Thanks for the views peeps - much appreciated. First - I'm not selling or buying any Sydney property in this stanza. Chasing the arbitrage opportunity here elsewhere on east coast of Aus only - but to be honest, don't know if I'd sell quickly or hold longer term.
So largely agree - property prices as a function of average salaries are high. Debt levels are high. Interest rate potential is up (banks rises independant of RBA especially). Wages steady. Banks talking about removing negative gearing out of the servicing calculators, and introducing know ur client obligations on brokers. All these things point to one thing - prices to cool off one way or another - agreed?
However factor in rents. They are rising. Continuing to do so. Sydney especially. And I'm a big believer that the only sure way to collapse a property market is to collapse rental prices - agreed? Problem is I don't see rental prices falling any time soon if ever (neither going up here fyi).
So in the next 5 years what happens with debt growth per household vs rises in rental income per household (including no. of 'new' landlords)?
Rotation is my guess. Sydney slowly turns into a city where renters outnumber owner occupiers (eg New York, Los Angeles) as 'owners' leave north and south. Hence values (capital/equity) of properties in Sydney stall/top out because rents can only go so high based on flat wages growth before they become untenable.
But the rest of the east coast? There's still capital growth to be had imo. Thereafter there should be high rents if the rest of east coast follows in Sydney's footsteps.
I dunno. I'm in two minds here - while others seem to have made up their minds already. Been stewing on it for a few months now. Hence why I put it out there I guess.
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