{"id":12755,"date":"2017-07-20T03:00:23","date_gmt":"2017-07-19T17:00:23","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=12755"},"modified":"2017-07-20T03:00:23","modified_gmt":"2017-07-19T17:00:23","slug":"reasons-not-to-buy-in-sydney-simon-pressley","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/reasons-not-to-buy-in-sydney-simon-pressley\/","title":{"rendered":"Reasons not to buy in Sydney – Simon Pressley"},"content":{"rendered":"

Simon Pressley<\/strong> says that an exodus is under way with thousands of people leaving New South Wales for more affordable property locations.\u00a0 So where are they headed and does this spell the end of the Sydney boom?
\nTranscript:\u00a0<\/strong>
\nKevin:<\/b>\u00a0 There\u2019s a blog currently on the Real Estate Talk website written by Simon Pressley from Propertyology that prompts me to want to talk to him about it. He makes the comment that an exodus is under way with thousands of people leaving New South Wales for more affordable property locations \u2013 and why wouldn\u2019t they?
\nPropertyology Managing Director Simon Pressley said more than 23,000 people migrated away from New South Wales over the 12-month period and that number is expected to escalate in the months and years ahead. Simon joins me.
\nSimon, thanks for your time.
\nSimon:<\/b>\u00a0 Always a pleasure chatting, Kevin.
\nKevin:<\/b>\u00a0 Simon, what impact will this exodus, if it continues, have on the Sydney property market, do you think?
\nSimon:\u00a0\u00a0<\/b>It\u2019s a direct reflection of its housing affordability, we feel. There\u2019s a bit of a precedent that was set at the turn of the century \u2013 roughly from 2002 to, say, 2007 \u2013 where there were very large volumes of people exiting New South Wales for other states. In that era, Queensland was the biggest beneficiary. And it would appear that that sort of trend is continuing.
\nCertainly, that exodus out of New South Wales is continuing. That doesn\u2019t necessarily mean that it\u2019s going to be repeatable with all\u00a0<\/b>of them coming to Queensland.
\nKevin:<\/b>\u00a0 But, Simon, we are hearing about an undersupply driving the market there. Is that real?
\nSimon:\u00a0\u00a0<\/b>No, I don\u2019t think it\u2019s real. It\u2019s a perception that a lot of people have who live in Sydney because it\u2019s so congested and expensive, and they process that to mean undersupply. It\u2019s always going to be congested, it\u2019s always going to be expensive, but the actual data shows that there\u2019s been more new supply in Sydney over the last couple of years \u2013 and for the next couple of years, for that matter \u2013 than at any time before.
\nOf course, people then respond and go, \u201cOh, but our population growth is much higher now than any time before.\u201d That\u2019s actually not true. The population growth in Sydney over the last couple of years is comparable to, say, 2006 and 2007, but in those two years, Sydney built only half the volume of properties that they\u2019re building now, and there was no boom in 2006 and 2007.
\nSo, we don\u2019t think there\u2019s an undersupply or an oversupply. What we\u2019re saying is there\u2019s a lot more supply than what people probably realize is what\u2019s happening, and in the next couple of years, there are going to be record volumes.
\nKevin:<\/b>\u00a0 We always talk about the property cycle, don\u2019t we? How does this fit into that cycle, or is it throwing it out?
\nSimon:<\/b>\u00a0 I think Sydney has definitely well and truly peaked. It\u2019s in its fifth year of a strong price growth cycle. It\u2019s rare for any property market to be that strong for that long. Typically, three years of good growth is quite a normal cycle. Of course, Sydney has had such a strong economy combined with low interest rates that we\u2019ve all benefited from, and that\u2019s probably why it\u2019s gone into its fifth year. But I think it\u2019s definitely at the end of its cycle now.
\nKevin:<\/b>\u00a0 When we see that Sydney market adjust, it does actually go into a bit of a crash or a bit of a freefall for a little while. Is that likely to happen, do you think?
\nSimon:<\/b>\u00a0 Anything\u2019s possible. I\u2019m not forecasting that Sydney property values are going to significantly decline. We could see some modest decline, but things decline for a reason, and the common causes for property values to fall are either fast rising interest rates and\/or really poor economic conditions.
\nNow, we\u2019ve already had some out-of-cycle interest rate rises and Australia\u2019s most expensive city also has the largest value mortgages, so that\u2019s going to have some impact, more so on those who have investment properties than owner occupiers. But as far forward as we can analyze, its economy is likely to remain strong.
\nFor that reason, I can\u2019t see Sydney\u2019s market crashing. I don\u2019t expect strong price growth: modest growth or you could have a prolonged period of next to nothing.
\nKevin:<\/b>\u00a0 Is it likely to mean that Melbourne is going to become our biggest city sooner than is currently projected?
\nSimon:<\/b>\u00a0 Possibly. Melbourne\u2019s population growth rate has become over the last couple of years the fastest in Australia. It hasn\u2019t always been that way. Brisbane and Perth and Darwin, for that matter, have always been the three strongest population growths, but in this current era, it\u2019s Melbourne.
\nLet\u2019s not forget, though, whilst Melbourne is not as expensive as Sydney is still Australia\u2019s second most expensive city. So, if someone were to leave Sydney, let\u2019s say, because housing affordability is just not there and go to Melbourne, are they going to be comfortable living 50 kilometers out of the Melbourne CBD where you can buy an affordable house? I\u2019m not sure. They might move somewhere else.
\nKevin:<\/b>\u00a0 From a pure investor perspective, are there better capital growth locations around Australia than Sydney?
\nSimon:<\/b>\u00a0 Almost everywhere, I would say. We wouldn\u2019t have said that over the last five years, but as I said earlier, Kevin, I feel that Sydney is at the very end of its growth cycle. Other than Melbourne, most of Australia hasn\u2019t really done anything over the last five to 10 years, really. So, we could generalize and say everywhere else has its growth cycle ahead of it.
\nRight here and now today, the hottest market in the country unquestionably is Hobart. We feel it\u2019s still got a few good years ahead of it. Canberra is another one that\u2019s performing well, though Canberra is a little bit on the expensive side as well. Brisbane we think has definitely got better potential than Sydney, although I think it is unlikely at the minute to have spectacular growth.
\nWe\u2019re encouraging investors to have a critical look at all of regional Australia. Region doesn\u2019t always mean risky. It can mean risky if it\u2019s a tiny, small mining town, but if you cast your eye to the really strong regional cities, many of those have some really good capital growth potential and better rental yields.
\nKevin:<\/b>\u00a0 Always good talking to you. Get more information and read the full blog article on our website RealEstateTalk.com.au. Look for it under my channel. You\u2019ll find it there from Simon Pressley at Propertyology. He\u2019s been my guest.
\nSimon, thank you very much for your time.
\nSimon:<\/b>\u00a0 Thank you, Kevin. Have a great day.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

Simon Pressley says that an exodus is under way with thousands of people leaving New South Wales for more affordable property locations.\u00a0 So where are they headed and does this spell the end of the Sydney boom? Transcript:\u00a0 Kevin:\u00a0 There\u2019s a blog currently on the…<\/p>\n","protected":false},"author":176692471,"featured_media":12582,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,36,22,25],"tags":[101],"class_list":["post-12755","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nReasons not to buy in Sydney - Simon Pressley - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/reasons-not-to-buy-in-sydney-simon-pressley\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Reasons not to buy in Sydney - Simon Pressley - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Simon Pressley says that an exodus is under way with thousands of people leaving New South Wales for more affordable property locations.\u00a0 So where are they headed and does this spell the end of the Sydney boom? 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