That's pretty much how I see it. The only saving grace is the dollar has room to fall.
Just looking at the March quarter ABS population figures and they reveal an interesting trend for WA. From June 2011 to March 2013, net migration to WA made up over 20% of total Australian migration growth.
However, since then the proportion has dropped consistently each quarter and now sits at 13.38%.
Looking back long term, this percentage fits in with the longer term average of around 14%.
The extra interest in migrating to WA from June 2011 to March 2013 fits in nicely with the mining and O&G capex boom.
With applications for 457's down 43% in the first half of this year (to June 30th), this trend looks set to continue.
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.
From what I can see it is fairly certain that there will be a softening / correction in the market - especially when the approved buildings come into the market next year and early 2016.
I don't think there will be a crash, however it may be a long grilling 24 months before the market bottoms out after the peak.
Those who have bought in late 2007 would have paid interest for two years for no capital growth.
Then those who have bought in 2010 would have paid interest for two years for no capital growth.
Maybe those who have bought this year would be paying interest for the next two years for no capital growth.
Being a first gen migrant, I don't see how the Perth market will crash. It will soften from time to time no doubt, but not crash. Simple reason being that migrants like us had to pay heaps more for a home in our country (relative to our income). Not only that, vehicles, education, food etc all cost more relative to the income over there. Life's much tougher over there.
Trust me, life is very affordable here. Talking to ALL my friends who are first gen migrants, we come to a clear conclusion that we no longer need to work as hard as we used to, the missus can now stay home, vehicles are cheap and can be paid with cash (a $25k car here would cost over $100k over there), there's no need to save up a couple of hundred grand to send our kids overseas for better education, and now we can comfortably pay for a home mortgage plus an IP.
For some friends who have came over and decided to work as hard as they used to, good on them, they are now doing very very well.
The government will continue to take migrants to improve productivity and spur growth. As long as there is a big gap in living standards between here and where the migrants come from, they will continue to support property prices. To them, life is much easier, not harder.
I can fully understand how the locals would definitely feel a fall in affordability and living standards. It is the same as for my kids who grow up here - I continue to tell them that this is a free market. Like it or not, people movement around the globe will not cease, migrants will keep coming in. If you are not competitive, life will be tough for you.
Just looking at the March quarter ABS population figures and they reveal an interesting trend for WA. From June 2011 to March 2013, net migration to WA made up over 20% of total Australian migration growth.
However, since then the proportion has dropped consistently each quarter and now sits at 13.38%.
Looking back long term, this percentage fits in with the longer term average of around 14%.
The extra interest in migrating to WA from June 2011 to March 2013 fits in nicely with the mining and O&G capex boom.
With applications for 457's down 43% in the first half of this year (to June 30th), this trend looks set to continue.
Correlates with the rental shortage and dead cat bounce of 2012. Without that, the pressure is off.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
From what I can see it is fairly certain that there will be a softening / correction in the market - especially when the approved buildings come into the market next year and early 2016.
I don't think there will be a crash, however it may be a long grilling 24 months before the market bottoms out after the peak.
Those who have bought in late 2007 would have paid interest for two years for no capital growth.
Then those who have bought in 2010 would have paid interest for two years for no capital growth.
Maybe those who have bought this year would be paying interest for the next two years for no capital growth.
Being a first gen migrant, I don't see how the Perth market will crash. It will soften from time to time no doubt, but not crash. Simple reason being that migrants like us had to pay heaps more for a home in our country (relative to our income). Not only that, vehicles, education, food etc all cost more relative to the income over there. Life's much tougher over there.
Trust me, life is very affordable here. Talking to ALL my friends who are first gen migrants, we come to a clear conclusion that we no longer need to work as hard as we used to, the missus can now stay home, vehicles are cheap and can be paid with cash (a $25k car here would cost over $100k over there), there's no need to save up a couple of hundred grand to send our kids overseas for better education, and now we can comfortably pay for a home mortgage plus an IP.
For some friends who have came over and decided to work as hard as they used to, good on them, they are now doing very very well.
The government will continue to take migrants to improve productivity and spur growth. As long as there is a big gap in living standards between here and where the migrants come from, they will continue to support property prices. To them, life is much easier, not harder.
I can fully understand how the locals would definitely feel a fall in affordability and living standards. It is the same as for my kids who grow up here - I continue to tell them that this is a free market. Like it or not, people movement around the globe will not cease, migrants will keep coming in. If you are not competitive, life will be tough for you.
The whole point of the expression : "thinking the grass is greener on the other side" is that it isn't.
Its the same colour.
Yeah I'm well aware of that expression but sadly you don't get my point at all..
People have differing experiences in investing, also what's an actual negative can be a positive for some.
Grass is green yes, but theres different shades of greenbut it depends how realistic you are prepared to get success.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$ It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do. Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
From what I can see it is fairly certain that there will be a softening / correction in the market - especially when the approved buildings come into the market next year and early 2016.
I don't think there will be a crash, however it may be a long grilling 24 months before the market bottoms out after the peak.
Those who have bought in late 2007 would have paid interest for two years for no capital growth.
Then those who have bought in 2010 would have paid interest for two years for no capital growth.
Maybe those who have bought this year would be paying interest for the next two years for no capital growth.
Being a first gen migrant, I don't see how the Perth market will crash. It will soften from time to time no doubt, but not crash. Simple reason being that migrants like us had to pay heaps more for a home in our country (relative to our income). Not only that, vehicles, education, food etc all cost more relative to the income over there. Life's much tougher over there.
Trust me, life is very affordable here. Talking to ALL my friends who are first gen migrants, we come to a clear conclusion that we no longer need to work as hard as we used to, the missus can now stay home, vehicles are cheap and can be paid with cash (a $25k car here would cost over $100k over there), there's no need to save up a couple of hundred grand to send our kids overseas for better education, and now we can comfortably pay for a home mortgage plus an IP.
For some friends who have came over and decided to work as hard as they used to, good on them, they are now doing very very well.
The government will continue to take migrants to improve productivity and spur growth. As long as there is a big gap in living standards between here and where the migrants come from, they will continue to support property prices. To them, life is much easier, not harder.
I can fully understand how the locals would definitely feel a fall in affordability and living standards. It is the same as for my kids who grow up here - I continue to tell them that this is a free market. Like it or not, people movement around the globe will not cease, migrants will keep coming in. If you are not competitive, life will be tough for you.
A post that's worthy of some idiots to consider in what you are saying. it's obvious you have stated how it simply is for your situation.
I agree 2016 will get interesting .
Another thing I wanted to add to you is I hope you have been inspired & connected by those migrants who have come here previously in the last 20-40+ years ago who have established some reputable biznesses. Don't forget, there's first generation born Aussies that understand the reality of close family values & know about striving achievement to improve one self & their families.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$ It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do. Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
An engineering graduate should expect to get around RM1800-2500/month or aud$600-$800/month. My wife is an accountant, she was getting RM900/month as a fresh grad. I'm an engineer, I was getting RM4500 ~AUD$1500/month before coming here, with 10 years experience.
The most common suburban house would be a terrace house (both left and right of the house would be connected to the neighbours'). Land size is approximately 200sqm. Building size is around 120sqm, 3x1. Front of the house is fully occupied with car port. Minimal backyard. Below is a photo of a typical terrace house you can find in any suburb over there.
Expect to pay RM550k for something like this. ~aud$183k. Cost per sqm of plot is now $915/sqm.
A typical plot in Perth, 680sqm, $550k.= $808/sqm Average income - $75k/year = $6250/month.
A typical car - Toyota corolla. RM120k (aud$40k) from toyota. You can check this on toyota malaysia website.
Food is typically RM8 per meal.
Also, blue collar jobs are tough in Malaysia due to the large number of cheap labour we get from Bangladesh, Indonesia, Myanmar, China etc. So if you are in the trades, say a construction worker, even RM2000 a month (aud$666) is considered fortunate.
Imagine as a uni graduate, you make RM4500 a month with 10 years experience. A meal costs RM8 A car costs RM120k. A house (very small house) costs RM550k. Education for kid, imagine saving up for your kids to go overseas for a degree due to poor quality education and limited opportunity in Malaysia. My parents spent RM500k for my education in Australia.
Now, put yourself in our shoes. Imagine making $4.5k a month in aus. Spending $120k on a typical corolla (you could buy a Beemer or Porsche in aus with this amount of $$!) Paying $550k for a 200sqm suburban terrace house, worse than a duplex. Saving $500k for your kid's education.
Malaysians form one of the top 5 migrant groups in Perth. Do you think they think houses are expensive in Perth? You tell me.
Did get the link posted right. here you go. a typical suburban house in Malaysia.
I'm looking at the results of the ICAC in NSW, we might not be a third world country, but we're corrupt with the best of them.
Nigeria is unstable because the multinationals have the power to change their laws, much like the way the mining companies got the Labor government to back down from its resources tax. Hoodwinking the population into thinking it would go badly for them. But the resources are here, they can't move them, they have to either play our game, or we play theirs, I would rather they played ours, but sure, if you want to roll over and let them take, then be my guest, but don't complain if in 30 years, things don't turn out how you expected them to.
It is because the multinationals are there that the people often revolt. I would too if my government was in collusion with large multinationals, to essentially steal the wealth beneath my feet, while I lived on less than $1 a day. If the fabulous wealth that Nigeria has was actually shared with the population, I can't see any reason why there would need to be thieves (beyond the relatively normal first world level of thievery) in the first place.
Both, we won't get the projected income, because the projected income is based on peak prices, not actual prices. And the government is corrupt, of course it is.
What? How is that any different to what we are currently doing... Shipping raw iron ore off to be smelted in China, while buying said steel back from the Chinese.
Possibly, it depends on how well the government and the companies involved keep the people of Australia asleep.
And that's the problem, they've been built, or are nearing completion, the money in the way we deal with our resources is in the construction phase, the production phase is all about profits for the company and its shareholders, we only get a tiny portion of that in our state and national coffers.
The bears are watching the bulls standing on the tracks, saying come off, there is a train coming, and the bulls are standing there with a dumb look on their faces, saying that it's business as usual, there is no train coming, and if it is, it's slow and stately, and we'll all see it coming, but none of the bulls could even conceive of iron ore being less than $100 a ton, but look at it today, less than $80 a ton.
I am actually in agreement with most of this post. We are all human and subject to similar failings and we see corruption here just like all other places. However we do have some checks and balances. I also agree that we have too much outside interference (particularly due to the wealth of resources here). Global companies are too involved in the government of this country and are especially interfering in WA as they bully when they don't get their way easily eg ratings, negative press etc etc when government decisions don't go their way. However this is nowhere near the situation in Nigeria. We don't murder whole towns of people to sell resources to global companies.
Things could be better for sure and we do live in a world with global companies acting outside any kind of government structure and hopefully this an issue for your generation will grasp hold of and tackle. My youngest daughter shares many of your viewpoints and she keeps me up to date on many of the big issues. I am very grateful to have her as she is up to date and very concerned about social justice.
Where I come from in debates here is that we do live in a flawed world and there is a game played where people are led to believe that all the evils in the world will soon collapse and they will benefit. The truth is that we do progress (believe it or not). The world is a better place today than the world my parents grew up in. Millions of people have been lifted out of poverty especially in the East.
The truth also is that in growing population centres people will compete for homes. Nothing will stop that outside war and extreme black swan events. As soon as the event is over it will return to business as usual, look at the US and Ireland for recent examples.
Now back to WA and the huge volumes of LNG about to be released into our economy. The construction workers are finding other work in the economy due to the recovery. New long term highly paid mining jobs have been created and a massive new income stream for the government and for the local economy. Even before Saudi etc formed their own companies Chevron brought them wealth. Maybe in a few year we too can buy out some of these companies.
The point remains how on earth can bears expect a crash with that particular freight train coming down the line.
One project alone, Gorgon, is expected to add additional government revenue of about A$40 billion (in 2009 dollars) over 30 years. That is enough to fund a new children's hospital every year for 40 years.
busted
24 Sep 2014, 06:40 PM
Very interesting point, I may refer you to news of closure of oil refineries around Australia. Only half of fuel at pump would be sourced within this country by the end of this year. Yes, we are on our way to Nigeria.
There is no doubt that the Australian economy is being changed by the rise of Asia and by the stubbornly high dollar. This does not make a Nigeria. You exaggerate the negatives while ignoring the huge positives in our economy. They many export the refineries but they cannot export the mines. It does not make economic sense nor is it good for the world as a whole to try to hoard everything locally, IMHO. We import most of our oil anyway as our own oil is worth more on the global market than if it was sold for fuel at home. Should we be using high grade oil when low grades are good enough.
A low population, rich country like Australia needs to engage with the world. As the population increases we will be more able to fund local mining etc without overseas borrowing and then can be much more in control of our destiny.
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.
Now back to WA and the huge volumes of LNG about to be released into our economy. The construction workers are finding other work in the economy due to the recovery. New long term highly paid mining jobs have been created and a massive new income stream for the government and for the local economy. Even before Saudi etc formed their own companies Chevron brought them wealth. Maybe in a few year we too can buy out some of these companies.
The point remains how on earth can bears expect a crash with that particular freight train coming down the line.
One project alone, Gorgon, is expected to add additional government revenue of about A$40 billion (in 2009 dollars) over 30 years. That is enough to fund a new children's hospital every year for 40 years.
Remember the net effect on the economy though. People swapping highly paid construction jobs for less paid jobs elsewhere means less disposable income.
Going back to ratios, 5000 persons taking a very conservative 25% pay cut (in reality closer to 50% and assuming they all find alternate employment) won't be offset by 500 persons in new operations roles (which pay significantly less than construction).
Also I note you quote figures from 2009 which are completely out of touch with today's commercial realities. The current situation with Gorgon is revealed in the below SMH article published in August this year.
"US oil major Chevron is struggling to lock-in 20-year sales contracts for its Gorgon liquefied natural gas (LNG) export plant in Australia, the world's most expensive, as buyers spoiled for choice from new suppliers hold out for cheaper deals.
The high level of unsold LNG shows how the US shale gas boom has played havoc with major investments now coming to fruition in Australia, and threatens to undermine the industry's traditional sales model where projects tie up forward sales in long-term contracts."
"Spot prices slump
The vulnerability of producers is reflected in a near 50 per cent price fall for Asian spot cargoes in recent months to three-and-a-half year lows, which has taken spot LNG well below long-term oil-linked contracts and surprised many industry players."
Recall comments from my previous post regarding low cost competitors. This will have a significant dent on the $40bn government revenue figure and jeopardise any further expansion plans.
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