 at 12:18 pm
March 4th, 2008 at 12:30 pm
Is he really comparing the current market to the early eighties?!? 40% price crash and something like 20 YEARS before prices recovered? He’s starting to sound more pessimistic than Alan Angel.
March 4th, 2008 at 12:32 pm
“Your stretching for bad news in other countries while real estate here continues to be a rock solid investment.”
Your blind ignorance is what stretches the imagination. All American boom cities collapsing Dosh: “Yeah but we’re different, they have economic problems.” International boom cities collapsing, “Yeah but they’re overseas!” All Canadian boom cities except Vancouver and Victoria collapsing, “We’re DIFFERENT here! Really really! I have absolutely no factual information to back up my rhetoric but I just KNOW we’re different here! La la la, I’m not listening to you, see I’m covering my ears!”
Honestly Dosh, I’ve never seen a worse display of wilful ignorance. At least Krrish is just genuinely slow, you seem to have at least an 80s range IQ or so. You CAN figure it out if you choose to.
March 4th, 2008 at 12:39 pm
That’s a polite way of saying that the Olympics mean squat. If you’d like some experimental evidence, RE in Calgary and Edmonton have always tracked each other closely although only Calgary had the Olympics. The Olympics did nothing for RE in either city. RE prices, which had crashed in the early 80’s like in BC, did not recover until well after the Olympics, when oil prices (surprise) began to rise again.
March 4th, 2008 at 12:44 pm
March 4th, 2008 at 1:04 pm
Drachen its not ignorance its a different opinion. you see doom and gloom everywhere, sure some cities have markets that are down, but others like us have markets that are up.
March 4th, 2008 at 2:19 pm
i wonder if construction will still be going strong after the olympics and all the condos are done. a co-worker of mine mentioned that at bcit there are 47 (or was it 67?) classes of electricians. okay, i mangled that. that is, there’s a heck of a lot of people taking up electrician courses, due to the demand in construction.
March 4th, 2008 at 2:26 pm
Both of them display a glaring lack of intelligence.
March 4th, 2008 at 2:27 pm
“but others like us have markets that are up.”
As usual you are lacking any factual foundation.
Where other than Vancouver and Victoria are markets up? You can’t just make stuff up and expect us to buy your crap, back it up man, provide sources other than your fevered imagination.
“its not ignorance its a different opinion”
One is just a symptom of the other.
March 4th, 2008 at 3:19 pm
And Canada’s central bank said this “can be expected to have significant spillover effects on the global economy.”
**** Global Economy EXCEPT Vancouver!****
HAHHAHHAHAHAHA
March 4th, 2008 at 3:30 pm
Looking at the result of the votes, it totally shows the negativity of the people coming to this website. Is it because you guys can’t really “afford” so you guys get angry?
Well, hope to see more of different views here.
Thanks everyone
March 4th, 2008 at 3:40 pm
“Constantly hoping the market is going to crash.”
I think you’re missing the point. We don’t HOPE the market will crash we KNOW the market will crash. The debate here is mostly about when and how much. Any rudimentary analysis from a moderately intelligent spectator quickly arrives at the same conclusion. Markets don’t climb like they have in Vancouver without a following crash unless there is a fundamental change in the market. This is Economic law, it is not cheatable, adjustable or malleable.
March 4th, 2008 at 3:54 pm
Drachen, you’re way off, it’s in the low 60’s max!
March 4th, 2008 at 4:16 pm
March 4th, 2008 at 4:25 pm
anything? Thats very open minded of you, but I think its important to keep an open mind so I’d love to see anything that supports an argument for prices never going down.
March 4th, 2008 at 4:35 pm
http://vancouver.craigslist.ca/search/a … &bedrooms=
March 4th, 2008 at 4:40 pm
here’s a perma bull:
http://tinyurl.com/26ay5v
guaranteed to buy something real soon.
this will the high end market for the next 25 years……
March 4th, 2008 at 4:41 pm
I guess I will just stay as a reader then. Thanks for your all’s feedback.
March 4th, 2008 at 4:45 pm
Andrew, you were invited to submit anything that’d support the argument for prices never going down.
Just as I assumed you can’t..
March 4th, 2008 at 4:49 pm
Looks like sales declined 6.4% this year compared to Feb 07 and 9% from Feb 06.
Listings on the other hand rose 26.2 % compared to Feb 07 and 21% over Feb 06. Hmmm can you spot the trend?
Prices are up .5% from last month
I will put the detailed monthly stats up tonight on my site.
http://www.northshoreproperties.ca
Look forward to your analysis Pope!
March 4th, 2008 at 4:52 pm
March 4th, 2008 at 5:02 pm
When I look around I see a lot of short term projects putting a squeeze on construction costs, but I don’t see local wages or rents rising to match. Personally I’m doing fine, but none of the statscan numbers have shown any dramatic wage increases, rent or immigration increases. I’m also astounded by the thin margin some of my friends and neighbors are operating on.
I truly would like to see some varied opinions posted, because perhaps I am being too negative, but I see a lot of storm clouds on the horizon (credit contraction, US recession, forestry shutdown, etc). So far I haven’t seen anything other than vague feelgood stuff and speculation propping up prices. If there is something I’m not considering I’d really like to be made aware of it.
March 4th, 2008 at 5:15 pm
Well that’s accurate as long as your definition of “past performance” only includes the last 10-20 years and only the Vancouver market.
March 4th, 2008 at 5:18 pm
March 4th, 2008 at 5:37 pm
If you dared to pull your head out of the sand, and stood on your tippy toes, you might just be able to see Edmonton, Calgary and Seattle, who were all convinced they were different last year at this time.
March 4th, 2008 at 7:22 pm
We do not have any bulls here. We have Krish/Satv, and Dosh who are sub marginal morons, but neither of them has presented any sort of convincing counter explanation to what is happening in the GVRD RE market. I do not respond to them because I think they are just trolling to try and incite flamings.
If you wander over to Chipman’s blog, the resident bulls cannot put together any rational argument either.
March 4th, 2008 at 7:37 pm
March 4th, 2008 at 7:50 pm
is.. arguments
March 4th, 2008 at 7:56 pm
“you get the usual platitudes about the booming economy, running out of land, or everyone wanting to live here.”
what else would make you happy?you idiot when your own place doesn’t seem best place to you on earth what else place would like to accomodate your worthless body?
are you entertaining the idea that you are a personal bit#h of vhb and mohican who present old data with their own made headlines?
March 4th, 2008 at 8:03 pm
too #$@$%$# funny!!
March 4th, 2008 at 9:18 pm
You sound an awful lot like an angry version of Krrish. Kind of reminds me of a monkey baring fangs and flinging lots of poo at his screen. What’s the matter? Seeing the day when all that money mommy and daddy paid for your home goes down the drain? Don’t worry, you can sell your kids organs to pay the mortgage. He’ll, I’ll buy them all just to keep your ‘tard genes out of the pool…
March 4th, 2008 at 9:59 pm
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.
March 4th, 2008 at 10:06 pm
A story about 40 year mortgages is coming up on the CBC National.
March 4th, 2008 at 10:20 pm
you are such a joker!
March 4th, 2008 at 10:44 pm
You want negativity. Here it is.
Vancouver real estate will never crash. Instead, in 20 years, 90% of the population will be slaves to the bank, still hardly making a dent in their 40 year mortgages.
The moderate inflation and increasing wages have now brought their payments into the 45% of gross income range. Only 10 more years until the last 10 years of their mortgage is finally actually affordable. They are 70 when they pay it off.
The Vancouver economy has stagnated the whole time because no-one had any money left over after their mortgage payment to buy new cars, fuel, food out or really anything. The only people that use any of the services are the tourists, and not many of these come due to the gloomy attitude of the residents.
Whats interesting is these events would be forced to happen if real estate does not crash, but if they happen people will move and prices will crash.
Bottom line is, unless you are a bank, realtor or house flipper; high housing prices are not good for you. They only make you feel wealthy and cause you to borrow. Actually, they are really only good for house flippers and realtors while prices are rising quickly, which any sane person would admit has to stop very soon.
So it comes down to the banks owning pretty much everyone but the rich; or a crash.
I think any positive person, who cares about society in general and not their own selfish hopes and desires and profit potential(obviously not bankers) will actually want and hope for the impending crash.
So really; who is negative and who is positive????????????????
I challenge you or any bull, not to worry about whether or not a price crash will occur, and not to try to justify the prices either. Just do this. Tell me why high prices are a good thing for society!! In the long term!!!
Are some people pissed off they can’t afford place to live? Well they have every right to be. Part of what made Vancouver one of the best places to live was the relatively high quality of life the middle class could live. That is rapidly being taken from us, and most of you damn sheeple are applauding it because you can’t see past your noses.
March 4th, 2008 at 10:55 pm
Anyway, looks like the party’s over in Victoria….prices DOWN 5.95% year to date.
Fasten your seat belts.
March 4th, 2008 at 11:10 pm
sorry… too lazy to link right now…
i don’t get it. why would posted rates go down when worries around the financial market starts in canada? wouldn’t they go up instead?
March 4th, 2008 at 11:28 pm
pop open yahoo finance. all you see is negative news. what else do you expect. the market is crashing. people is losing their jobs. do you really expect real estate to go up. by the end of 2008, you will see yoy loss.
March 4th, 2008 at 11:35 pm
You are right on the money. A health economy is an economy with deflation. Isn’t great, save now to buy more later.
Bubbled R/E is bad for society. Why would anyone take on a $400,000 mortgage for a condo? Are they F*cken crazy? Have they thought about how long that will take to pay it off??
March 5th, 2008 at 12:16 am
http://sunsetgrove.ca/
Yeeesh
March 5th, 2008 at 1:21 am
We have detected that your web browser does not meet the minimum requirements to enter this site.
Well aren’t we exclusive? Firefox 2.0 under Linux is not good enough for their website!
Can’t get a competent web designer by the look of it. Or maybe they’re just pre-screening for buyers with the least analytical skills.
March 5th, 2008 at 2:09 am
Translation: Is inflation good for the economy? We know the answer.
Are some people pissed off they can’t afford place to live? Well they have every right to be. Part of what made Vancouver one of the best places to live was the relatively high quality of life the middle class could live. That is rapidly being taken from us,
So, the homeless from Hastings/Carrall/Columbia can riot too? Get real, dude. There are no free lunches anymore. And why refer to only the middle class? Most of us have to work exceedingly hard for a living and for only mediocre pay.
Tell me seriously what you would do if you had several million dollars (your very own cash)? Like that Burnaby woman who won the lottery. First stop – buy a property or upgrade, no? Next stop, invest in some stocks etc. Don’t think you’ll put all of the money into the bank for a few % p.a.
The bottom line is that the rich gets richer and the poor gets poorer – and statistics show that this happens annually in all developed countries (check Forbes’ richest people).
Not only that, the rich are encouraged by governments to invest. In many countries of the world, most of the income tax gathered comes from only a few hundred people (the richest). So they are considered real assets to their economies and other economies (Sultan of Brunei responded to Thatcher’s request for billions of investment dollars for Britain).
Does it matter whether RE crashes or not? Not to the rich. It’s a fact of life that cycles of boom and bust occur and usually, the very well-heeled not only survive but become much richer because they have the resources to hold onto their investments in busts and add on cheaper investments. Prime example: Li Ka Shing (Expo land) had ‘bad’ buys in many places in Asia in the 80s. Now, he’s a billionaire.
Do you think these rich people care whether we are able to own homes or not? Do you care whether the homeless in Hastings/Carrall get housing (maybe, only Tony Danza does)?