Good sound logical post. When you say the near future, when in your estimation will these imbalances be re balanced?
That is a tough one. I suppose it depends on the reaction of investors. I spoke to one investor last week who is selling because he thinks capital appreciation will be limited over the next couple of years and he can't be bothered with managing tenants anymore. He bought for 200k and can sell now for 600k so he has done well. There are others who will have bought in the last year or two who may be panicked to sell. I am not sure if the unemployment rate will kick up too much because a lot of people you talk to will just go back to where they came from. Especially a lot of the Kiwis who tend to see Perth as a place to make money rather than a permanent place of residence. I haven't met a Kiwi yet who isn't homesick. Interestingly, NZ to Australia migration turned net negative this year for the first time since 1990 so maybe they are leaving now. What will happen is that pay will drop for an awful lot of West Aussies. I am seeing this already where I work. Welders, electricians etc. are being taken on at lower rates than a year ago. What could underpin the market somewhat is foreign investment buying. If Sydney and Melbourne are too expensive for foreign investors they may look west. I am 100% certain though that prices will drop in the short term. How much by depends on many factors, but the consensus amongst everyone I talk to is that this is not a good time to buy a house in Perth.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
Jimbo, there used to be a blue collar tradie here going by the bogan name of 'timmy'..........
Now he;s long gone, but a lot of these guys here used to believe timmy and everything he trumped up about Perth like gospel.
Now that mining & Perth are both fucked, and timmy gone..........most of these dumb fucks still here are now quite chaste, but still unapologetic.
There is a lot of dumb money in the Perth property market. I know one couple, hubby is FIFO concrete layer and wife works in Woolies. Three kids in private school, two $60k plus 4wds, fishing boat, couple of jet skis and 5 investment properties in the same suburb they live in. The cars are financed as is the boat (got good finance deals apparently). He is always banging on about the merits of property investment. The main thing is that he reckons he pays little if any tax with NG. Free money from the taxman. I hear this all the time when I am on site. How much their little empires are worth blah blah blah. They can't see the reality that they are leveraged up to the hilt and totally reliant on their FIFO wages in order to remain solvent. Any downward movement in prices, upward movement in interest rates or slackening of the rental market and they are stuffed. I haven't met many FIFO workers who don't have an investment property or six and I haven't met a FIFO worker who invests in other asset classes. I was chatting to this woman at work the other day and she was telling me how property always doubles in value every ten years. I asked her why and she replied, "it always doubles every ten years, it always has". Perth property is the dumb money capital of the world.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
The big driver of the Perth market has been international and interstate migration during the mining investment boom. This created high rental demand and fueled investment buying. A lot of the investment buyers are themselves FIFO workers earning big bucks for their normally average paying jobs.
Some of this is just not true. There was a stagnant and dropping property market throughout the mining investment boom, there was no rush of investors buying property, despit the ridiculously high rental returns.
Have you been reading that nonsense they sell over at Macrobusiness? People make money from selling these doomsday scenarios, they have done this all of my long life
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.
Some of this is just not true. There was a stagnant and dropping property market throughout the mining investment boom, there was no rush of investors buying property, despit the ridiculously high rental returns.
Have you been reading that nonsense they sell over at Macrobusiness? People make money from selling these doomsday scenarios, they have done this all of my long life
The stagnant periods were post GFC and when the Iron Ore price plummeted. Both episodes saw big layoffs from infrastructure projects. No big bucks FIFO money, no investment buying. As soon as these projects picked up again, the market started to climb.
I don't need to read blogs to see what is happening right in front of my nose.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
Jimbo, I just sent an In mail to an old colleague of mine from Worley's asking about mining & Perth, and he mentioned the situation is absolutely fucking dire! West Perth is empty now of human activity. Hay street and all the cafe's are half shut down, and the half left still open are empty. Businesses shutting down left and right. Small vendors and boiler makers all closed up in places like Kewdale and Malaga areas.
Tens of thousands of tradies have come back from up north and willing to do anything for some work. Rates are down big time. He was having a bit of a chuckle because he stopped looking left and right anymore crossing the streets in the city because the cars are all gone!
He mentions it is so eerie because during the work week especially around West Perth you actually can cross the streets without any fear of being hit by a car, cuz they gone man!
Now the question to ask is with nothing else holding the levy, how long until it catastrophically bursts and takes all these suckers down in the drain?
Lulldapul do you ever get tired of peoples tales of drama and never ending doom and gloom. You have been on here a long time saying this stuff.
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.
Lulldapul do you ever get tired of peoples tales of drama and never ending doom and gloom. You have been on here a long time saying this stuff.
From my own perspective, I am doing some work on a Gorgon contract at the moment and I finish up around December. Up until about two months ago I was being spammed by recruitment agencies advising me of vacancies but that has ground to a halt. I was talking to a boilermaker mate of mine earlier and he is working in Henderson but only until October and he has nothing lined up either. It isn't armageddon in Perth at the moment and official unemployment is steady but there is an uneasy feeling amongst my colleagues that things ain't what they were.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
There is a lot of dumb money in the Perth property market. I know one couple, hubby is FIFO concrete layer and wife works in Woolies. Three kids in private school, two $60k plus 4wds, fishing boat, couple of jet skis and 5 investment properties in the same suburb they live in. The cars are financed as is the boat (got good finance deals apparently).
This current generation has simply lost its sences I think. To believe that having a million dollars of debt and no cash is smarter than having no debt and a few hundred thousand tucked away is the height of folly. Yes I understand the "savings don't generate any yield now" line and that property as an investment has traditionally offered stellar returns. But it is leveraged, it is inherently risky and you should never play with borrowed money the same way you would play with your own savings. Yet that is precisely what everyone does now. When people had limited access to credit they used to save up and were very cagey about building pools and buying new cars, but with borrowed money they don't seem to care? If they want it they simply buy it if the bank ok's the loan.
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