I’ve been reading this site for a long time & would appreciate your opinion/thoughts. Wife & I are considering putting an offer on an apartment. We’ve been in Manly, suburb of Sydney (Australia) and love it. We have lived in many places – Korea, Europe, US, SA – and for our (unusual requirements), the location is perfect – short bus or ferry to major city, walk to surf (me), walk to shops/grocery/public transport/pool/beach/pre-school/school, etc (wife doesn’t drive) and enjoy the “small town” atmosphere, yet next to major city. Sydney is good for our line of work. We’ve always rented and have been diligently saving for own place for a long time. A really long time, and we’ve really scrimped over the years to “save our pennies”.
The AUD has fallen precipitously in Q4 2008 against the USD & Euro and stayed down, making a purchase realistic (most of our savings in USD & Euro) – we’d buy outright. For 2 yrs we’ve been snooping around to get handle on streets, prices, rents, etc and we’ve found, for us, a great apartment that fits all of our needs in our price range (1mil AUD), leaving healthy 2 yr cushion in the bank for when/if I lose job.
Rental returns seem paltry to me, 2%-4% is the norm, but it appears that is the case going back decades. The Sydney market is different from other parts of Australia, has been flat since 2003, and there isn’t really any more land or ability to develop in our area, which has traditionally been a sought after place. Rents have been steadily increasing YOY and vacancy rates for the Sydney area and locally have been under 1% for many years. No significant new developments in the pipeline for the greater Sydney area and the population is supposed to continue increasing. There wasn’t really a glut of no down or non-recourse loans made in the last decade here (they don’t really do that very much here) so I don’t see a wave of defaults coming, like in CA. All of this seems to reinforce our idea that we’d like to buy.
On the other hand 650k USD / 1mil AUD is a heck of a lot of money and I’d hate to see the market significantly drop in the next year or so and/or the AUD slide further. Then again if we keep our $ invested, it really just covers what we pay in rent, after taxes so we’d be more or less “breaking even” if we used it to buy. I’m also concerned about the USD taking a big hit against other currencies and also about inflation locally & in the USA. It seems like if we owned our apartment that would help shield us from potential inflation losses. I understand all pressures now are in the deflationary camp, but I worry sometime in the near future this will change & we will have very strong inflation for a period.
Does anyone have a line into realestate market data (other than http://www.residex.com.au …ugh) for Sydney area? Does anyone think buying now is a really bad idea?
We’re cool on the FIRB thing – just got Permanent Residency visa status.
employment & general economic outlook is very poor with sentiment that worst is yet to come. I guess I just worry that with it will come cheeeeper house prices, and might be better to wait. On other hand, we really like the aptmt we are considering and have seen lots that aren’t as good (for us.)
We’re cool on the FIRB thing – just got Permanent Residency visa status.
employment & general economic outlook is very poor with sentiment that worst is yet to come. I guess I just worry that with it will come cheeeeper house prices, and might be better to wait. On other hand, we really like the aptmt we are considering and have seen lots that aren’t as good (for us.)
We’re cool on the FIRB thing – just got Permanent Residency visa status.
employment & general economic outlook is very poor with sentiment that worst is yet to come. I guess I just worry that with it will come cheeeeper house prices, and might be better to wait. On other hand, we really like the aptmt we are considering and have seen lots that aren’t as good (for us.)
We’re cool on the FIRB thing – just got Permanent Residency visa status.
employment & general economic outlook is very poor with sentiment that worst is yet to come. I guess I just worry that with it will come cheeeeper house prices, and might be better to wait. On other hand, we really like the aptmt we are considering and have seen lots that aren’t as good (for us.)
