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The Perth Property Crash Thread; Let us enjoy the inevitable collapse as it unfolds in WA
Topic Started: 13 Aug 2014, 12:28 AM (89,580 Views)
Suckpoppet
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Recent releases from the ABS have provided early evidence that Perth housing is at the precipice.

Today’s house price release from the ABS revealed that Perth house prices declined by 0.3% in the June quarter, with annual price growth slowing sharply to just 3.6%.

Meanwhile, the June quarter CPI release, released late last month, showed Perth rental growth slowing to just 0.5% over the quarter, with annual growth falling to a below-inflation 2.9%.

Annual growth in real house prices and rents in Perth’s housing market are slowing sharply.

The forward indicators also point to ongoing weakness.

The single best short-term indicator for house prices – housing finance commitments – also slowed further over the June quarter, which given past strong correlations suggests that Perth house price growth will continue to moderate throughout the remainder of this year and into next.

Similarly, Perth rental vacancy rates are also rising fast and have recently climbed above the national average, suggesting further weak rental growth ahead.

Following the end of the mid-1970s mining boom, Perth house prices declined by nearly 30% in inflation-adjusted terms over an eight year period.

Similar falls could be on offer this time around.

Think long and hard before gearing-up to purchase Perth property as risks abound.
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Jonah
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Just a few quick impressions from someone in Perth who has been astonished by the price trends of Australian property.

1. The Perth market is fragmenting. There appears to me to be the above $800k market and the below $800k market, with the top end stagnating with long days on market and the lower end still doing well but possibly beginning to lose some steam. I don’t have figures to prove this — I would appreciate it if someone could post a breakdown of Perth sales volumes by price category — but anecdotally I can attest that there are many more for sale signs in the leafy $1 million plus suburbs than in the cheaper suburbs.

2. The rental market is now officially a buyer’s market, and becoming more so with each passing day. The REIWA reported vacancy rate (http://reiwa.com.au/home/default.aspx, bottom of the page) is 4.1%. Renters can pick and choose from among 6,015 properties. Many investors who have been happily negatively geared for years must be starting to question the wisdom of the “property ladder”, since subsidising a renter by a couple of thousand dollars a year and claiming it back from tax is a very different proposition to being out of pocket 30 or 40k on a house that stands empty for a year, while showing no capital appreciation. Commercial leasing is a disaster, rapidly descending into catastrophe, with the Perth office vacancy rate now over 12% (see http://www.theaustralian.com.au/business/cbd-vacancy-rates-highest-in-17-years/story-e6frg8zx-1226996653055 and http://www.theaustralian.com.au/business/property/office-tower-values-in-brisbane-and-perth-tipped-to-fall/story-fnko7zi0-1227015895915). Commercial vacancies are likely to climb further as the mining slowdown bites and a slew of new office blocks come on line.

3. Still, properties under $800k seem to be selling well, confidence still appears to be high, money is still virtually free to anyone who can fog a mirror, and the median Perth price has only slid 1%, to $545k.

My humble conclusions: As long as money is free and jobs appear safe, property prices in the less than $1 million price category in Perth will remain quite stable, neither increasing nor falling for the foreseeable future. However, should the end of the mining investment boom start to have a significant impact on the WA employment rate, things could turn very ugly, very quickly.
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Suckpoppet
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http://www.sqmresearch.com.au/graph_vacancy.php?region=wa%3A%3APerth&type=c&t=1

:o

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Edited by Suckpoppet, 13 Aug 2014, 12:45 AM.
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Admin
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Quote:
 
CBD office vacancies soar

Marissa Lague
The West Australian

The Property Council of Australia is tomorrow expected to release official figures showing the CBD vacancy rate has climbed close to 13 per cent.

Leasing deals in the six months since the last review of Perth's office market, when official CBD vacancy was at 9 per cent, have not been enough to offset the high level of relinquished space.

Perth's status as most expensive office market has been unravelling since the start of the resources downturn in 2012 when demand declined sharply.

Building owners had tried to maintain leasing rates by offering incentives but Justin Boelen, director of tenant advisory firm Australian Corporate Property and Projects, said rents had fallen in the past six months.

"Face rents have started to fall from $50 to $100/sqm depending on the location and quality of the space," Mr Boelen said. "Rents for quality space remains stable.

"The trend in the Eastern States markets has been for incentives to rise before rents fall, so, with pressure on rents, incentives will stay and potentially increase for some time yet."

Mr Boelen said incentives were unchanged at 20 and 30 per cent from the beginning of the year but varied according to the identity of the tenant, the location of the property and the building.

"What has changed in the last six months is the acknowledgment from agents and owners that incentives exist . . . to the point where incentives are now part of their leasing campaign."

Despite the city's higher vacancy rate, Michael Knight, Colliers International's manager for research and urban economics said there was no reason to panic.

"That the WA economy is transitioning is no surprise and least of all to the CBD office market, which has been seeing the effects of a fairly significant drop off in resource sector project activity," Mr Knight said.

"The key results for the office market have been a climbing vacancy rate and an environment of increasing incentives . . . we are beginning to see some downward pressure on net face rents.

"But it's important to note that these impacts on the Perth CBD office market, as significant as they appear right now, should be seen for what they are - a cyclical change and an expected correction in what was, in effect, an overheated market."

Read more: https://au.news.yahoo.com/thewest/a/24642170/cbd-office-vacancies-soar/
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Perthite
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So you saw it coming but your boss would not let you tell anyone?

f..k off.
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skamy
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WA will be just fine, it has an unemployment level of only 5% and is one of the wealthiest states per capita. The crash drama queens are setting themselves up for yet another big FAIL.

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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Perthite
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Just don't read the articles luv... that will help.
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newjez
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I would expect Perth to equalise with Brisbane and Adelaide over the next few years. Whether this means Perth will fall, or just stay flat while the other states rise is anyones guess. But take away Perth's highly paid mining jobs, and Adelaide and Brisbane are looking very attractive. If I was a new migrant, I know where I'd be looking.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Massive
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newjez
13 Aug 2014, 04:15 PM
I would expect Perth to equalise with Brisbane and Adelaide over the next few years. Whether this means Perth will fall, or just stay flat while the other states rise is anyones guess. But take away Perth's highly paid mining jobs, and Adelaide and Brisbane are looking very attractive. If I was a new migrant, I know where I'd be looking.
If my family wasn't in Perth, Brisbane/Gold Coast all the way - my wife is still pushing me to look into the market there actually ... Got the sunshine and the beaches, plus proximity to Sydney ( and melbourne) and Top end...

bit of a no-brainer IMO... Perth has to wait on its airport upgrade ( hopefully making it more of a hub) and some better supporting regional centers to be up there with Brisi..


Edited by Massive, 13 Aug 2014, 04:21 PM.
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Veritas
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skamy
13 Aug 2014, 03:30 PM
WA will be just fine, it has an unemployment level of only 5% and is one of the wealthiest states per capita. The crash drama queens are setting themselves up for yet another big FAIL.

Would you consider a drop in the median of between 20-30% a crash?

That's what's coming barring ZIRP.
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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