Sydney homes better than New York & Paris?
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ANALYSIS, Sydney — Property prices in Sydney (and other Australian capitals) are more expensive than almost any city in the world.
New York? Paris? Boston? Vienna?
In general, better value than Sydney, as has been reported in numerous media stories today. Property prices are at 7.5 average median earnings.
And we’re not talking Park Avenue property here, more like Queens.
Sydney suburban Bondi is a sleazy second rate suburb, not comparable to Park Avenue. Yet property is priced in the millions of dollars.
There seems little doubt that Australian capitals of Sydney, Melbourne, Brisbane and Perth property are over-valued.
In Paris I have seen beautiful Left Bank apartments for under USD $1,000,000. And Paris is in the centre of Europe.
Distance is the main reason Australian property is overvalued
Sydney is 13 hours minimum travel time from the world’s super power.
West Coast USA, is close, New York further, and most other major US cities are a long way in travel time from Sydney.
Europe is more than 21 hours flying time ex-Sydney to a hub, let alone a final destination.
How can a small city of 3-4 million people, as in Sydney and Melbourne’s case, have properties worth more than a capital of finance, influence and culture?
In short – Sydney, has a harbour, but no culture. (As a librarian observed to me privately, Sydney has beautiful libraries that no one uses… )
New York has a culture, and a CBD like Manhattan which is a 130+ streets long, and has the variety of Tribeca, Park Ave, Fifth Ave, Wall St, Upper East Side, Chinatown, Bowery & Little Italy…
Further property standards in Sydney are far lower than most global capitals when ranked on construction, industry standards or materials according to European and American tradespeople I have met.
There is no cultural comparison between an uppish Sydney and New York or Paris, or the top European capitals…
Unless …
Property price rises was part of the far-Right’s debt-filled asset bubble. No labor for income, just asset interest. No need to work, just wait for your house price to rise.
Many Australians have been doing just that.
Now they don’t want to accept a falling market. Asset bubbles don’t last.
But as property prices start to fall over coming months and beyond, those same people will cry ‘foul’.
Why must Australian property prices fall ?
There is no intrinsic (other than manufactured) shortage of land in Australia.
Australia is a long way from European capitals, and European population. And the USA and Canada. And even much of Asia.
London prices are high, but the small UK aisle holds many times more people than Australia, and is a comfortable 7 hours from New York, and a commuter 2 hours flight from most of Europe.
In a global world, it is only Australians who value their property so highly.
Property is Australia’s tulip bubble.
But once the foreign debt Australia is borrowing dries up, then property prices will plummet.
Intrinsic value is what prices reflect, long-term.
And Australian property and cultural exchange is not as globally valuable or easy as New York or Paris. Or London.
Full stop.
[...] Photo Blog wrote an interesting post today onHere’s a quick excerpt ANALYSIS, Sydney — Property prices in Sydney (and other Australian capitals) are more expensive than almost any city in the world. New York? Paris? Boston? Vienna? In general, better value than Sydney, as has been reported in numerous media stories today. Property prices are at 7.5 average median earnings. And we’re not talking Park Avenue property here, more like Queens. Sydney suburban Bondi is a sleazy second rate suburb, not comparable to Park Avenue. Yet property is priced in the mil [...]
[...] An earlier and fuller 2thinknow analysis of the probable fall in property prices is here. [...]
[...] Sydney homes better than New York & Paris? ANALYSIS, Sydney — Property prices in Sydney (and other Australian capitals) are more expensive than almost any city in the world. New York? Paris? Boston? Vienna? In general, better value than Sydney, as has been reported in numerous media stories today. Property prices are at 7.5 average median earnings. And we’re not talking Park Avenue property here, more like Queens. Sydney suburban Bondi is a sleazy second rate suburb, not comparable to Park Avenue. Yet property is priced in the mil [...]
This article is flawed with a pathetic Euro-American bias.
‘West Coast USA, is close, New York further, and most other major US cities are a long way in travel time from Sydney.
Europe is more than 21 hours flying time ex-Sydney to a hub, let alone a final destination.’
True but you miss the real point – Sydney is closer to Asia.
While our Anglo – American cousins continue revising their growth rates ever lower.
The Australian economy is still booming (by trading with Asia).
As does immigration from Asia.
The facts simply do not support your case.
Aaustralia is clearly a better long term bet.
David Hume
While some good points have been raised I beg to differ that quality of materials implemented are of a lesser standard. Yes our climate differs from europe hence do our products. Overall the housing builtform varies from Fibro shacks to double brick, hebal block, plasterboard, precast panels and steel structures with glazed facades.
Over capitialisation is a killer, hence the good suburbs have the higher quality materials. At the end of the day builtform depreciates while land (usually) appreciates, especially when the harbour has limited lots.
Australia is a resource rich nation, when the population skyrockets so while our manufacturing capacity. At the moment we are selling valuable raw products without value adding.
The bigger the party the bigger the hangover. It doesn’t matter where you live – even Abergowrie!
UPDATE – PROPERTY PRICES
The 2thinknow View that:
> property prices would fall by 30% in Australia
> in most markets stocks were around 30-40% overpriced
> The true value of the stock market is around 4500 for the Australian All Ords
> the Australian peak was November (as we predicted)
> There would be a SEPTEMBER shock event (predicted in OCTOBER 2007)
See:
http://2thinknow.com/innovation/index.php/2007/10/02/3-predictions-for-life-in-australia-in-2008/
http://www.2thinknow.com/innovation/index.php/2007/12/27/2008-depression-economic-recession-usa-australia-america-uk/
In other words, our preduictions, using nascent trend analysis were VINDICATED.
We out-predicted almost all ‘names’ ANZ, Goldman Sachs, CBA, NAB, and internationally the IMF.
Economic analysts are great when in a clear bull market or bear market, but not in volatility. New techniques are needed.
We did this using nascent trend analysis, a new technique that allows for complexity, and uses ‘trigger’ events to allow confident predictions of outcomes.
WHATS’ NEXT?
IN USA, greater loss of wealth, widespread unemployment increases, property at ridiculous prices.
Exact range of results dependant on US election.
In UK, the UK is in recession. This will deepen. property prices will stabilise at new lower levels.
IN AUSTRALIA, more specific predictions are possible due to increased research by 2thinknow.
The fall in Australian property prices & stocks will be exacerbated by excess supply as baby boomers retire.
Property prices should fall to 2004 levels in aggregate.
NSW will not recover until 2010, with Victoria being the nation’s leading economy until 2010. WA condition will worse in 2009.
2thinknow analysis believes that the Australian All-Ords have now reached the correct value of 4500 (under 4000 is overshooting, but we may over-shoot further).
The Australian stock-market should move sideways in a band for some time. There will be a number of slow-rolling bankruptcies. Some corporates (eg CBA) will buy future assets cheap.
Nationalisation (eg. The Future Fund) may become more common. Especially infrastructure.
There will be substantive increases in white-collar unemployment, and infrastucture gaps will be exposed, exacerbating under-utilisation of labour.
Macquarie Infrastructure Model will be put under serious strain, as will PPPs. Macquarie Bank may be a casualty in March 2009 or thereabouts.
Unemployment will increase in 2009 by around 2% in Australia.
GLOBALLY, Most stock-markets will have various 30-120 day lags after the USA, and markets should move sideways once bottom is reached.
Any global Depression (see below), will force the stockmarket dow to the next floor of 3100 in Australia & a DJIA around 6700, with similar effects elsewhere. This would render the above predictions conservative.
2thinknow believe there is now a 40% chance of an extreme depression at current. This event will be foreseeable in December, as both US presidency hand-over begins, and Christmas cycle is complete.
Inflation cannot be predicted as the CPI based figures no longer represent any version of reality in terms of day-to-day living.
The main problem with the bailouts in progress is:
> unintended side effects (eg. Australain bank guarantee)
> competition for funds
> sovereign risk on massive debt
> strategic considerations.
Already there has been numerous geo-political manoeuvering on behalf of nations, and this may exacerbate causing increased volatility. The accuracy of numbers published by various governments will need increased scrutiny to prevent further surprises.
In 3 years, citizen taxes globally will generally rise.
Further predictions will be made in December.
Right now, that’s the 2thinknow view.
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