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Beware Mining Town Bulls - Perth and Darwin Housing Bubbles Ready To Burst!; Entire generation of speculators needs to be wiped out and made an example of
Topic Started: 30 Jul 2014, 04:19 PM (14,993 Views)
Massive
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skamy
31 Jul 2014, 02:55 AM
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Sorry Massive but I do not see these so called booms and busts I see steady price growth that you would expect from a growing city. Only 4 years showed an annual price drop since 1974. If you want read this http://6pointfinance.net/HousePrices.pdf then look at the recent ABS stats since 2003 and you will see that Perth is just emerging from the biggest downturn in the data which goes back to 1970. I will put a table of data with annual % change together for you that will make it easy to see this if you are interested in this data.

Most of the previous times when Perth has corrected is after huge annual increases lasting 10 years or more - not after several years stagnation and falling prices.


Ok I have taken note now what?

I don't get involved in Melbourne threads - that city appears to have a property market that defies my understanding. Do you think that will make Melbourne crash?
But that's Perth .. It falls behind . has a period of rapidc catch up then stagnates again.. ( notice i didn't say fall ).. But against inflation prices stop or recede salaries face same fate and urgency on property market vanishes ... Look at the 90's .. Basically 20% rise in 10 years from 89 .... What was inflation over that time ? Sydney and Melbourne start to look more and more desirable - especially for white collar positions - as their salaries increase while Perth sits there ...

Edit: u may not think 90s looks scary on the graph but this is a time wen guys in my profession were taking office furniture as compensation for no pay .. Firms were merging and downsizing etc etc ..

All the while inflation kicks in raising cost of living and reducing money that can be thrown around .. This is all purely anecdotal and won't be hunting down stats ... Its not devastating . it's just noticeably quiet ..

iI'm not 100% convinced its happening right now but wiring is on the wall in many respects
Edited by Massive, 31 Jul 2014, 10:55 AM.
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Down Markets
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So Peter - just to clarify what you said, First Time Buyers don't buy in down markets, so that's what's happening now with First Home Buyers - so you concede the housing markets going down. Thanks for your honest position on all this.
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skamy
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Massive
31 Jul 2014, 10:42 AM
But that's Perth .. It falls behind . has a period of rapidc catch up then stagnates again.. ( notice i didn't say fall ).. But against inflation prices stop or recede salaries face same fate and urgency on property market vanishes ... Look at the 90's .. Basically 20% rise in 10 years from 89 .... What was inflation over that time ? Sydney and Melbourne start to look more and more desirable - especially for white collar positions - as their salaries increase while Perth sits there ...

Edit: u may not think 90s looks scary on the graph but this is a time wen guys in my profession were taking office furniture as compensation for no pay .. Firms were merging and downsizing etc etc ..

All the while inflation kicks in raising cost of living and reducing money that can be thrown around .. This is all purely anecdotal and won't be hunting down stats ... Its not devastating . it's just noticeably quiet ..

iI'm not 100% convinced its happening right now but wiring is on the wall in many respects
I lived through the 90s too, we were lucky as we had been sponsored over here so we were safe in our jobs, but the times were indeed very bad.

Recently Perth has suffered too, house prices were very badly affected and they have still not returned outside the lower priced market. Above the early million dollar market is still pretty slow and prices are mostly still way below their peaks. The recent recovery has really only been significant in the under $1m market.

New home building is just emerging from a very serious contraction. Plus anyone who thinks Perth builders made money from the investment boom do not know the reality of huge losses suffered by contractors on these huge projects.

These Eastern State people ( :dry: ) think Perth boomed like a mining town during the investment boom when the opposite occurred.

The difference between my reading of the market and that of people like Leftee and maybe yourself is that I believe that we are in a recovering housing cycle not a declining cycle. IMO, the declining cycle ended a couple of years ago. Perth is not booming like Sydney but it is recovering and things are looking very positive for local construction next year. The handover from Capex spending to residential construction may be not be completely smooth but is has both upside and downside risks.

Perth has not had a house price boom for almost 10 years. I think the risks are higher for a boom than for a bust at this stage and if I was a gambling woman I would bet on a bit of a boom from mid next year, after a slower spring start.

Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Veritas
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skamy
31 Jul 2014, 12:26 PM
I lived through the 90s too, we were lucky as we had been sponsored over here so we were safe in our jobs, but the times were indeed very bad.

Recently Perth has suffered too, house prices were very badly affected and they have still not returned outside the lower priced market. Above the early million dollar market is still pretty slow and prices are mostly still way below their peaks. The recent recovery has really only been significant in the under $1m market.

New home building is just emerging from a very serious contraction. Plus anyone who thinks Perth builders made money from the investment boom do not know the reality of huge losses suffered by contractors on these huge projects.

These Eastern State people ( :dry: ) think Perth boomed like a mining town during the investment boom when the opposite occurred.

The difference between my reading of the market and that of people like Leftee and maybe yourself is that I believe that we are in a recovering housing cycle not a declining cycle. IMO, the declining cycle ended a couple of years ago. Perth is not booming like Sydney but it is recovering and things are looking very positive for local construction next year. The handover from Capex spending to residential construction may be not be completely smooth but is has both upside and downside risks.

Perth has not had a house price boom for almost 10 years. I think the risks are higher for a boom than for a bust at this stage and if I was a gambling woman I would bet on a bit of a boom from mid next year, after a slower spring start.
Another fun story were the housing market (somehow) runs on magic money.

Essentially, you are arguing that economic fundamentals in WA turning negative (and they are) will precipitate a housing boom, because we haven't had one in ten years?

So a massive mining boom causes the first boom.

And the unwinding of that boom will cause another one.

Nice reasoning. :re:
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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Massive
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skamy
31 Jul 2014, 12:26 PM
I lived through the 90s too, we were lucky as we had been sponsored over here so we were safe in our jobs, but the times were indeed very bad.

Recently Perth has suffered too, house prices were very badly affected and they have still not returned outside the lower priced market. Above the early million dollar market is still pretty slow and prices are mostly still way below their peaks. The recent recovery has really only been significant in the under $1m market.

New home building is just emerging from a very serious contraction. Plus anyone who thinks Perth builders made money from the investment boom do not know the reality of huge losses suffered by contractors on these huge projects.

These Eastern State people ( :dry: ) think Perth boomed like a mining town during the investment boom when the opposite occurred.

The difference between my reading of the market and that of people like Leftee and maybe yourself is that I believe that we are in a recovering housing cycle not a declining cycle. IMO, the declining cycle ended a couple of years ago. Perth is not booming like Sydney but it is recovering and things are looking very positive for local construction next year. The handover from Capex spending to residential construction may be not be completely smooth but is has both upside and downside risks.

Perth has not had a house price boom for almost 10 years. I think the risks are higher for a boom than for a bust at this stage and if I was a gambling woman I would bet on a bit of a boom from mid next year, after a slower spring start.
Perth house prices had one of their biggest booms in the 2000's median up around 4.5x in a decade ... wages also boomed ( though was overdue ) -
these prices were supported by mass immigration and high paying jobs for those workers in more recent years...

IMO the downturn in WA economy hasn't started / or is only just starting ..... yes Perth is entering a construction cycle, but that is not hand in hand with raising prices may well be quite the contrary as it has been in the past... I would dispute your assertion there has been no boom in 10 years... 2005 - 2013 has seen the median almost double in that time. In fact there has been a fairly well sustained boom in house prices from 2000 - 2013 through an unprecedented mining investement boom which has only just started winding down...






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Foxy
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Zero is coming...

Veritas
31 Jul 2014, 12:39 PM
Another fun story were the housing market (somehow) runs on magic money.

Essentially, you are arguing that economic fundamentals in WA turning negative (and they are) will precipitate a housing boom, because we haven't had one in ten years?

So a massive mining boom causes the first boom.

And the unwinding of that boom will cause another one.

Nice reasoning. :re:
http://www.youtube.com/watch?v=QE_OLPEN5vU
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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PiratePete1911
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This is what my inbox has been looking like the last few weeks in the northern suburbs of Perth:

Posted Image
Posted Image
Posted Image

Everything is having its price reduced after spending a while on the market.

In January this year I couldn't even make it to a home open without the damn house being under contract.
Edited by PiratePete1911, 31 Jul 2014, 01:30 PM.
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skamy
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Veritas
31 Jul 2014, 12:39 PM
Another fun story were the housing market (somehow) runs on magic money.

Essentially, you are arguing that economic fundamentals in WA turning negative (and they are) will precipitate a housing boom, because we haven't had one in ten years?

So a massive mining boom causes the first boom.

And the unwinding of that boom will cause another one.

Nice reasoning. :re:
During the investment boom house prices fell, they did not boom. So your interpretation of my point was flawed from start to finish by this error.

We are in an mining export boom and heading into a home construction at record levels. Do you live in the same city as I do?

WA still is the wealthiest state per capita, has the fastest growing population and has the lowest state unemployment and the highest employment participation rate.

So fundamentals are in fact strong, you are always predicting that they are heading into the negatives and you have been wrong for sooooo long Veritas. Maybe you should question your sources at this stage.

The market has had several years to clear out any stressed sales. The bust is over now, we just await the boom.

IMHO, it is actually a good little window to buy an existing home as things are quite steady right now and you might even get a bargain on a badly presented home. Good well presented homes are still selling within a couple of weeks. Land sales on the other hand are a bit crazy so it may be wise to wait a while for new stock to come online, land prices rose by 20% in the past 10 months.




Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Massive
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skamy
31 Jul 2014, 01:34 PM
During the investment boom house prices fell, they did not boom. So your interpretation of my point was flawed from start to finish by this error.



:bl:

have you been reading different charts ? or living in a different Perth ?

http://www.ft.com/cms/s/2/0fe89674-bb1b-11e3-948c-00144feabdc0.html#axzz390gUcb33


Quote:
 
Before 2003, Perth’s property market lagged behind those of Sydney and Melbourne. While prices nationally began their upward march from the late-1990s, house values in Perth did not begin to rise until 2003, coinciding with the start of the commodities boom. In the three years to 2006, prices in Perth more than doubled, according to the Australian Bureau of Statistics. “Higher sustained commodity prices such as we have seen over the past decade have led to a substantial increase in mining investment in order to increase production,” says Tony Crabb, head of research at Savills Australia. “This resulted, not only in an influx of workers, but substantially higher wages. The combination meant rents rose and the capacity to borrow more increased and sent house prices soaring in Perth.”

According to research by Savills, house price growth has correlated directly with increases in employment directly related to mining. Between 2003 and 2013, direct mining employment in Perth rose from 44,491 people to 101,698, an increase of 128 per cent. During that same period, median property prices rose 113 per cent to an average A$535,000. By comparison, property prices in Sydney grew 30.2 per cent during this same period, rising to a median of $651,000.

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Veritas
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skamy
31 Jul 2014, 01:34 PM
During the investment boom house prices fell, they did not boom. So your interpretation of my point was flawed from start to finish by this error.

We are in an mining export boom and heading into a home construction at record levels. Do you live in the same city as I do?

WA still is the wealthiest state per capita, has the fastest growing population and has the lowest state unemployment and the highest employment participation rate.

So fundamentals are in fact strong, you are always predicting that they are heading into the negatives and you have been wrong for sooooo long Veritas. Maybe you should question your sources at this stage.

The market has had several years to clear out any stressed sales. The bust is over now, we just await the boom.

IMHO, it is actually a good little window to buy an existing home as things are quite steady right now and you might even get a bargain on a badly presented home. Good well presented homes are still selling within a couple of weeks. Land sales on the other hand are a bit crazy so it may be wise to wait a while for new stock to come online, land prices rose by 20% in the past 10 months.



Actually, I have been right.

My position all along was that house prices in WA would fall in line with deteriorating fundamentals.

That is exactly what is happening.

And the extra supply coming on line is going to make things even better for buyers.

The fact that house prices could fall after the GFC and barely recover following it during the State's biggest ever purple patch should tell you something Skamy.

What do you think is going to happen now that the natural resources boom is heading south?

Another housing boom?

hilarious. Ever wonder why Shadberg never back you up on these threads?
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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