Property investment surge in Sydney
On May 20th the blog was about a property investment surge in Sydney according to auction clearance results and a possible change to negative gearing laws.
Auction clearance rates decline dramatically
According to Domain, we had a huge number of investors rushing to get in before Mr Shorten changes the rules in 2 year’s time. Just a couple of days later, the same organisation published an article supporting this supposed “huge increase in property investors” entitled FOMO, (short for Fear of Missing Out), where they stated:
“Forget about John Symond’s warning of “Armageddon” for house prices if negative gearing is abolished. At least in the short term, the artificial deadline on negative gearing is likely to push up Sydney property prices, regardless of who wins the election.
Last weekend’s boom-like 80 per cent auction clearance rate has experts wondering if it’s set to be repeated this weekend, indicating the boom is back. Labor has set a termination date of July 1 next year for the policy that delivers tax breaks to investors. After that, only buyers of new properties will be able to negatively gear.”
This ‘boom” was based on little else but the auction clearance rates which were based on about half the number of auctions that took place at this time last year when the real Sydney price boom was entering its last quarter.
It’s time we all have to accept as property investors that for the time being, and probably the next few years, the price rises in investment property in the city of Sydney are over.
From the very positive headlines of two weeks ago, we now read, “ Sydney recorded a clearance rate of 72.8 per cent on Saturday a far cry from the remarkable 80.3 per cent rate recorded two weeks ago. Sydney hosted higher numbers of auctions on the weekend with 599 home listed to go under the hammer compared to 573 the previous weekend. Auction listings however continue to track well below the levels of last autumn with 858 auctions conducted on the same weekend last year.”
So, in summary, if the freak clearance figures we saw a couple of weeks ago were due to a huge surge of property investors who were frightened of missing out because of small changes to negative gearing in two years time if Labor win the election, then the results of Saturday must be interpreted as “Sydney Property investment buyers now convinced Mr Turnbull will win next election”. All based on Auction clearance results of course…. I don’t think so!
Read full story: http://goo.gl/LwtyYN
