The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1286 YOUR PROPERTY IS WORTH LESS THAN 10 YEARS AGO? WHAT HAPPENED...
What if your Sydney property investment isn't as foolproof as you thought? Discover the shocking truth about areas like Box Hill and Sydney Olympic Park, where property values have surprisingly decreased over the past decade. We'll unpack the concept of a "10-year price freeze" and reveal how overdevelopment and an oversupply of properties have contributed to this unexpected trend. Equip yourself with the critical insights on appreciating land versus depreciating structures to avoid common investment pitfalls and make smarter real estate decisions.
Explore the intricate balance between choosing a home for its investment potential and its livability. Imagine the transformation of regions like the Olympic Park into prime residential zones with relaxed planning controls around train stations—yet the reality tells a different story. Through personal anecdotes and expert analysis, we highlight the importance of capital growth and lifestyle considerations. Remember, in real estate, "Supply is the enemy of capital growth." Tune in for essential tips to navigate the complexities of the Sydney property market, ensuring your investments align with both your financial goals and lifestyle needs.
Properties that in years they sell for less. It's happening, it happened and we're going to talk about it now how to make sure you're not buying that property. Stay tuned.
Speaker 2:Oh, good morning oh, billy, how are you? I'm the confused real estate agent this morning. I just don't know how this has happened in Sydney.
Speaker 1:How does that happen in Sydney? Now listen, just before we get into how you can lose money in real estate, I just can't believe this topic. But it's true. We're going to show you some suburbs, but I just want to talk about you getting old. This morning I asked you about what colour you were going to go when you get old and I just said you're going to be like white, white, white hair, white, all white, probably not bald, but white. And you said something even cooler. I thought it was pretty cool. Can you tell us what you said?
Speaker 2:I said, I don't really care what color the hair goes. I'm more excited for that stage of my life when I can transition from a billy to a bill, and this is going to happen pretty quickly. I'll have gray hair if property values don't go up in 10 years.
Speaker 1:So don't say you're genuinely excited about getting old yeah, I'm really excited to retire. It's not gonna happen for a little while, but you really are billy, the old man in a young man's body. What happened to you? What did your parents do?
Speaker 2:to you. That's a good question. It's a good question. I'll tell you what. I'll tell you what, um, I'll tell you how. This is similar to property. I love the way they frame. They frame this up. They called this a 10-year price freeze and maybe I'm maybe I'm frozen in time as well a 10-year price freeze it's not like it's interesting.
Speaker 1:You know you don't want to be this person, billy. You don't want to be the person paying a six percent interest rate for 10 years. You know you don't want to be this person, Billy. You don't want to be the person paying a 6% interest rate for 10 years on an investment property in particular and be in the same position you were 10 years later. What suburbs did this to these people, Billy?
Speaker 2:Should we just show? Should we just show and tell it's a little bit small?
Speaker 1:I'm sorry, I couldn't make this any bigger we'll try to work this out before we can on screen, but you can always read them out after you pop them up, whilst you pop up.
Speaker 2:Yeah, I'll read them. I'll read them out. I'll read them out for you. There's also the link there for the full article if you want to go have a look, but this is coming straight from proper track. Um so good, you know, good source, and there is suburbs right there for you.
Speaker 2:So, from the top, my eyes are burning um, these are the suburbs where prices have fallen or frozen since 2014. Frozen in time, not gone anywhere. Um, the ones in red are the ones unfortunately in a negative, and then the ones underneath that are the ones that have done minimal sort of growth. Majority of these areas are sitting, you know, sort of back to back near each other. Um, but at the top of the list, box Hill houses. Median price in 2014 was 2.25. Median house price in 2024 is 1.24. Like that's down 44 percent over a million bucks. How has that happened? Like underneath that?
Speaker 2:austral houses and negative change 37%. That's, on average, 500,000. Yeah, I've got it. Just get you to suburbs. But the one that surprised me most, I think one that we all know Sydney Olympic Park apartments. Median price in 2014, $700,000. Median price in 2024, $685,000. That's a change of just over 2%. $15,000 in the red yeah, so it's just the world.
Speaker 1:It's a world of pain. What other suburbs? Don't worry about the percentages, just blast them out. We've only got a couple more minutes Billy.
Speaker 2:Rose Hill units, mount Cola, punch bowl, mort Lake, ramsgate North Rocks North Ride North. Ride Harris Park West Ride Ride P ride north. Ride harris park west. Ride ride p coast.
Speaker 1:The great and then the greatest sort of sydney inside interesting now when I hear those suburbs billy bob, old man, a young man's body, what do you think of? You've got like. What are your thoughts? You've got a lovely quote, but what are your thoughts?
Speaker 2:My thoughts are that, generally speaking, these suburbs have had strong development Nuclear reactors next door to them. Strong development, and I'll give you my little one line, because I don't know how to say it any better Supply is the enemy of capital growth. I'll say it one more time Supply is the enemy of capital growth, and I really don't know how to put it any better than that.
Speaker 1:God, I can't believe you're such a harsh young man. There's two values to a property. One on the back of, I completely support and I think that's the number one bill For anyone out there. That is the number one why these suburbs listed have not performed at all. Actually, they have not only not performed but they've gone negative. So number one is exactly what you just said and number two and I love this saying property has two values. One is the land, one is the structure. They're the two values. One value goes up all the time, no matter what. The other value goes down all the time, no matter what.
Speaker 1:So allow me to give everyone an example. Guys, guys, if you have a house and it's a spec home, you built it with metricon and you spend a million bucks, five hundred thousand, on building a house and you bought the block of land, your land value most likely will be worth double and your unit and your house value will most likely be worth half about 20 years later. So one value is appreciating, the other is depreciating. So please remember a lot of these suburbs that Billy's read out. New properties were developed and the land value went up and the property value went down. But when you underpin what you just said, billy, about the supply. These suburbs had a stupendous amount of supply hitting the marketplace, so the land value froze or went down and the actual structure value went down.
Speaker 1:Yeah, spot on, yeah, they said how does one get around that when they're a first-time buyer? How do you get around? How do you avoid your property value going down? That's the question on everyone's lips yeah, spot on.
Speaker 2:They quoted it to say you know, ultimately prices rise because there's too much demand and not enough supply. So when it's the opposite, it simply just moderates prices. That's what you see in that table.
Speaker 1:Okay, I'll give you a working example DY, dy, northern Beaches. There are 9,600 units in the suburb. A lot of units, fast fact. There's more sales in dy postcode than there is in the sydney sydney city cbd postcode of 2000. We do more sales every year, always have last five, ten years. But here's the kicker dy was 8 600 units for almost 50 years. The supply didn't change. When it did change, the supply changed by about 10 over overall 60-year period or specifically a 10-year period. It changed by 10 period or specifically a 10-year period. It changed by 10. You have areas like ride or in particular you have areas like roseberry. So we changed by 10. One tenth places, places like botany, roseberry, alexandra and around there. The whole catchment had 2 000000 units. Five years later it had 4,000 units. Three years later it had 8,000 units. Five years later it had 16,000 units. So it multiplied by a factor of 8, 10, 12 in some of these suburbs and that puts an enormous amount of downward pressure on the pricing. That is, those suburbs that you can see here.
Speaker 2:I've got a question like luke's great question do you buy in these areas now due to the price drops? Is there, is there some kind of? Uh, what I'm looking for?
Speaker 1:is there some kind of a level at which you had that's a great buy, sure, um, it's how does look? To answer your thanks, luke's. Thank you very much for your question. To answer your question, I think you've got to look at how this happened. How it happened and what actually happened in these areas is there was a strong necessity, there was planning controls or zoning changes made and the allowance allowed these units to be built at surplus. If you're at the true end of that allowance, maybe you've got a heart rate. If you're halfway through the developing of what's been developed in these suburbs, I still don't think you have a fat chance.
Speaker 2:There you go. Really interesting.
Speaker 1:So all in all, On the back of that, billy, on the back of that, I think. If you're looking in, sydney is one of the toughest on planning controls obviously not in those suburbs, but on the back of that. Queensland, think about it, melbourne, think about it, melbourne, think about it. A lot of those guys have loosened their belt up on planning controls and it puts pressure like this yes, it's just a good thing to factor in with whatever you do, wherever you go.
Speaker 2:Not a good club to be a part of.
Speaker 1:No, and if you're a first home buyer buying in these places 10 years later, it's worth less Hard life, Hard life. Look at the historics of these suburbs. Follow the historics. If you can't see a building track record in these suburbs for 50 years or 30 years, be worried. Be worried Because these guys, I would dare to say if you clawed back 20, 30, 40 years RP Data, for example, would do that and show you the performance of these suburbs, I think you'd see zero performance. They'd be relatively new, emerging suburbs or a lot of planning controls have been released within those suburbs.
Speaker 2:I feel like we've really given these suburbs a hard time this morning. Can we finish on a good note?
Speaker 1:They're good suburbs. It's just the planning controls Like if you I would live, like any of those suburbs I'd happily live in, but it's the planning controls that loosened up train stations. It was just logic to nail those areas Like the Olympics 2000, olympic Park, like that was just a nothing, not a big bank of land doing nothing, with excellent transport. So what a great place to live.
Speaker 2:Great place to live. Tricky investment. That's where you've got to weigh up where you put your money at. Well said, Not that they're not liveable, Great spot to live.
Speaker 1:Yeah, and Bill, I've bought in these suburbs, um, where I know that suburb that the performance was less than other areas that I know would perform better. Yep, but I bought for family reasons or lifestyle reasons. So sometimes it actually just doesn't stack and you just know that you you're walking into a sand storm into with capital growth, but you know, you know it works for you and it's not. It's not a capital growth play as much, it's, you know, lifestyle or whatever it may be close to family, whatever so much supply and people paying massive prices can't believe marston park isn't in there.
Speaker 2:Maybe it doesn't have that from the community. There is a few more as well. If we go back to that link. We could only fit so many on that screenshot. There is a few more there you go.
Speaker 1:That's a good way to summarize it leaving on a good note. Happy tuesday two, two quotes yours go.
Speaker 2:Supply is the enemy of capital growth uh, and mine is.
Speaker 1:There's two values. One is the land, which is an appreciating value, and one is the actual structure, which is a depreciating value. There's two values to a property boom, used tool properly, boom, bye-bye.