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.
Yes this was done due the rental problems of recent years and rental price growth of 20% PA.
This is another reason why we have good stock on markets for rentals now. A lot of the new supply has also been created for the $350 a week price bracket which is helping to keep rental prices lower and affordable.
FHB are moving from rentals into there own homes due to Perth having a lot of affordable housing in new estates. While you have to travel to reach these areas, they are all nice new bright estates. A lot of them purpose built new suburbs so not attached to an old or redeveloped area with a bad reputation.
Why rent when you can buy or build for about the same cost and lock in a low rate home loan of 4.89% for 5 years if you wanted to. That is a perfect start for a FHB.
This is a big reason why the rental vacancy rate is rising due to the strength of the FHB market.
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.
Yes this was done due the rental problems of recent years and rental price growth of 20% PA.
This is another reason why we have good stock on markets for rentals now. A lot of the new supply has also been created for the $350 a week price bracket which is helping to keep rental prices lower and affordable.
FHB are moving from rentals into there own homes due to Perth having a lot of affordable housing in new estates. While you have to travel to reach these areas, they are all nice new bright estates. A lot of them purpose built new suburbs so not attached to an old or redeveloped area with a bad reputation.
Why rent when you can buy or build for about the same cost and lock in a low rate home loan of 4.89% for 5 years if you wanted to. That is a perfect start for a FHB.
This is a big reason why the rental vacancy rate is rising due to the strength of the FHB market.
Do you find it strange that this initiative seems to receive such poor coverage in the media? I only heard about it by chance and then had to go digging to find much information about it.
Do you find it strange that this initiative seems to receive such poor coverage in the media? I only heard about it by chance and then had to go digging to find much information about it.
It did get coverage when it was first brought out. Not much now though, I guess as the rental squeeze has eased you do not have that political focus. When people are living in caravans and paying $350 a week for it, or living out of cars it tends to focus attention on it.
The Government could even wind this program back now but I suspect they want to see rental prices fall a bit due to the huge backlog of people on the social housing waiting list. If rents fall further the Government can push more people into the private market as supply of properties increases. This reduces the burden on the Governments budget. Last I heard there was a backlog of some 20,000 people waiting for social housing in Perth.
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 simple fact is that for a market to grow, it needs more capital injected by new buyers. This will either be achieved by increasing leverage, increasing wages, foreign investment or savings being released.
Poor supply can increase prices, but only to the limits of affordability.
The meteoric price rises in Perth to 2007 were caused by a perfect storm of the following.
1. High numbers of migrants bringing profits from their own booming property markets and exchanging them for a weak Aussie dollar. 2. Lack of supply creating competition amongst buyers and forcing prices up to their limit of affordability. 3. Tight rental market and strong price increases encouraging investment buyers to leverage up and compete with other buyers in a restricted supply environment. This again forced up prices to their limit of affordability.
The rebound over recent years has been caused mainly by the limit of affordability being raised by low interest rates. The recent flat results show that the limit has been reached again.
To see further growth in Perth property prices, we would need to see wages grow above CPI or the further lowering of interest rates. Though the latter is a possibility, there is not much downward space for the RBA to move into.
As average wages in WA are likely to stay flat or decline (as high income FIFO becomes less common), there is not much chance of affordability pushing up house prices further.
There is a lot of new construction going on, but remember, a large number of those properties are being built for people who are currently renting from investors. This ties in with the increasing vacancy rates.
The well publicised end of the mining infrastructure boom has made WA a less attractive prospect for interstate migration. Victoria to WA for example is now net negative for the first time in years.
The most likely outcome of falling migration and increased housing stock from new building is over supply.
Taking it further, investors who find that their rental incomes are either non existent or falling, may be tempted to sell. Those who bought early may decide to cash in while the going is good and those who bought late may cash in to avoid possible losses.
In a purely owner occupier market, downturns are no big deal for the owner. If prices drop they can up size for less and if they just want to move house, there is no loss. This prevents wild market swings.
In a speculative market where investors rely on rental yields and ultimately capital gain, the game changes.
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.
"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."
I've heard it all now....
No way in hell would you have ever even contemplated rents falling to begin with.
Thanks for that Mike, i am much in agreement with this.
Massive and I were also discussing two different periods, his charts show the growth in house prices with wages (etc) several years ago, whereas my data is showing that this did not occur with the most recent wages growth for the investment boom.
The unemployment figures are unexpectedly good with WA in such a strong position compared to the rest of the States.
Here are the unemployment stats from the 90s (ABS). WA is in a much stronger position today.
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.
Massive and I were also discussing two different periods, his charts show the growth in house prices with wages (etc) several years ago, whereas my data is showing that this did not occur with the most recent wages growth for the investment boom.
oh dear... .i posted wages growth for the same period and showed the correlation for house prices .... you just posted a graph on investment for the same period ... they arent the same thing....
there was not significant wage growth in recent years relative to the period up to 2007 .... and when it did spike towards end of 2012/2013 , those charts show house price growth followed..
skamy
7 Aug 2014, 02:22 PM
Here are the unemployment stats from the 90s (ABS). WA is in a much stronger position today.
again i am not disputing this...
im disputing your calls for people to buy perth property ASAP as house prices are about to rise into another boom period ... you have yet to say how ... im not convinced that a redundant young miner earning 150k starting up a 70k job as a labourer has the same purchasing power to support buying houses as his predecssors did a few years ago.
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..
...........
the economy shouldnt fall apart, but i personally skeptical of claims of notable gains in property prices coming in next few years.
Prices do not always just depend on wages, because sometimes there are different salary groups competing for the homes. The key is the population growth.
There are many cities with huge price to incomes eg London and Paris etc, this is because the people buying homes are in the top income brackets in these cities. The people on lower incomes got priced out further and further from the city. This happens here too.
My reasons for being positive about Perth is that the FHB market has been strong but the upgraders market has yet to respond significantly. Prices are not fully back to 2007 levels, in my experience these falls never last, and at some stage places like City Beach and other top suburbs will rise again.
As discussed by others on this thread Perth is still very affordable for FHB compared to Melbourne or Sydney. There is hesitancy in the market compared to Melbourne and Sydney yet Perth fundamentals such as income, jobs, population growth etc.
I do not think there will be any more significant house price drops , I think that period has just passed and I believe the market will grow from here.
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.
and yet you still cant say where the money will come from ....
who will buy the houses in Perth at higher prices in the next few years ? do you believe tradies working in the coming construction boom will be able to afford the same prices as those who were working on the mines before them?
all that spiel mike makes about more accesible FHB homes with lower rents etc doesnt change the fact that its having negative impact on the price growth rate.. growth rate has stalled for the whole year so far .. and with more and more of these accessible price points being made ( to support people on lower incomes ) how does that support a basis for rising prices?
the top end is reportedly seeing less activity already, and FHB buyers are moving into lower priced homes... new workers are taking on lower paying jobs in construction industries.. how does this make prices go up ?
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