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
Sandgroper, I wouldn't hold my breath for a price crash though - remember that property speculation is supported by government policy and is veiwed as crucial to economic growth, even if it is not said in so many words. Even if coming generations are locked out of home ownership, everything possible will still be done to ensure that prices keep rising. Interest rates may be very low but we can still take them a bit lower yet and that's just for starters.
Here in Gladstone, the boom has passed it's peak (though things are still going) and rents have plunged sharply. Which is good, young people not on $150 000 might reasonably be able to afford to leave home. But selling prices have only come down a little, despite poor demand and plentiful supply. Movements in the price of housing are no longer connected to the fundamental purpose of housing, that's history.
Yep the silly high rents will fall but house prices are sticky. There will be some good buys for those brave enough to buy in this market, and that's usually cashed up investors. FTB's certainly don't buy in down markets, and that's why they are down markets.
On the median house price index for Gladstone, Perth and Darwin this will be but a small blip.
Gladstone could become an interesting petri dish to observe Peter? The prices for most of the area have behaved - to a certain extent - as though Gladstone were a "more desirable suburb". Theoretically, as suburbs of major cities become gentrified and more expensive, those without deep pockets are forced further out to the margins where housing is supposedly cheaper - so what happens when an entire town has become dramtically more expensive? And most of those with deep pockets are leaving town? Where do those who have jobs but not overly high-paying ones go? Obviously they rent, watching a sea of houses for sale whose vendors apparently have no need to sell since the price does not come down.
Supply exceeds demand but unlike theoretical supply-demand models, the price does not fall by any significant amount.
I guess the strategy being pursued by those invested in Gladstone housing who have not unloaded yet is simply to hold out for the next industrial boom.
It might get painful for some of them when the construction fully winds up though - in order to offset your losses using negative gearing, you need to be able to demonstrate that you are receiving some rental income. The time is coming where there are more rentals here than people to rent them. But then, I'm sure there's a government-sponsored rort they can access somewhere.
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These Eastern State people ( ) think Perth boomed like a mining town during the investment boom when the opposite occurred
You're obviously not referring to the latest investment boom, the one you posted the monster growth chart of yourself.
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...
When I first bought here in 2011 we looked in all these areas and there pages and pages of unsold properties, the house we bought had been on the market for 2 years and sold for $200K less than the original asking price of over $800K.
The market at the moment is not as hot as it was in the spring and summer but it is very far from a buyers market. Some people always get carried away and ask too much so there will always be price changes like these.
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.
House prices have been stagnant and dropping since 2007 apart from the first home buyer fillup in 2009. The last price boom ran from 2004 to 2006 check it out here
When I first bought here in 2011 we looked in all these areas and there pages and pages of unsold properties, the house we bought had been on the market for 2 years and sold for $200K less than the original asking price of over $800K.
The market at the moment is not as hot as it was in the spring and summer but it is very far from a buyers market. Some people always get carried away and ask too much so there will always be price changes like these.
the downturn in investment, commodity prices and immigration growth has only just started materialising in the last year... and its well documented.
im also not saying its a buyers market in housing right now... but also wouldnt call it a market due a recovery from a bust / downturn... quite the opposite in fact if the slowdown in commodities and mining continues.. things may pick up again, but the fundamentals need to turn first.
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?
You will never ever get a price fall back to the levels in 2011 when you first started telling me about your fantasy house price crash. You have been wrong all the time - every month you claim some new calamity will hit Perth and every month you have been wrong.
The latest ABS statistics have Perth ticking along quite well. Yet you are still dreaming of catastrophe, you will probably go jumping around if we have a quiet winter result although that happens regularly and no crash follows. Then you will get all excited if spring shows a bit of extra stock on the market but again no house price crash will follow. This will probably go on for at least 5 years then you will cave in and buy a home and then prices will crash.
You are crash obsessed yet there is NOTHING absolutely NOTHING in Perth's history of house pricing of any similar event to the one you keep telling me is just around the corner. At the most they fall by a few % points and that was after severe worldwide shocks.
To get any kind of significant price drops you need a huge increase in unemployment PLUS large numbers of stressed highly mortgaged owners. We could jump nearly a full % point in unemployment and not get to Sydney's level and Sydney is booming.
All that will happen is people wont sell, they will not sell at a loss if at all possible, and that is what you hope for when you predict falling prices.
Does Shadow not come on these threads - I didn't notice - I don't post on Melbourne threads- I wonder if the Melbourne bulls miss me, maybe I should make an effort for them.
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.
You will never ever get a price fall back to the levels in 2011 when you first started telling me about your fantasy house price crash. You have been wrong all the time - every month you claim some new calamity will hit Perth and every month you have been wrong.
The latest ABS statistics have Perth ticking along quite well. Yet you are still dreaming of catastrophe, you will probably go jumping around if we have a quiet winter result although that happens regularly and no crash follows. Then you will get all excited if spring shows a bit of extra stock on the market but again no house price crash will follow. This will probably go on for at least 5 years then you will cave in and buy a home and then prices will crash.
You are crash obsessed yet there is NOTHING absolutely NOTHING in Perth's history of house pricing of any similar event to the one you keep telling me is just around the corner. At the most they fall by a few % points and that was after severe worldwide shocks.
To get any kind of significant price drops you need a huge increase in unemployment PLUS large numbers of stressed highly mortgaged owners. We could jump nearly a full % point in unemployment and not get to Sydney's level and Sydney is booming.
All that will happen is people wont sell, they will not sell at a loss if at all possible, and that is what you hope for when you predict falling prices.
Does Shadow not come on these threads - I didn't notice - I don't post on Melbourne threads- I wonder if the Melbourne bulls miss me, maybe I should make an effort for them.
I'm still dreaming of catastrophe?
You silly old goat.
I said prices would fall in line with deteriorating fundamentals.
That is exactly what is happening.
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
One of my Brothers has covered three aspects of the Perth market (land, rentals, construction) during 3 different peaks & troughs ..2007-2011, I think he's generally made some witty choices. One block(elevated .. great water views) bought right at the peak..he still owes on it $30-40k, but he purchased 2 others right at the very bottom & It's more than compensated...
The important thing to understand about debt, is it doesnt go away until you have pAid it off..& if the value of the asset you borrowed against goes down in value, then yeah you are in serious trouble.
ATM, I'm going through the influx of of annual water, & shire rates to pay off..now my thoughts? To pay in full or installments...
Bloody hell. ..ones bill nearly 2k, mostly averaging $1383-$1699. The rents still coming To me, & Perth is not down the toilet. Not bothered by any negative sentiment.
Oh well I'm tempted with one potential prize ...if I pay up one rates in full 10 days in the Big Apple for 2... No kids
Bliss.
Another thing with markets,, when selling if you have assets in high demand locations it will sell..
As a landlord, I win if govts do nothing for FHB I will still have rent....
As a landowner I win when I am the vendor of what Mr & Mrs Average wants..
1999 The market was hot, it ran hard, we lucky dipped in buying properties..anyone who was never expecting correction has got rocks in their head.
But for the future? I will dip my toe in the water regarding picking up 1 more...for cash .
I just watch, wait, & pounce when it's appropiate.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$ It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do. Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
The prices for most of the area have behaved - to a certain extent - as though Gladstone were a "more desirable suburb". Theoretically, as suburbs of major cities become gentrified and more expensive, those without deep pockets are forced further out to the margins where housing is supposedly cheaper - so what happens when an entire town has become dramtically more expensive? And most of those with deep pockets are leaving town? Where do those who have jobs but not overly high-paying ones go?
Supply exceeds demand but unlike theoretical supply-demand models, the price does not fall by any significant amount.
It might get painful for some of them when the construction fully winds up though - The time is coming where there are more rentals here than people to rent them. But then, I'm sure there's a government-sponsored rort they can access somewhere.
You're obviously not referring to the latest investment boom, the one you posted the monster growth chart of yourself.
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Gladstone could become an interesting petri dish to observe Peter?
Indeed.
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Obviously they rent, watching a sea of houses for sale whose vendors apparently have no need to sell since the price does not come down.
People are very very reluctant to sell at a loss, even if cutting ones losses might be the best thing to do. It's 'better' to sell a house for what you paid for it, even if takes ten years to sell.
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I guess the strategy being pursued by those invested in Gladstone housing who have not unloaded yet is simply to hold out for the next industrial boom.
Yep.
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in order to offset your losses using negative gearing, you need to be able to demonstrate that you are receiving some rental income.
Incorrect. You just need to demonstrate that you are trying to rent the joint.
That is a hugely positive article, it is very buoyant indeed on Perth as it winds down from the investment stage and into the export stage of the mining boom.
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On the East Coast, the news about Perth and the riches being dug from the ground, the money flowing, sits uneasily. They smile and convince themselves it will be another boom which will turn into bust. Then the East Coast will be back on top again, where the action really is, and Perth will be back in its place.
Marion shakes her head: “We don’t think so.”
People started losing jobs about 12 months ago as the construction phase of the mining boom came to a close. But there’s now increasing work in the energy sector which will continue for many years, Marion says.
“We’ve been through a very economically fortuitous time in Western Australia. What we have in terms of natural resources will be there for a long time.”
I really do see heaps of opportunity here in this city compared to Sydney. There are loads of FHB opportunities close to the city, loads of waterfronts under $1.5m etc.
My many years of experience of property markets and my habit of obsessive researching tell me a good story for Perth.
Veritas
31 Jul 2014, 02:39 PM
I'm still dreaming of catastrophe?
You silly old goat.
I said prices would fall in line with deteriorating fundamentals.
That is exactly what is happening.
AHA you resorted to name calling I win again
You are silly sometimes Veritas , prices are not falling they rose by 7% according to the latest ABS stats. You gotta stop jumping around on these weekly figures.
What fundamentals do you think are bad in Perth, unemployment is great, participation rate is great, wealth is great, savings are high, mortgage default is ridiculously low. Building starts are high, land prices are booming, FHBs are buying away no bother.
Where are these bad fundamentals of yours? in your macrobusiness fairy tales most likely.
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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