Stay well away from Perth and WA , wait til prices decline to near the bottom, that could still be another ten or twenty years away.
I see some bears here, sorry to pick you out count, that say things like we will see a downturn for a few years, or it will be a few years before things improve.
Tell me this count, what miracle will surface that will cure this complete fuck up of society over the last forty years through the mindless amounts of debt taken on.
How can we deal with cheap asain labour count? Will our wages match theirs in three years time ? Will theirs be $17 , will theirs rise to $8 an hour and ours come down to 8$ and hour. Yes the dollar may drop , still makes no difference when their wages are so cheap. You could cut our wages in half tommorow , and we would still be priced out of the game. If we dropped our wages in half tommorow, they would still be more than US wages.
And the other thing is, all our jobs being taken by rapid advancements in technology, computerised and automated systems.
I am over forty now, but I remember discussing the barcode on products with my dad in primary school. I also remember when in high school, he was asked to write an article about computers in the future for computer magazine I think it was. That was 25-30 years ago , anyway about the barcode, my dad said that one day they will just scan the item on a machine and the price will come up. I did not think much about it at the time, but its interesting to think about it now. If you wonder where I get my genius from Peter, its in the blood, not to mention when talking about the future.
If you think the Price of Iron Ore has a direct influence on Property prices can you explain this to me as I want to learn.
During 2004 to 2006 Perth House prices almost doubled in value over that 2 year period.
In 2004 the price of Iron Ore was $16.5 for much of the year, it slowly increased to be $33 a ton for most of 2006.
So why at these low Iron Ore prices did Perth property prices double in value during the same time?
Iron Ore prices since then have increased to almost $200 a ton, yet house prices did not double, triple or in value over the past 8 years while Iron Ore sky rocketed. There appears to be no direct connection between Iron Ore prices and property prices.
Presently Iron Ore prices are some 400% higher then when Perth house prices started to boom in 2004 and more then 200% higher then when the property market finished it boom.
Can you explain this for me so I can make informed investment decisions into the future.
If you think the Price of Iron Ore has a direct influence on Property prices can you explain this to me as I want to learn.
During 2004 to 2006 Perth House prices almost doubled in value over that 2 year period.
The thing is Mike, you have to understand that it is not one single factor that drives house prices all of the time.
It is a combination of factors and sometimes, one factor that didn't impact prices at one time, can move up the list in importance and become the main driver.
If you look at population growth, on its own it will not influence prices up or down. But the great majority of the migrants coming in between 2001 to 2007, had sold houses in a housing boom (UK) and had exchanged their pounds for dollars at between 2.50 and 3.00 and arrived in a tight supply market. They bid prices up.
Many of those migrants did not come to Australia to work on minesites. They came as brickies, plasterers and other building trades in response to a strong campaign by Australia in the UK to attract people to help address a skills shortage in construction.
There is around a two year lag between application and arrival in Australia for a skilled migrant and many who decided to come here when conditions were favourable, arrived a bit late in the game.
So, although overseas migration increased in 2008, those coming from the UK (the majority) were selling in a slow and falling UK market and exchanging pounds for dollars at 2.00 or less.
So the drivers of the WA market for a good few years pre the GFC were poor supply, immigration, the UK housing market boom and the weak dollar.
The iron ore price impact on the housing market didn't come into play until the onset of the GFC and Chinas decision to ride it out by ramping up infrastructure.
This kicked off a capex boom and effectively rescued Australia from experiencing the full impact of the GFC.
The iron ore price is not that critical to the WA housing market now. The capex boom is falling back and even if ore prices stayed at their highs, we have enough mining capacity to cope with demand for a good few years to come.
A low ore price will impact state revenues however and this may lead to a fall back in infrastructure works as the WA government balances its books.
What WA faces now, is an increasing supply of housing as we play catch up with demand and a falling immigration rate which will reduce demand.
We may attract more migrants as we ramp up housing construction, but those migrants will not be bringing the levels of cash that the 2001 to 2007 migrants were bringing in.
All of the above circumstances could play out again over time. The dollar could weaken, the ore price could rise enough to encourage mining expansion and house prices could see rapid growth again.
But that is not going to happen in the next few years.
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 thing is Mike, you have to understand that it is not one single factor that drives house prices all of the time.
It is a combination of factors and sometimes, one factor that didn't impact prices at one time, can move up the list in importance and become the main driver.
If you look at population growth, on its own it will not influence prices up or down. But the great majority of the migrants coming in between 2001 to 2007, had sold houses in a housing boom (UK) and had exchanged their pounds for dollars at between 2.50 and 3.00 and arrived in a tight supply market. They bid prices up.
Many of those migrants did not come to Australia to work on minesites. They came as brickies, plasterers and other building trades in response to a strong campaign by Australia in the UK to attract people to help address a skills shortage in construction.
There is around a two year lag between application and arrival in Australia for a skilled migrant and many who decided to come here when conditions were favourable, arrived a bit late in the game.
So, although overseas migration increased in 2008, those coming from the UK (the majority) were selling in a slow and falling UK market and exchanging pounds for dollars at 2.00 or less.
So the drivers of the WA market for a good few years pre the GFC were poor supply, immigration, the UK housing market boom and the weak dollar.
The iron ore price impact on the housing market didn't come into play until the onset of the GFC and Chinas decision to ride it out by ramping up infrastructure.
This kicked off a capex boom and effectively rescued Australia from experiencing the full impact of the GFC.
The iron ore price is not that critical to the WA housing market now. The capex boom is falling back and even if ore prices stayed at their highs, we have enough mining capacity to cope with demand for a good few years to come.
A low ore price will impact state revenues however and this may lead to a fall back in infrastructure works as the WA government balances its books.
What WA faces now, is an increasing supply of housing as we play catch up with demand and a falling immigration rate which will reduce demand.
We may attract more migrants as we ramp up housing construction, but those migrants will not be bringing the levels of cash that the 2001 to 2007 migrants were bringing in.
All of the above circumstances could play out again over time. The dollar could weaken, the ore price could rise enough to encourage mining expansion and house prices could see rapid growth again.
But that is not going to happen in the next few years.
For once a decent answer from you with no abuse at the end.
I wanted the other guy to say things like this, oh well.
A lot more factors at play then you listed but a good start.
The thing is Mike, you have to understand that it is not one single factor that drives house prices all of the time.
It is a combination of factors and sometimes, one factor that didn't impact prices at one time, can move up the list in importance and become the main driver.
If you look at population growth, on its own it will not influence prices up or down. But the great majority of the migrants coming in between 2001 to 2007, had sold houses in a housing boom (UK) and had exchanged their pounds for dollars at between 2.50 and 3.00 and arrived in a tight supply market. They bid prices up.
Many of those migrants did not come to Australia to work on minesites. They came as brickies, plasterers and other building trades in response to a strong campaign by Australia in the UK to attract people to help address a skills shortage in construction.
There is around a two year lag between application and arrival in Australia for a skilled migrant and many who decided to come here when conditions were favourable, arrived a bit late in the game.
So, although overseas migration increased in 2008, those coming from the UK (the majority) were selling in a slow and falling UK market and exchanging pounds for dollars at 2.00 or less.
So the drivers of the WA market for a good few years pre the GFC were poor supply, immigration, the UK housing market boom and the weak dollar.
The iron ore price impact on the housing market didn't come into play until the onset of the GFC and Chinas decision to ride it out by ramping up infrastructure.
This kicked off a capex boom and effectively rescued Australia from experiencing the full impact of the GFC.
The iron ore price is not that critical to the WA housing market now. The capex boom is falling back and even if ore prices stayed at their highs, we have enough mining capacity to cope with demand for a good few years to come.
A low ore price will impact state revenues however and this may lead to a fall back in infrastructure works as the WA government balances its books.
What WA faces now, is an increasing supply of housing as we play catch up with demand and a falling immigration rate which will reduce demand.
We may attract more migrants as we ramp up housing construction, but those migrants will not be bringing the levels of cash that the 2001 to 2007 migrants were bringing in.
All of the above circumstances could play out again over time. The dollar could weaken, the ore price could rise enough to encourage mining expansion and house prices could see rapid growth again.
But that is not going to happen in the next few years.
This is the mistake, Perth does not need iron ore expansions being built - it needs the mines being operational. The money is made when the ore is exported and Perth based big companies are still making a lot of profit on iron ore.
We have not seen a huge increase in property on the market we are seeing falling vacancy rates again.
Maybe your area is different but here in North Perth the housing market seems really healthy.
Perth is just emerging from a sustained contraction in residential building, growth in this sector is much more beneficial to local people than hosting mine workers. I believe that you are totally overestimating the size of the problem of moving from the construction phase of these new mines to the profitable production phase.
How can building new mines in this State ever lead to the collapse of the property market in its capital city? There will be no crash.
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.
So are you personally buying or selling right about now Skamy? (Or have you just been holding happily?)
And are you recommending your younger family members should load up on debt to get in? Right about now - As in get more debt - Recommending that buying one on leverage is OK; But buying three on maximum leverage can only be better ... Right about now ... In Perth ... ?
This is the mistake, Perth does not need iron ore expansions being built - it needs the mines being operational. The money is made when the ore is exported and Perth based big companies are still making a lot of profit on iron ore.
Operational with a reduced workforce, profits going overseas, falling ore prices and falling state revenues.
Quote:
Perth is just emerging from a sustained contraction in residential building, growth in this sector is much more beneficial to local people than hosting mine workers.
I totally agree. The residential construction boom will increase housing stock and reduce rents.
Quote:
I believe that you are totally overestimating the size of the problem of moving from the construction phase of these new mines to the profitable production phase.
I am not alone in this belief. I share it with the state and federal government and every respected economist in the country.
Quote:
How can building new mines in this State ever lead to the collapse of the property market in its capital city?
Again, I totally agree. Building new mines is very prosperous for all of us. It is when we stop building new mines that we have a problem.
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.
Again, I totally agree. Building new mines is very prosperous for all of us. It is when we stop building new mines that we have a problem.
The issue in a nutshell.
Mike
4 Sep 2014, 09:24 AM
If you think the Price of Iron Ore has a direct influence on Property prices can you explain this to me as I want to learn.
During 2004 to 2006 Perth House prices almost doubled in value over that 2 year period.
In 2004 the price of Iron Ore was $16.5 for much of the year, it slowly increased to be $33 a ton for most of 2006.
So why at these low Iron Ore prices did Perth property prices double in value during the same time?
Iron Ore prices since then have increased to almost $200 a ton, yet house prices did not double, triple or in value over the past 8 years while Iron Ore sky rocketed. There appears to be no direct connection between Iron Ore prices and property prices.
Presently Iron Ore prices are some 400% higher then when Perth house prices started to boom in 2004 and more then 200% higher then when the property market finished it boom.
Can you explain this for me so I can make informed investment decisions into the future.
I would have said that it had less to do with the price of the red dirt at the time and more to do with the trajectory of mining investment. The actual price itself as a stand-alone concept is less relevent since much of the profit belongs to foreigners anyway and governments collecting taxes and royalties from it are not currently of an expansionary mindset - as long as that remains true the proceeds will not find their way back into the domestic economy in any great amount.
The price increase you refer to begins at exactly the time the first leg of the mining boom was ramping up. Demand from the Chinese giant was surging and capacity was being expanded to meet that demand.
The biggest contribution mining makes to the economy is always and ever in the investment phase. The great construction boom and the rise of all the sattelite industries needed to service it and the virtual army of workers it requires is where most of the economic benefit to Australia is. Unless the course of events changes dramatically, the next couple of years will see a sharp reduction in the need for mining construction workforces and everything that services them and mining's contribution to the flow of spending will wane very significantly. The operational workforce will increase but that will be swamped by the size of the fall of the construction-related workforce - here at Gladstone, the LNG mega-project was employing around 10 000 at the peak and that doesn't count all of the indirectly-related ones. When it is operational it will require less than 1000 to run it.
Those are the facts and if it becomes apparent that the facts have changed, I will change my mind. Until then, I think there is very l9 likely a significant adjustment on the horizon.
So are you personally buying or selling right about now Skamy? (Or have you just been holding happily?)
And are you recommending your younger family members should load up on debt to get in? Right about now - As in get more debt - Recommending that buying one on leverage is OK; But buying three on maximum leverage can only be better ... Right about now ... In Perth ... ?
I have bought and am happily holding. I sold one of my subdivides for the asking price on the first home open just over a month ago.
My buyer also sold their home at the first home open with 3 offers, so I know that the Perth market is healthy under $800-900k.
I am of the opinion that if a person wants to own their own home they should buy as soon as it is sensible to buy, to me that is just obvious common sense. Buying an investment property is another thing, it is a lot of work and we never did this until our 50s when we were secure in our own home.
Some people can balance this and do very well, lots of younger people on here for example. But we were too nervous back then and also wanted a nicer home than we need now the kids are all grown up. Did you buy an IP recently Herbie?
In my own honest opinion I think it is a great time to buy around Perth there are still loads of places 30-40% down from peak particularly high end property and nearby coastal areas such as Yanchep etc. I just cannot see them getting lower and prices will always return in a big city like Perth
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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