The sad fact is, skamy has all the facts and evidence in front of him, yet still wishes to push others down the path to ruins, why oh why oh why.
Just trying to sell another ticket to this titanic voyage skamy ? Though so....
Just look at the thread title. A more realistic one would of been " Australias jobs collapse has already begun". This is what is happening not the fantasy he tries to portray.
Good luck mate, you will sure be needing it.
You keep telling us property is for the long hall. Why did you recently leverage up on two properties there and then tell last week you had sold one. Was it not a sure bet, all that capital gains and rent increases coming your way.
So why did you sell if the market is so good and property is for the long hall ?
I sold because we decided to buy our PPOR closer to my daughter. I have kept one as a rental, this one is part of our retirement plan.
I do not buy and sell trying to second guess booms nor busts. I would never sell in a downturn, I saw too many people do this in the 90s and never ever get back into the housing market.
As Massive said that was a dreadful time. There was a world wide recession and interest rates were crippling. Perth today is nothing like that.
You cannot keep denying the facts, house prices have been rising for 2 years now and the worst of the downturn is well and truly over.
Australia has low unemployment and Perth has one of the lowest unemployment levels in the country. Whether you wish to deny it or not there is a residential construction boom already known to be coming. The buildings are through planning and being financed now. This is a big employer full stop.
The last time I spent time on this forum many of the bears posting here were calling the death of Perth due to some imaginary downturn they were spruiking for China.
Perth, however, has just kept ticking along.
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.
I sold because we decided to buy our PPOR closer to my daughter. I have kept one as a rental, this one is part of our retirement plan.
I do not buy and sell trying to second guess booms nor busts. I would never sell in a downturn, I saw too many people do this in the 90s and never ever get back into the housing market.
As Massive said that was a dreadful time. There was a world wide recession and interest rates were crippling. Perth today is nothing like that.
You cannot keep denying the facts, house prices have been rising for 2 years now and the worst of the downturn is well and truly over.
Australia has low unemployment and Perth has one of the lowest unemployment levels in the country. Whether you wish to deny it or not there is a residential construction boom already known to be coming. The buildings are through planning and being financed now. This is a big employer full stop.
The last time I spent time on this forum many of the bears posting here were calling the death of Perth due to some imaginary downturn they were spruiking for China.
Perth, however, has just kept ticking along.
still does not change the fact that the high paid positions are disappearing, salary increases are below inflation ( ie decreasing in real terms) , with the massive wage growths peaking several years ago already reflecting in volatile house prices since that period that have essentially moved nowhere ..
how can people buy so many highly priced IP's if they are earning half their income Skamy ? its something you seem happy to ignore.. sure they will have jobs and everything will continue on the way it always has - but how can prices for property continue to grow if people cant get the same salaries to support the prices ?
i posted the charts of mining salary growth and house price growth and it doesnt take much to see the correlation between the two.
as for no downturn or slowdown in china ... its been on ever since GFC and the central government has had to add stimulation a number of times .... the slowdown has really gained steam in the last year and its screwed up all my forecasts considerably...
Since 2006 Perth's median price took two annual falls this is the most severe contraction since the 90s. Work out the probability of a further fall based on the historical evidence. The odds are not good.
@Massive,
Graph one shows the marked decline in house price to income showing that house prices did not increase with wages. Graph 2 show that this decrease occured over the same period of the huge engineering projects.
Clearly, the people who came to build the mines did not buy homes here. My view is therefore not negative for Perth, there is a lot of negative talk in the MSM due to the increase in vacancy rates, but even the rents are not really falling much.
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.
Graph one shows the marked decline in house price to income showing that house prices did not increase with wages. Graph 2 show that this decrease occured over the same period of the huge engineering projects.
Clearly, the people who came to build the mines did not buy homes here. My view is therefore not negative for Perth, there is a lot of negative talk in the MSM due to the increase in vacancy rates, but even the rents are not really falling much.
the massive engineering investment spike didnt increase salaries in the same way the push to 2007 did and as a result can see house prices barely moved ... purchasing power did not improve so prices held - and slid on uncertainty in the market.... Growth rate has basically correlated to wage growth rate and the market has thusfar indicated this ... as salary growth continues to slide, i personally expect to see house price growth do the same...
this has happened every cycle... it doesnt go up again by magic.. it will turn up when wages growth resumes and Perth economy has next blue sky event.
It was not wages growth, employment, mining boom which kicked off the housing boom in 2004-2006 where prices doubled.
What did happen is the mining boom focused attention on perth, this was the export/prices boom at the time. Perth was very cheap compared to other capitals in terms of house prices. This focused attention on Perth of investors and kicked off a feeding frenzy. Due to limited stock and future supply of land and properties it was a buy now or miss out. Which it truly was.
I bought a property during this time. In one week it moved from $130,000 to $140,000, then started moving up $10,000 per day!!!. I bought it for $160,000. It is now valued over $420,000 and been rented out ever since. It was a crazy market. Perth was playing catch-up to the rest of the nation.
I do agree wages growth needs to increase over time to allow for local residents to purchases property. However this overlooks investors which are 30% of the market and many come from outside locations, which are not affected by local wages. So you can have price growth with none or little wage growth.
At present I think the Perth market is well balanced. First home buyers are back in force with close to record sales volumes with FHBG over the last 2 months. This will feed into upgraders markets in the coming months as FHB have bought 75% established houses. FHB still make up 25% or more of the market which is the highest in Australia of the capital cities which is very health. Meaning most FHB consider Perth affordable, have jobs and income to support a property purchase. The higher volume of sub $500k properties being sold puts a drag on the overall median price, this is normally followed by a surge of $600-800k properties sold in the following months as the people who sold there properties to FHB now settle into mostly upgraded properties. Upgraders are also building more houses at present in the higher price band due to high competition for quality homes in quality locations. Hard to get what you want.
The trend unemployment rate for Perth did not moved from 5.0%, seasonally adjusted did moved up 0.2% to 5.2%. Perth seems to be treading water with employment growth keeping pace with population growth at present. Appears to be the Eastern States forcing the unemployment rate up.
still does not change the fact that the high paid positions are disappearing, salary increases are below inflation ( ie decreasing in real terms) , with the massive wage growths peaking several years ago already reflecting in volatile house prices since that period that have essentially moved nowhere ..
how can people buy so many highly priced IP's if they are earning half their income Skamy ? its something you seem happy to ignore.. sure they will have jobs and everything will continue on the way it always has - but how can prices for property continue to grow if people cant get the same salaries to support the prices ?
i posted the charts of mining salary growth and house price growth and it doesnt take much to see the correlation between the two.
as for no downturn or slowdown in china ... its been on ever since GFC and the central government has had to add stimulation a number of times .... the slowdown has really gained steam in the last year and its screwed up all my forecasts considerably...
That media report is such a beat up - unemployment is steady- it is just the seasonally adjusted figure that has risen. The participation rate has risen as has the number of new full time jobs
WA still created over 3000 new jobs last month, the unemployment rate is steady at 5% (the participation rate is steady and unemployment is still way down compared to the other states.
I am not saying that China nor our local economy will not have their ups and downs, I just cannot understand how some folk keep jumping to extreme negative predictions.
House prices grow as the population grows. More people compete for the well located properties. This is the long term advantage of property investment. Booms and busts come and go but this is the long term outcome for property prices in growing cities. Homes that were once bought by Irish navies in Sydney are now bought by multi millionares.
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.
At present I think the Perth market is well balanced. First home buyers are back in force with close to record sales volumes with FHBG over the last 2 months. This will feed into upgraders markets in the coming months as FHB have bought 75% established houses. FHB still make up 25% or more of the market which is the highest in Australia of the capital cities which is very health. Meaning most FHB consider Perth affordable, have jobs and income to support a property purchase.
I do note the the WA government has some initiatives in place to provide more affordable housing that don't seem available elsewhere. Good for them.
Quote:
That media report is such a beat up - unemployment is steady- it is just the seasonally adjusted figure that has risen. The participation rate has risen as has the number of new full time jobs
The media report is reporting the ABS so I'd be hesitant to lable it a beat-up. But again, I don't think it's quite as bad as it looks but I don't yet see any solid evidence that it's getting better either.
House prices grow as the population grows. More people compete for the well located properties. This is the long term advantage of property investment. Booms and busts come and go but this is the long term outcome for property prices in growing cities. Homes that were once bought by Irish navies in Sydney are now bought by multi millionares.
they can only compete with the money they have...
that is why cities with 10- 20 ,000,000 have medians that are either comparable or less than that of Perth with only 2,000,000 or so residents... earnings dictate spending and borrowing power... even uber-bull shadow's current mantra is house price growth with incomes..
again not prediciting a crash, but i cant understand the basis on which you are saying more rises are on the way if salaries are stagnating and the high paying positions are becoming more scarce ...
mike is right about the massive catchup, again - its happened in previous boom cycle ... perth booms, prices go nuts, things start to peak, WA politiicans starts saying we should be separate from the rest of Australia to keep hold of the money, signs of slowdown, wages stop increasing, wallets close, slowdown occurs, perth stagnates while sydney and melbourne grow.
FHB should be healthy as many of them should have saved money in the mines and now coming back home to buy and start up the next part of their life - possibly in construction industry...
the economy shouldnt fall apart, but i personally skeptical of claims of notable gains in property prices coming in next few years.
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