Some wise words of advice from AMP’s Shane Oliver:
With a “huge increase” in supply set to come onto the market at a time of tightening bank-lending standards, sensible investors should be weighing up their options, according to AMP Capital chief economist and head of investment strategy Shane Oliver.
“If I was an investor … I’d be tempted to get out,” Dr Oliver told Domain. “Particularly if there are cranes all over the place.”
“I’m not saying people should sell their houses, I’m not selling my house,” Dr Oliver stressed. “I’m not in the property-crash camp.”
“[But] if you’re an investor it’s a different story, [property price] cycles matter a lot more to you.”
“We’ve now come back about 5.5 per cent, which is really just a flick off the top,” he said. “A better time to sell would have been a year ago, but I think there is still more to come.”
The below table from CoreLogic shows that Greater Sydney is facing a 9.3% uplift in unit supply over the next two years:
We also know that:
- Sydney investor demand has collapsed;
- Sales volumes have collapsed;
- Auction clearance rates have collapsed;
- Foreign buyers have deserted;
- Sydney rental vacancy rates are the highest on record (according to SQM);
- Sydney rents are falling;
- Mortgage repayments are lifting (especially on interest-only mortgages as they reset to principal and interest); and
- Labor is committed to unwinding negative gearing and raising capital gains taxes should it win office.
These headwinds make investing in Sydney property particularly risky.
I’ll be discussing these issues in greater detail at tonight’s MB Fund event in Sydney.
