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Why there will be no crash in Perth; Perth bears have their fantasy smashed
Topic Started: 21 Aug 2014, 02:38 AM (43,324 Views)
Jimbo
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Moneyonmymind
22 Aug 2014, 12:10 AM
Bought in '13 and and ya can't lose I'm only paying a fraction more than rent, in a much nicer house and no more rent inspections etc. As an added bonus it'll be mine outright within ~15 years. Any inevitable price gains will be a bonus.
Funny that, I could buy your house twice with cash and still have a bit to spare. I am not bearish on Perth property because I am poor and missed out. I have made an absolute packet out of property over the years. I am bearish on Perth property because I believe that it is going down. No other reason.
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.
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Ned Flanders
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skamy
21 Aug 2014, 03:37 PM
In your dreams Perthite, in your dreams. Look at the State forecasts for growth etc.

You have been sold a lemon by dodgy gloomy websites who make money out of people by selling them a cheap house fantasy.

There will be no austerity imposed on WA, that is just a nonsense with the amount of wealth in this state.
Comedy gold!

:tu:
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" ... which is that all-too-familiar dynamic in Irish life where people tell lies, cover them up and create all sorts of collateral damage, sometimes spread out over decades, and never take responsibility."
- Alan Glynn
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SittingOnDeFence
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skamy
21 Aug 2014, 05:05 PM
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Can you point out where in the graph Perth was at record lows (like you say)
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Foxy
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Zero is coming...

SittingOnDeFence
22 Aug 2014, 01:00 AM
Can you point out where in the graph Perth was at record lows (like you say)
Would you people please use half of the brain god gave you.

Correct this chart for inflation. PLEASE. :mad:

Peter
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Massive
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Mustapha Mond
22 Aug 2014, 01:28 AM
Would you people please use half of the brain god gave you.

Correct this chart for inflation. PLEASE. :mad:

Peter
here we go

Posted Image

Quote:
 
All of Australia’s capital cities have experienced a boom in real housing prices beginning in the latter half of the 1990s. At the top of the table are Melbourne and Perth; although Perth’s boom was 2 per cent greater than Melbourne’s, quality adjustments would deflate the index, resulting in Melbourne as the top performer.

http://www.propertyobserver.com.au/forward-planning/investment-strategy/market-trends/22658-ytc-monday-may-13-feature-soos.html?limitstart=0
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SittingOnDeFence
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Mustapha Mond
22 Aug 2014, 01:28 AM
Would you people please use half of the brain god gave you.

Correct this chart for inflation. PLEASE. :mad:

Peter
Blame REIWA!
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skamy
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Jimbo
21 Aug 2014, 09:43 PM
OK, a quick case study. My parents sold a house in Melville in 1975 for $18,500. It was on a 1000m2 block.

It now has a property at the rear and both combined would be in the region of around 1.2 million (A standalone property in the same area would cost at least a million anyway). Deduct a generous 200k for the rear build (was built over 10 years ago) and you have a growth rate of 54 times the 1975 price.

Yet the Perth median price has increased by only 27 times in that same time frame. (very neat how the the numbers work out to be half, but that is just coincidence).

The median price growth for Perth may not look that severe when you look at the REIWA chart, but it has been watered down by building further out, on smaller blocks, and by subdivision. On a like for like basis, since 1974 Perth property has outperformed even bubbly London (at 42 times for a like for like).

I am not so sure either about WA having sticky down wages. If you are a tradie working on contracts, you take whatever you can get. The wages blip during the GFC was caused by some projects being iced for six months or so but the crazy hikes upwards were caused by all the big players trying to get their sites up and running at the same time. That was a perfect storm that we probably won't see again.




What I meant is that average wages tend to be sticky as are average house prices. You and I know that there are some heavily discounted properties in Perth but you would not see that in the median house price statistics.

Mining is not that big an employer, it represents about 5% of jobs in WA. Most people in Perth work in typical big city jobs on typical big city wages eg retail, health, social services, education, home construction etc. Most homes in Perth are bought by these workers.

http://profile.id.com.au/perth/industries?BMID=40&WebID=160

No-one buys a house on a FIFO wage expecting it to last, apart from anything else the banks are reluctant to factor in uplifts Maybe there is an idiot someplace trying this out, but the majority of FIFO are paying down existing mortgages obtained on pre FIFO wages.

What I am saying is that it is a big call to predict falling average wages, it happens rarely, and even if they did they may only fall a bit as even if big mining wages were halved it would have an effect of about 2% on average wages and probably no measurable effect on the median wage, as these wages would probably still not move to the lower 50% band. So I don't think it will be anything like enough to send people out selling their homes at fire-sale prices. Which is what some bears talk about.








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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Massive
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skamy
22 Aug 2014, 02:10 AM
Mining is not that big an employer, it represents about 5% of jobs in WA. Most people in Perth work in typical big city jobs on typical big city wages eg retail, health, social services, education, home construction etc. Most homes in Perth are bought by these workers.
.....
What I am saying is that it is a big call to predict falling average wages, it happens rarely, and even if they did they may only fall a bit as even if big mining wages were halved it would have an effect of about 2% on average wages and probably no measurable effect on the median wage, as these wages would probably still not move to the lower 50% band. So I don't think it will be anything like enough to send people out selling their homes at fire-sale prices. Which is what some bears talk about.







Quote:
 
Australian Bureau of Statistics (2012), Labour Force, Australia, Detailed, Quarterly, Time Series Workbook, Cat. No. 6291.0.55.003), which shows employment in mining for those states with a substantial mining workforce, it’s very clear that there’s has been a huge growth in jobs in the mining industry in WA. By early 2012, the mining sector was employing over 7% of WA’s workforce, which compares with around 3.6% in 2000

it is correct a number of these are overseas migrant workers. But they've still been pumping that cash into the economy here, renting places ( possibly buying for short term capital gains ), buying pricey beers and coffees to support our baristas,etc ( who are the highest paid in the world ), etc...
Posted Image

that money washing around will be closing out to some extent...

and regarding wages, real incomes can indeed drop in downturns ..

Chart 1: Trends in real median equivalised household income, Australia, 1981–82 to 2011–12 (1981–82 = 100)
Posted Image
- See more at: http://inside.org.au/poverty-in-a-time-of-prosperity/#sthash.YMq3A9oB.dpuf

houses wont necessarily be on fire sale, but stagnation / real loss over the remainder of this decade is not an unreasonable prediction the way things are right now.
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Foxy
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Zero is coming...

So if we take real house prices, real wage growth and interest rates into account the house prices have not "really" gone up much??

I think houses are "cheap"

Peter

And may very well get cheaper.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Massive
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Mustapha Mond
22 Aug 2014, 02:31 AM
So if we take real house prices, real wage growth and interest rates into account the house prices have not "really" gone up much??

I think houses are "cheap"

Peter

And may very well get cheaper.
houses have tracked wages, that went off like a rocket during the investment boom...

now it would appear those wage pressures will likely ease and with it real house prices... Western Australia cant remain one of the most expensive places in the world (for salaries ) when our new fallback plan behind the short term housing construction boom will be towards our other industries ....

the house/property speculation thing is almost over for this cycle. But i know you know that , and i suspect you are already ahead of me putting money in a very strategic position for the coming decade that some of these perth property and mining bulls havent seen as of yet ;)





Edited by Massive, 22 Aug 2014, 02:48 AM.
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