Normally I'm a bear bear bear. When I was in Perth last year and commercial properties had 30-40% off, as well as all the home opens I was going to had no one in them. I realised it was time to buy
didn't say anything because I wanted to get in first.
Got 2 places now, one in applecross (nbn, fiona stanley, booragoon doubling, canning bridge upgrade)
one in rivervale (nbn, new shops coming, stadium, improved infrastructure)
I went to about 20 home opens and put in bids 15% below their 2008 values. So around 25-30% off what they should go for if they got a steady return over the last 7/8 years. Gave the agents my card, told them what I do, how Perth is terrible and is getting worse, how I needed a place for my wife because she just got pregnant and if it was up to me I'd wait until there's some security in the economy. blah blah blah, strung them along. My wife's not pregnant lol. got about 10 calls back for around 10 calls for 5% off 10 for 10% off and 2 for 15% off the 2008/2009 price. Snapped them up.
Rio and BHP churn out iron ore for a profit and make up 85% of the market. The risky ones make up less than 5%. In total iron ore makes up 29% of the WA economy. So that's around 1.5% to the WA economy IF the risky ones go under which is insignificant. Also we're about to become the biggest gas supplier in the world... That doesn't happen when things are falling apart. Sure the platforms are designed in mayalasia, built in korea and run by 50% 457 visas but we still get the other 50% of the workers and the royalties and the ongoing works. WA is not doing as bad as the papers make it out to be. Plus a lot of companies have managed to trim the fat in the last few years thanks to me haha. Didn't share that with them though ;-) Those two got accepted. Good blocks, both with city views on north hills off main roads. Sellers were desperate. With the cash I had in the government supported stock market since 2008/9 I put down full 20% deposits and put the rest back in the market. Offset accounts are useless if you get 10% back every year with shares lol.
Anyhow, I knew demand was coming because a LOT of people at the Christmas parties were scared and afraid of a crash but at the same time realising rates were so low they could borrow for almost nothing but it hadn't clicked yet. They discussed wages climbing and how relatively speaking its affordable but no one had taken the plunge.
Wage growth in WA has been chugging along since 2008 and house prices haven't really moved. The wage now? 70-80k? you can get new 3x2 and 4x2 for 3-4x your wage in WA. Its almost corrected itself.
Plus the RBA and Govt finally realised we have a currency war going on with the USA and Euro so our rate will at the floor at least until end of next year while they try to force our dollar lower which will make it even more profitable for work to be done in WA.
On top of all that immigration had plummeted and people are moving out which is taking care of the unemployment so thats another bonus.
I sold 'the worlds ending' to the agents when its actually not so bad haha it was FUN.
Now I see every man woman and child is trying to sell to upgrade. Went to a couple of home opens last weekend and they must have had 20 couples at every house. It was crazy when there was no one 6 months ago, I was dreading the competition I would have had to face for the premium blocks. Now rates are low and we've had a lull, I'd expect WA to follow Sydney in a year or so, definitely not as strong but WA is going to keep on climbing. Production of resources is increasing and its churning it all out for a profit. WA hasnt/wont be losing its manufacture base like SA. Its actually pretty strong just there was too much fat.
That said the other big big give away for me was, although I was seeing a lot of staff and assets getting cut down, feasibility studies kept popping up. First in November then a bunch in December to beat the new year. Now its non-stop feasibility and expansion enquiries. It was a big indicator that the markets turning after 7-8 years of pretty much non stop cuts and winding down stuff. Right now I'm working on a new 500 man camp and plant for up north. Again, cant say where or when or who but the company previously fired a HEAP of people and now the fat's gone they are very profitable and were helping them move into an expansion phase. Thats right this minute. This year though I think I've done maybe 6 or 7 major feasibilities for 8-9 figure expansions all of which were profitable especially with the exchange rate coming down.
Its not as bad as people think is all... Maybe 6 - 12 months of a dip because there are so many houses on the market as people are trying to upgrade but not too bad because rates are low and people have cash to burn, then its going to be gains again.
I'd still follow the basic principals if you're going to buy a house. Positive geared. Get land. Find expansion/high demand areas as close to the city as you can. God how bad is Subiaco! I looked there too and that place has turned into a ghost town lol I did get one offer back from Subi but turned them down because the hospital and stadium are going. Pretty much everything in the Western area is a wasteland now since they refuse to upgrade and improve the infrastructure to accommodate higher populations and create proper hubs using existing infrastructure. Too little too late, the state government has planned out expansions for SoR for the next 50 years so thats where I targeted.
Anyhow thats what I've been up to. Hope you all had a good new year!
