Sydney bargain-hunting
Although the official statistics suggest something slightly different, by my reckoning Sydney's housing market has now entered its third year of downturn.
From a purely psychological point of view, this makes for a testing time for owners, and some may now choose to sell.
I'm interested in opportunities, but one of the challenges facing bargain-hunters - at least in the areas that are typically of most interest - is that Sydney's regional unemployment rates are as close to zero as you'll ever see.
The cash rate setting is also at the lowest ever level, so there's little in the way of mortgage stress to report in inner Sydney, although tighter access to credit and the interest-only mortgage reset could smoke out some portfolio investors.
And despite record levels of construction in recent years, Sydney doesn't really have a structural oversupply.
What it does have, though, is a few concentrated gluts of apartment completions and projects hitting the market at the same time, which might give rise to some distressed sales or failed apartment projects.
Pockets of pain
My experience in Britain has taught me that sharp price falls are sometimes seen when the economy really turns bad, leading to rising unemployment and forced sellers - hardly a widespread problem facing Sydney at this point in time - and sometimes in the most supply-responsive areas.
I spent a long time last week looking for bargains in the Sydney market, and in the east I couldn't find anything - I mean, not a single thing - that you might term a bargain, or anything even approximating to a bargain.
I don't really know enough about Homebush, Parramatta, Blacktown, or Western Sydney to comment in any meaningful way.
The best examples I could find of significant price declines, at least within 20 kilometres of the City, were mostly in areas zoned for higher-density housing or construction hotspots.
Epping was a standout example, where scores of apartments were sold off the plan around 2014, and it's not too hard in that area to find examples of units for sale at well below the 'as new' price (although, interestingly, some have been advertised 'almost as new').
Resale prices in some developments look likely to be up to 15 to 20 per cent lower than the off-the-plan price after an assumption for discounting is factored in.
A high proportion of such apartments was bought by non-residents, and jt's probably fair to say that total return might not have been absolutely front of mind for some off the plan buyers.
Locations around Epping and parts of the Hills District have experienced a huge surge in apartment completions in recent years.
Finding a tenant would be hard work right now for landlords, which might encourage more sellers in 2019.
Source: SQM Research
For all that, I could only find a handful of apparently distressed sales, including in regions such as Canterbury-Bankstown, but still very little which you could reasonably term an outright bargain.
I assume that in time some developments under construction will fail, and will be sold on at lower prices.
I'm by no means an expert in Sydney's middle-ring suburbs, though, so am all ears if anyone knows better.
