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WA population growth has crashed.; Slowest in 8 years and forecast to fall.
Topic Started: 20 Dec 2014, 12:45 PM (14,085 Views)
skamy
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Perthite
20 Dec 2014, 04:42 PM
Please explain to me how this will underpin current levels of residential construction.

:re:
The people who are building at the moment are here already, these are new people coming. These new people will be wanting to build and buy homes ON TOP of those already underway.

The way you figure things out is based on a fantasy, builders don't build on the expectation of growth, the vast majority build for a person who need the home to live in.
Spec builders are insignificant in WA, they are such a small part of the market.
Guest
20 Dec 2014, 06:54 PM
All indicators for Perth have gone from very postive to very negative over a short period of time.

There little run in the sun is over. Been and gone. The results show 5.1% rise in house prices since 2010 and falling rents.

Its only a matter of time before investors start piling out. Looking at the property on market numbers, it looks like its already begun, increasing by around 40% from the same time last year. Might be another 40% in twelve months time.

I expect interest rates will be 2% or less by early september 2015. I expect a possible rise in gst to by 1st july. It all depends on how fast the economy declines. Not a matter of if anymore, we are surely past that stage, just as matter of how far and how long. They are the only two questions we dont know the answer to now.
This is so ridiculous - why would investors pull out yields are great and interest rates are low? How can you believe this doomster cult nonsense?
Edited by skamy, 1 Jan 2015, 06:05 PM.
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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skamy
1 Jan 2015, 06:00 PM
The people who are building at the moment are here already, these are new people coming. These new people will be wanting to build and buy homes ON TOP of those already underway.

The way you figure things out is based on a fantasy, builders don't build on the expectation of growth, the vast majority build for a person who need the home to live in.
Spec builders are insignificant in WA, they are such a small part of the market.
That a load of crap.

I know someone with 6 units for sale in Kelmscott. Another 3 at 60% completion in Gossy.

All built on expectation of population growth.

They call them developers.

The guys that built the 7 years supply of multi-storey residential.

how did that happen?

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skamy
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Ned Flanders
21 Dec 2014, 10:38 AM
Much as I enjoy a good schadenfreude on Sunday morning, I guess the question is, without idio.... er ... people ... like Mike and skamy, who would have you offloaded your house to last July?

Show me a market without idiots and I will show you a market that is completely illiquid.
Miles who has lost more than you with your silly doomster cult Austrian economics that kept you out of the Sydneymarket when prces were rock bottom and you could have got a FHB grant etc etc.
Perthite
1 Jan 2015, 06:05 PM
That a load of crap.

I know someone with 6 units for sale in Kelmscott. Another 3 at 60% completion in Gossy.

All built on expectation of population growth.

They call them developers.

The guys that built the 7 years supply of multi-storey residential.

how did that happen?

In order to build units you need a large % of sales Perthite and that is just the facts - these new people arriving will buy too and people will build for them but you are living in a totally fantasy land if you think developers are taking big risks and building for huge population growth.

You seem to know nothing about the Perth residential construction market, people are still smarting from 2008 and no-one is as stupid as you make them out to be.
Edited by skamy, 1 Jan 2015, 06:15 PM.
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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skamy
1 Jan 2015, 06:10 PM
Miles who has lost more than you with your silly doomster cult Austrian economics that kept you out of the Sydneymarket when prces were rock bottom and you could have got a FHB grant etc etc.

In order to build units you need a large % of sales Perthite and that is just the facts - these new people arriving will buy too and people will build for them but you are living in a totally fantasy land if you think developers are taking big risks and building for huge population growth.

You seem to know nothing about the Perth residential construction market, people are still smarting from 2008 and no-one is as stupid as you make them out to be.
"The boom we had was simply not normal but there were too many who thought it was," Mr Nicolaou said.

They would not have even considered it a risk.

https://au.news.yahoo.com/thewest/a/25885176/wa-looks-to-beyond-the-boom/

Then they overbuilt. It has happened and you need to get over it.

Time will tell if the rest of residential construction is in the same boat.
Edited by Perthite, 1 Jan 2015, 07:16 PM.
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Jimbo
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skamy
1 Jan 2015, 06:00 PM
The people who are building at the moment are here already, these are new people coming. These new people will be wanting to build and buy homes ON TOP of those already underway.

Maybe true in the past, but Perth has been building a hell of a lot of units and apartments and though some may have been sold off plan, once completed, someone will be moving into them.

Either the off plan sales were for investors wishing to rent them out, FTB's looking for their first home or movers. Whatever way you look at it, every completed unit or apartment equals another property on the supply side. It doesn't matter if the future owner is already here. They will be vacating something else when they move in.

Every developer will try and gauge future demand before building and all expectations were for WA to continue adding over 70,000 people a year. Investment buyers would have made the same considerations.

There are over 7000 rental properties listed for Perth metro at the moment and I am not aware of any migrant tent cities. It follows that supply has already met demand when it comes to housing migrants. They may well go on to buy, but they will leave an empty rental behind them.
Edited by Jimbo, 2 Jan 2015, 12:06 AM.
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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skamy
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Jimbo
1 Jan 2015, 09:23 PM
Maybe true in the past, but Perth has been building a hell of a lot of units and apartments and though some may have been sold off plan, once completed, someone will be moving into them.

Either the off plan sales were for investors wishing to rent them out, FTB's looking for their first home or movers. Whatever way you look at it, every completed unit or apartment equals another property on the supply side. It doesn't matter if the future owner is already here. They will be vacating something else when they move in.

Every developer will try and gauge future demand before building and all expectations were for WA to continue adding over 70,000 people a year. Investment buyers would have made the same considerations.

There are over 7000 rental properties listed for Perth metro at the moment and I am not aware of any migrant tent cities. It follows that supply has already met demand when it comes to housing migrants. They may well go on to buy, but they will leave an empty rental behind them.
There are 6200 properties listed not over 7000.

http://reiwa.com.au/

You think people are stupid and did not know that there was a temporary explosion of people in Perth during the investment boom. You think developers throw away money building units they don't think they can rent. NOBODY built for the investment boom people surge that is a silly assumption, developers were burned in 2008 they are still very very risk averse.
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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Jimbo
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skamy
2 Jan 2015, 02:10 AM
There are 6200 properties listed not over 7000.

That depends on where you get your numbers from, but OK, assume there are 6200. That is up nearly 40% on a year ago.

Quote:
 
You think people are stupid and did not know that there was a temporary explosion of people in Perth during the investment boom. You think developers throw away money building units they don't think they can rent. NOBODY built for the investment boom people surge that is a silly assumption, developers were burned in 2008 they are still very very risk averse.


I don't think anyone was stupid. Official projections were for a 70k + increase in population this year.

Only a few months ago you were saying that immigration wasn't falling but now that it clearly is falling, it suddenly doesn't matter?

Earlier in the year, REIWA and the state government were spruiking that a residential construction boom would give us a nice smooth transition in the local economy. All this on the back of a supposed 70,000 people a year coming to the state. That isn't going to happen now. 45,000 maximum by the looks of things. Apartment and unit building is speculative in any market. Developers obtain finance based on the likelihood of the development turning a profit. A year ago, official projections were for 70k population growth and an ongoing boom in mining and Oil and Gas infrastructure projects.

Now we have a big drop in immigration numbers, massive falls in resources prices and the market these properties will be sold into is not the market they were built for.



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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Mike
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Jimbo
2 Jan 2015, 03:33 AM
That depends on where you get your numbers from, but OK, assume there are 6200. That is up nearly 40% on a year ago.




I don't think anyone was stupid. Official projections were for a 70k + increase in population this year.

Only a few months ago you were saying that immigration wasn't falling but now that it clearly is falling, it suddenly doesn't matter?

Earlier in the year, REIWA and the state government were spruiking that a residential construction boom would give us a nice smooth transition in the local economy. All this on the back of a supposed 70,000 people a year coming to the state. That isn't going to happen now. 45,000 maximum by the looks of things. Apartment and unit building is speculative in any market. Developers obtain finance based on the likelihood of the development turning a profit. A year ago, official projections were for 70k population growth and an ongoing boom in mining and Oil and Gas infrastructure projects.

Now we have a big drop in immigration numbers, massive falls in resources prices and the market these properties will be sold into is not the market they were built for.



Please provide a link to official government projections which base the population growth assumptions on 70,000+ people arriving in WA over 2014 or 2015.

Please provide some evidence that developers have been building for a population growth of 70,000+ people per year.

You make a lot of statements, start supporting those statements with some actually facts rather then you're misinformed opinion.

In December 1993 WA approved 2,551 houses/units to build.

http://www.abs.gov.au/AUSSTATS/abs@.nsf/second+level+view?ReadForm&prodno=8731.0&viewtitle=Building%20Approvals,%20Australia~Oct%202014~Latest~02/12/2014&&tabname=Past%20Future%20Issues&prodno=8731.0&issue=Oct%202014&num=&view=&

In December 2014 WA approved around 2,700 houses/units to build.

http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/8731.0Main%20Features1Oct%202014?opendocument&tabname=Summary&prodno=8731.0&issue=Oct%202014&num=&view=

The only difference is we have over 900,000 more people then we did in 1993.

I hope you are factoring in that 1 in 4 new builds (as per the ABS) is a replacement of an existing property. So out of the 30,000 properties built or approved in 2014, 7500 of them are replacement of existing stock. This means only 22,500 new properties are adding to supply. At the current population growth this supply is now only meeting the demand of population growth of around 50-55,000 people per year.

Now I suggest you take a look at the last 20 years of construction levels in Perth compared to population growth. This will give you a very good understanding of why house prices have increased as we have underbuilt for many years leading to a shortage of supply. WA needs construction of 40,000 houses per year to generate a flood of new properties and it needs to be sustained over a number of years to reduce property prices.

In 2013 we had 71,400 new people and built around 26,000 properties, 20,000 of those are new stock no replacements. At 2.6 people per household we needed 27,461 new houses. A short fall of over 7,000 properties for 2013.

http://www.abs.gov.au/AUSSTATS/abs@.nsf/allprimarymainfeatures/FA627CA7C5708380CA257D5D0015EB95?opendocument

http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/8731.0Main%20Features3December%202013?opendocument&tabname=Summary&prodno=8731.0&issue=December%202013&num=&view=

In 2012 we had 83,000 people and built 20,000 new houses of which 15,000 increased supply. We needed almost 32,000 new properties in 2012 to meet population growth. A Shortfall of 17,000 new properties.

In 2011 we had 67,400 new people and built around 20,000 new properties of which 15,000 added to supply. We needed almost 26,000 new properties. A shortfall of 9,000.

In the last 4 years WA has underbuilt by 33,000 properties for the population growth which has already occurred, let alone future population growth. The current rate of construction is only now just meeting demand. This level needs to be sustained and increased for a number of years before Perth has any type of overbuilding issues.



http://mike-globaleconomy.blogspot.com.au/
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Dr Kinetoscope
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Mike
2 Jan 2015, 11:20 AM
Please provide a link to official government projections which base the population growth assumptions on 70,000+ people arriving in WA over 2014 or 2015.

Please provide some evidence that developers have been building for a population growth of 70,000+ people per year.

You make a lot of statements, start supporting those statements with some actually facts rather then you're misinformed opinion.

Relax Mike, have a lie down.

He is referring to the HIA's report from 2010:

Housing shortage to exceed 70,000 by 2020: report
http://www.watoday.com.au/wa-news/housing-shortage-to-exceed-70000-by-2020-report-20100318-qgzo.html

I remember reading it at the time - among the most highly speculative reports i've ever read, I must say.

By the way, did you buy up prior to the Sydney boom over the past couple of years? If you are interested in facts, there have been far greater gains to be had in Sydney than in Perth. Most astute developers I know won't go near Perth.
Edited by Dr Kinetoscope, 2 Jan 2015, 03:53 PM.
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skamy
1 Jan 2015, 06:00 PM
The people who are building at the moment are here already, these are new people coming. These new people will be wanting to build and buy homes ON TOP of those already underway.

The way you figure things out is based on a fantasy, builders don't build on the expectation of growth, the vast majority build for a person who need the home to live in.
Spec builders are insignificant in WA, they are such a small part of the market.

This is so ridiculous - why would investors pull out yields are great and interest rates are low? How can you believe this doomster cult nonsense?
Yields, what an absolute joke skamy. 3.8% is the current return. Can get more in the bank without the guarantee of further rents declines and price decli es for years on end.

Another eye opener for you all........

In Perth, if I was to put down 10%deposit , the rental return would not cover a FIFTY YEAR loan term, and thats if rates were locked in at 4% for the life of the loan, and thats also if you never had to pay council rates or water rates or maintenance and repairs or strata fees.

Sounds far fetched right......

But all fact.

Again, what an absolute joke the whole thing is.......
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