Perth houses are currently as affordable as they were in 2003 and 1996

Discussion in 'Property Market Economics' started by Shadow, 27th May, 2015.

  1. Shadow

    Shadow Evil Specufestor

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    Perth house prices rose very strongly from 2002 to 2006. Over this period, nominal prices increased by 150%.

    However, since 2006, nominal prices have only increased by 17%, which is a decline in real terms...

    http://i187.photobucket.com/albums/x308/LPShadow/Perth-House-Prices.png~original

    While house prices fell in real terms from 2006 to 2014, incomes kept on rising, meaning Perth's house price to income ratio today is back at 2005 levels...

    http://i187.photobucket.com/albums/x308/LPShadow/Perth-Price-Income.png~original

    And when we consider true affordability, by taking mortgage rates into account, Perth prices are more affordable than they have been since 2003...

    http://i187.photobucket.com/albums/x308/LPShadow/Perth-Mortgage-Income.png~original

    With affordability stronger than it has been for more than a decade, Perth today is quite similar to Sydney in 2011-2012.

    In 2011-2012, many Sydney bears expected prices to crash.

    What they didn't realise is that Sydney prices at the time were at their most affordable for over a decade.

    Instead of crashing, Sydney prices have increased by 40% since 2012.

    Could Perth experience a similar boom over the next few years?
     
    charttv likes this.
  2. Brady

    Brady Big 4 Banker

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    What's Perth's population growth compared with Sydney?
     
  3. Biz

    Biz $17 DOLLAS YO!

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    Note sure but hasn't Perth's economy always been very dependant on mining activity. With the investment side of the mining boom tailing off and vancies rising it's hard to see where the price growth is going to come from.

    Sydney was different. The last significant shift in prices was in the early 2000's, it was under supplied for a long time and we had a new government that started to make things happen infrastructure wise for the first time in a decade. I think a lot of people underestimate how beneficial the change in state governments has been and the commitment to the new airport from the federal libs.
     
  4. MRO

    MRO Member

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    I agree with this.
     
  5. Deltaberry

    Deltaberry Member

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    Sure but where's the money coming from? Sydney's money is coming from the entire Australian continent and is picking up 20% of China's overseas money.

    Also last I saw, Perth had a similar median price to Melbourne and was higher than Brisbane?
     
  6. Shadow

    Shadow Evil Specufestor

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  7. Shadow

    Shadow Evil Specufestor

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    It's possible that as Sydney and Melbourne house prices move out of reach for more and more people, investors and homebuyers will begin to look interstate.
     
  8. Tano

    Tano Member

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    Yes and international buyers including institutions I would have thought Brisbane is next to rise before perth.

    I like reading shadows posts, especially the Sydney 1m thread. When do you see this starting to occur?
     
  9. Shadow

    Shadow Evil Specufestor

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    I'm thinking another year of stagnation for Perth, and then prices will start to rise.
     
  10. Aaron Sice

    Aaron Sice Seldom Seen Kid

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    [​IMG]

    http://en.wikipedia.org/wiki/Economy_of_Western_Australia
     
  11. Aaron Sice

    Aaron Sice Seldom Seen Kid

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    I agree Shadow.

    I saw it last time and wasn't in a position to invest - but I see it now so am doing all I can to get into the market.
     
  12. Burnhi

    Burnhi Member

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    In general I don't see prices going anywhere for the next year in Perth.
    In terms of mining yes, it does rely a fair bit, however its not a one trick pony. It does have diversity, with a lot of Ag investments, and the AUD being off is making Ag commodities move a bit.
     
  13. INVSTOR

    INVSTOR O+

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    My bet is that Brisbane will rise over the next year and Perth will begin to rise in about a year.
     
  14. MTR

    MTR Bling Bling

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    I don't follow stats because they are too easily manipulated and I frankly don't understand them would rather follow what is actually happening on the ground and keep it real

    Perth market rose from 2012-14, market is now going sideways, boom again ?well not unless something dramatically changes. Boom cycles don't happen every 2 years, but hey if it happens I will be having a nice glass of Bubbles

    Why? Mining boom over, change in fBh threshold, job losses, market sentiment, population growth/immigration
     
  15. westminster

    westminster P Plate Developer

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    It doesn't necessarily have to be a boom. I'd be delighted with flat year then growth of 5% for a few years. 5% is not boom, it is stable growth and that would make me pretty happy.
     
  16. Ausprop

    Ausprop Member

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    some agent emailed me today saying they had seen a huge spike in enquiries and sales in the western suburbs. I think Mandurah is set to go before that, the FIFOs love it and comparative to their salary it is ridiculously cheap (actually cheap compared toanyones salary) and with yields at 6%+ its a no brainer. Perth does always tend to follow Sydney so who knows.
     
  17. Shadow

    Shadow Evil Specufestor

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    There was a 15% rise over those three years, which in real terms is about 2-3% per year. Hardly a boom.

    And that was after falling 13% in real terms during 2010 and 2011.

    Perth hasn't boomed since 2006.

    Perth has the strongest population growth in Australia, at 2.5%.

    Perth also has the lowest unemployment rate in Australia at 5.7%. It has fallen from 5.9% in December.
     
  18. MTR

    MTR Bling Bling

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    Yes, I agree, does not have to boom, also makes it easier to purchase development sites.
     
  19. MTR

    MTR Bling Bling

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    Beg to differ, I live in Perth.

    I know my properties in Perth during this period on average rose 30%+ and I know investors from Perth who also experienced similar scenario. This is end of 2012-2014. Why?because developers started to jump into the market and buying up big, suddenly there was a shortage of development sites, no stock or low stock. We also had FHB jumping in and low interested rates pushing it along

    The WA government also started rezoning many areas in Perth and investors got wind of this and started buying up pushing prices through the roof during this period. These were in the main State Housing areas close to the city.
    Balanced market for Perth is apparently around 12000 properties, during this period it dropped to around 7000, low stock, demand outstripped supply, BOOM.
    There is a post on SS regarding this topic and clearly we did have a short boom.
    Here is the link and what happened to property in Perth during this period
    http://somersoft.com/forums/showthread.php?t=85540&highlight=perth+listings

    Graphs wont tell you this, and that is my point graphs are rubbery at best, no offence intended just what I have learnt over the years.

    Cheers
    MTR:)
     
  20. HiEquity

    HiEquity Member

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    With respect MTR, I think Shadow's right. You are talking about mainly development sites and particular suburbs but my bog standard Perth PPOR and RIP have done nothing since 2008 - probably gone back a bit actually based on recent evidence. Plenty of non development RIP stock across Perth has been in the same boat. All the action around development sites and product hasn't really moved the rest of the market much as a whole over that time - of course certain suburbs are always exceptions but I'm referring to the whole Perth market here.