Rents and prices dropping with interest rates at record lows.
Jobs collapsing.
Wages collapsing.
Vacancy rates soaring.
Building soaring.
I will tell you how it goes from here.
Jobs losses will continue, not only in the mining sector or the sectors that were supported by mining, but other general jobs that are being taken by cheap foreign labour and modern technology.
From here we still have all this building being completed, not only will the jobs and money dissapear, but people will stop flowing into perth, not only will they stop flowing into Perth, they will start leaving Perth.
The amount of property being built will send rental vacancy rates to the moon, rental prices will start coming down hard and fast as landlords scramble to find a Tennant and undercut one another to do so.
The dimishining rental returns will force many landlords to sell up as not only were their rental expectations not been met, they have not even held up and are collapsing.
The amount of property on the market will increase as rents continue declining, there will be no greater fools left trying to buy now before they are priced outforever as the sheep relize the truth. And prices will crash.
I think there was a Global Financial Crisis at the time and a lot of folk thought that they would put off buying a house, that reduced demand for housing therefore prices fell.
But the GFC is in fact over now.
Right, so the GFC which had an extremely short lived negative effect on WA before the Chinese stimulus package put a rocket under the local economy was enough to damage sentiment.
But
The fact that the fundamentals are now all turning negative for WA will have no effect on sentiment?
You're dreaming.
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
what error ?? mining constuction workers are part of the mining component of salaries.... those construction workers were employed in the mining industry at the time - building the freaking mines... its the sector about to shed around 70,000+ high paid jobs... mostly mining construction.. fair to say a number of the tradies from the mines will go back to the construction industry on construction industry salaries. why not actually read the facts rather than mine for meanings you want to see ? amazing .. no wonder your rose coloured glasses are so thick .. you simply dont understand any of it ...
Division B Mining Subdivision 06 Coal Mining Group 060 Coal Mining Class 0600 Coal Mining Subdivision 07 Oil and Gas Extraction Group 070 Oil and Gas Extraction Class 0700 Oil and Gas Extraction Subdivision 08 Metal Ore Mining Group 080 Metal Ore Mining Class 0801 Iron Ore Mining Class 0802 Bauxite Mining Class 0803 Copper Ore Mining Class 0804 Gold Ore Mining Class 0805 Mineral Sand Mining Class 0806 Nickel Ore Mining Class 0807 Silver-Lead-Zinc Ore Mining Class 0809 Other Metal Ore Mining Subdivision 09 Non-Metallic Mineral Mining and Quarrying Group 091 Construction Material Mining Class 0911 Gravel and Sand Quarrying Class 0919 Other Construction Material Mining Group 099 Other Non-Metallic Mineral Mining and Quarrying Class 0990 Other Non-Metallic Mineral Mining and Quarrying Subdivision 10 Exploration and Other Mining Support Services Group 101 Exploration Class 1011 Petroleum Exploration Class 1012 Mineral Exploration Group 109 Other Mining Support Services Class 1090 Other Mining Support Services
Construction Division E Construction Subdivision 30 Building Construction Group 301 Residential Building Construction Class 3011 House Construction Class 3019 Other Residential Building Construction Group 302 Non-Residential Building Construction Class 3020 Non-Residential Building Construction Subdivision 31 Heavy and Civil Engineering Construction Group 310 Heavy and Civil Engineering Construction Class 3101 Road and Bridge Construction Class 3109 Other Heavy and Civil Engineering Construction Subdivision 32 Construction Services Group 321 Land Development and Site Preparation Services Class 3211 Land Development and Subdivision Class 3212 Site Preparation Services Group 322 Building Structure Services Class 3221 Concreting Services Class 3222 Bricklaying Services Class 3223 Roofing Services Class 3224 Structural Steel Erection Services Group 323 Building Installation Services Class 3231 Plumbing Services Class 3232 Electrical Services Class 3233 Air Conditioning and Heating Services Class 3234 Fire and Security Alarm Installation Services Class 3239 Other Building Installation Services Group 324 Building Completion Services Class 3241 Plastering and Ceiling Services Class 3242 Carpentry Services Class 3243 Tiling and Carpeting Services Class 3244 Painting and Decorating Services Class 3245 Glazing Services Group 329 Other Construction Services Class 3291 Landscape Construction Services Class 3292 Hire of Construction Machinery with Operator Class 3299 Other Construction Services n.e.c.
Veritas
22 Aug 2014, 12:29 PM
Right, so the GFC which had an extremely short lived negative effect on WA before the Chinese stimulus package put a rocket under the local economy was enough to damage sentiment.
But
The fact that the fundamentals are now all turning negative for WA will have no effect on sentiment?
You're dreaming.
Veritas you know the GFC had a big effect on Perth for many years, everyone was nervous and cut back on spending and refrained from buying and selling homes. It only started to recover in 2012, and then only slowly. Jimbo will show you a home that is 40% discounted from 2007.
Tell me which fundamentals have gone negative, wages are growing, population is growing, unemployment is stable at exceptionally low levels, and jobs are growing. Some of our major industries with head quarters in Perth eg Woodside, BHP and Fortescue are doing very well indeed.
You only see negatives as you believe the rubbish spouted on Macrobusiness and they are selling you a product.
You will say rents have dropped and vacancies have risen, but this is coming off huge rent increases, a 9 % drop after a 14% hike is not a bad fundamental any which way you look at it. Same with vacancy rates, they are still not numbers that would deter property investment they are coming off figures which had every caravan park within miles was fully booked out.
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.
OK skamy.. you do realise this is worse for averages then ... with mining construction workers earning mining salaries pushing up the averages of construction workers of the city, when those jobs clear out, the construction industry averages will come down as well. The guys working in construction on the mines sure arent averaging less than $2000 a week right now.
All this means is the disparity in income for a construction worker leaving the mines to come back to the city will be even greater than the current averages indicate... increasing the downward pressure on salaries..
my opinion at the moment is that house prices and wages in perth in real terms are likely to stagnate or decline in real terms for a few more years, and why im not in a rush to purchase perth residential property.... IMO there are other more enticing investment options in Western Australia outside of resi ...
I am sure that you are correct here, there are plenty of markets with great growth potential and nervousness about the change over from an investment boom to a export market with recovering home construction does dampen Perth no doubt about it.
What the purpose of my thread here was to show how unlikely WA and Perth is to suffer a housing market crash, it was in response to a thread hip hip hooraying a prediction of a housing crash here.
I doubt that big houses in places like Nedlands, Dalkeith, Mindarie, Yanchep, Mandurah will fall much lower, and some day they will return to 2007 prices no doubt about it.
If my ultimate dream was a home in Dalkeith (it is not) and I could afford it now I would buy, but that is because I am cautious and have not got experience in other investment types. I would not worry too much about missing out on a further drop, I would worry more about getting priced out. I can always ride out a downturn but I cannot price myself back into the market would be my logic. This is based on my experience only. I do know that there are people who move money around from property to shares etc and do very well, but that would give me a heart attack. Doing my little subdivide was enough stress for me for a long time.
If home buyers wanted to buy in places like Craigie, Greenwood, Dianella, Duncraig, Padbury, Heathridge, etc etc then they have missed the bottom completely, that is just a fact, these markets are close to boom conditions with multiple offers and quick sales and falling good quality well priced stock.
Massive
22 Aug 2014, 01:12 PM
OK skamy.. you do realise this is worse for averages then ... with mining construction workers earning mining salaries pushing up the averages of construction workers of the city, when those jobs clear out, the construction industry averages will come down as well. The guys working in construction on the mines sure arent averaging less than $2000 a week right now.
All this means is the disparity in income for a construction worker leaving the mines to come back to the city will be even greater than the current averages indicate... increasing the downward pressure on salaries..
No Massive, when the abs collected wages from John Holland workers on Gorgon they would be classified as construction workers and their wages would be in the average construction wage. A drop in the construction median wage is likely to be much smaller than a loss of huge numbers at the mining wages.
Mining construction is not huge relative to total construction eg hospitals, schools, roads, homes etc etc. a drop in wages will result in a few % drop in the construction wage.
To get your predicted big drops on wages you have to make another heap of assumptions. One that you have made is that mining operational wages will drop. This is a big call as many of these workers have expertise that will become more and more sought after as new mines open up, why on earth would their wages drop? they may in fact rise.
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.
No Massive, when the abs collected wages from John Holland workers on Gorgon they would be classified as construction workers and their wages would be in the average construction wage. A drop in the construction median wage is likely to be much smaller than a loss of huge numbers at the mining wages.
and you do realise those construction workers ARE earning $3000+ per week, right? far higher than the city average ... pushing up that median of construction salaries..
Thousands of low-skilled construction workers on the massive Gorgon LNG project will each earn about $150,000 a year under a deal which will set a new WA wages benchmark.
when those jobs go, only the lower paid ones in the city remain - what happens to the average ? it would mean that median in the ABS chart ive posted a few pages backs is actually inflated because of mining construction salaries.
Veritas you know the GFC had a big effect on Perth for many years, everyone was nervous and cut back on spending and refrained from buying and selling homes. It only started to recover in 2012, and then only slowly. Jimbo will show you a home that is 40% discounted from 2007.
Tell me which fundamentals have gone negative, wages are growing, population is growing, unemployment is stable at exceptionally low levels, and jobs are growing. Some of our major industries with head quarters in Perth eg Woodside, BHP and Fortescue are doing very well indeed.
The GFC had very little impact on Perth. Things slowed down for short while but we were in exactly the right place to profit from Chinese stimulus.
My point about the 40% drop in one house price, is that it illustrates the level of irrational expectations of many sellers. I pointed out to the agent of a very pokey 3x1 priced at 389k, that for 210k more I could buy a house closer to the beach, on double the block with a pool chucked in for good measure. I believe the 3x1 is way overpriced for what it is and should be closer to 289k. It has been on the market for six weeks now with one reduction and no offers.
Population is growing, but what about the drop in 457 applications for WA? Minus 43% is a big drop by any standards.
I don't know the numbers for permanent applications yet, but I doubt they will be higher than last year if 457s are down 43%.
So less people are coming to WA. Migration from Victoria to WA has gone net negative.
Wages will fall across the board as the feed in from the big miners starts to drop.
The lowest site rate I have heard of for a construction worker in the Pilbara is $40 an hour and he was a labourer working for a subby concreter.
Most will be on $60 (at least) an hour. You don't get that sort of money building houses in Perth. With less big money washing around, who will buy the $13 pints and $5.50 coffees? Beer will get cheaper, eating out will get cheaper and the people who serve this stuff will get paid less.
BHP, Woodside and FMG are doing well. They have finished building the shop and now they are selling their wares. Their shareholders will be happy. That does nothing for the rest of us though and the drop in IO price is going to leave a big hole in the state budget.
Meanwhile we are building houses for people who decided to buy a year ago and when they are finished, they will move out of their rentals into their shiny new houses in Baldivis on 350m2 blocks and leave behind a vacuum with fewer newcomers to fill.
My money is in the bank and that is where it is staying for a good while yet.
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.
Rents and prices dropping with interest rates at record lows.
Jobs collapsing.
Wages collapsing.
Vacancy rates soaring.
Building soaring.
I will tell you how it goes from here.
Jobs losses will continue, not only in the mining sector or the sectors that were supported by mining, but other general jobs that are being taken by cheap foreign labour and modern technology.
From here we still have all this building being completed, not only will the jobs and money dissapear, but people will stop flowing into perth, not only will they stop flowing into Perth, they will start leaving Perth.
The amount of property being built will send rental vacancy rates to the moon, rental prices will start coming down hard and fast as landlords scramble to find a Tennant and undercut one another to do so.
The dimishining rental returns will force many landlords to sell up as not only were their rental expectations not been met, they have not even held up and are collapsing.
The amount of property on the market will increase as rents continue declining, there will be no greater fools left trying to buy now before they are priced outforever as the sheep relize the truth. And prices will crash.
Mate this is just nonsense none of it is happening except in your miserable dreams House prices are rising sales were up on last years record winter sales. Jobs are growing Wages are rising and last news was a drop in vacancy rates
Maybe you don't live in Perth I think, and you are believing the usual rubbish from the East Coast newspapers who think Perth is Karratha.
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.
What the purpose of my thread here was to show how unlikely WA and Perth is to suffer a housing market crash, it was in response to a thread hip hip hooraying a prediction of a housing crash here.
I doubt that big houses in places like Nedlands, Dalkeith, Mindarie, Yanchep, Mandurah will fall much lower, and some day they will return to 2007 prices no doubt about it.
But at the same time, its not unwarranted to approach with a bit of caution..
with salaries the highest they have been in global terms, interest rates at record lows, population growth at record highs and house price ratio up at near record highs how much REAL capital growth do you think anyone purchasing a house in WA could expect to achieve moving forward? Especially now most of these aforementioned indicators are starting to turn ?
id argue from an investment point of view there is far more risk buying now than waiting out... there are other areas of WA economy and property outside of resi that have been given far less attention in recent years with much better growth potential, IMO.
Most will be on $60 (at least) an hour. You don't get that sort of money building houses in Perth. With less big money washing around, who will buy the $13 pints and $5.50 coffees? Beer will get cheaper, eating out will get cheaper and the people who serve this stuff will get paid less.
Who knows, but a coffee in Beijing is $6 and the average income and barista wages are much lower. Never underestimate the power of the populace to spend.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
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