Perth - madness.

[Kennethkohsg]

Anyway, with a 7% growth for the September quarter no wonder REIWA are talking up the market, oh the pain.

++++++++++++++++++++++++++
Not when the number of house listings reported by REIWA, has suddenly shot up from 3200 properties in April 2006 to 8800 properties at the end of Sep 2006, reportedly when there is a presently critical shortage of vacant land supply and with effective sale to property listings ratio dropping from 100% down to 52%?

Cheers,
Kenneth KOH

 

[gooram]

*****************************
Dear Gooram,

1. The average house price in your reference report is not neccessarily the same as to the median house price which you are referring to.

2. I suspect that Rob/REIWA is trying to talk up the market.

Cheers,
Kenneth KOH

Not necessarily, but highly likely the author was referring to the median price, rather than comparing apples and oranges.

Are you suggesting this number is made up? I agree that the figures do vary depending on whose tracking it, but they are always in the same ball park.

Also, median prices can be skewed when a large proportion of properties sold were in the top end of the market, and this is especially true in a 3 month period.

Despite the increasing number of properties on the market and the decreasing building approvals, prices are still moving up. What does this suggest?

 

[Kennethkohsg]

Not necessarily, but highly likely the author was referring to the median price, rather than comparing apples and oranges.

QUOTE]
============================

Dear Gooram,

1. The report uses "average house price", you quoted them as "median house price". I merely pointed out the the average house price is not neccessarily the same as the median house price.

2. I am making a factual statement.

3. You are suggesting that the news-reporter actually means the same things as your "median" house price.

4. Who knows whether this is indeed the case or not?

5. Thank you.

regards,
Kenneth KOH

 

[Kennethkohsg]

Despite the increasing number of properties on the market and the decreasing building approvals, prices are still moving up. What does this suggest?

***********************
Dear Gooram

1. What do you personally think?

2. Prices can goes up and and come down too depending on which suburbs which you are looking.

3. Often, statistics does not tell the full picture regarding the actual ground reality on a real time basis.

4. To "generalise" from general market trends without first validating its data accuracy/reliability is being "presumptous" and can sometimes result in different/"wrong" conlusions being made, as different interpretations can be given to the same trend/set of data concerned.

5. For your kind update, please.

6. Thank you.

regards,
Kenneth KOH

 

[redwing]

Hi Kenneth,

I believe it was reported in the paper (give that what weight you wish), I'm not sure how many people per week are actually moving to WA but it would be interesting to find out.

As for Statistics; aren't they just a bunch of numbers looking for an argument

 

[topcropper]

Good luck all you Perth property investors.
Looks like the resource boom is about to start another leg up.

See ya's.

 

[Keen]

Kenneth,

Good to hear from you - haven't seen a posting from you for a while (perhaps its just me).

I believe the real turnaround in addition to increased listings is when net migration falls - when homebuyers find it simply too unaffordable to live in such an "expensive" State and additionally when Investors find yields too low and believe the market has peaked and invest elsewhere.

Like you Kenneth I've just sold an IP. It was the hardest decision I've had to make to date. Regardless of what happens from here on end I can rest in peace as the funds were used to pay out my PPOR debt.

My real concern is for Mum and Dad investors that buy heavily -geared IP's and find that the capital growth has gone out of the market and are waiting years for growth to kick in again. (When that is - well we could argue that one until ........ it actually happens )

Regards

Keen

 

[gooram]

Dear Gooram,

1. The report uses "average house price", you quoted them as "median house price". I merely pointed out the the average house price is not neccessarily the same as the median house price.

2. I am making a factual statement.

3. You are suggesting that the news-reporter actually means the same things as your "median" house price.

4. Who knows whether this is indeed the case or not?

5. Thank you.

regards,
Kenneth KOH

Kenneth,

To set your mind at ease, here's an article with the same figures where the journalist nearly gets their terminology right, it seems there's some confusion between median and average

http://www.theaustralian.news.com.au/story/0,20867,20574549-31037,00.html

 

[Pete]

Slowing to 7% per quarter.

 

[gooram]

***********************
Dear Gooram

1. What do you personally think?

2. Prices can goes up and and come down too depending on which suburbs which you are looking.

3. Often, statistics does not tell the full picture regarding the actual ground reality on a real time basis.

4. To "generalise" from general market trends without first validating its data accuracy/reliability is being "presumptous" and can sometimes result in different/"wrong" conlusions being made, as different interpretations can be given to the same trend/set of data concerned.

5. For your kind update, please.

6. Thank you.

regards,
Kenneth KOH

You're absolutely right Kenneth, I was merely reporting the statistics. Whether they are right or useful is a philosophical debate.

What do I think this means? I don't know that I have enough experience to answer it, which is why I put it out there. I suppose one could summise that the market now is dominated by those upgrading with their "new found wealth", together with first homebuyers dropping out of the market and thus the lower end of the market is not selling. Both of these factors would drive the median price upwards.

 

[Pete]

Real, unsatisfied demand is driving the market, IMO - and will for a while yet.

 

[Kennethkohsg]

Kenneth,

To set your mind at ease, here's an article with the same figures where the journalist nearly gets their terminology right, it seems there's some confusion between median and average

http://www.theaustralian.news.com.au/story/0,20867,20574549-31037,00.html

***********************************
Dear Gooram,

1. From what I know, REIWA and and its ex-President, Greg Rossen has always been using the term, " median house price".

2. I agree with you that the news-reporters have probably get their terminology wrong in this case.

3. I think this is the first time REIWA and its new President, Rob Druitt, are officially using the term, " average house price" from whom the new-reporters have quoted the term from, instead of the usual term, " median house price".

4. I wonder why is this so?

5. Personally, I do not think that REIWA nor Rob Druitt is as "naive" as the news-reporter, in using the the 2 terms, "average house price" and the "median house price" inter-changeably as if they mean exactly the same thing.

6. It would be truly "naive" of them if this is indeed the case, having know their difference between these 2 terms and having carefully used the term, "median house price", during all these past few years.

7. Now REIWA.com has reportedly been using a new House Price Measure. How is this measure, different from the previous "median house price" definition, I wonder?

8. Morever, REIWA.com has further quailifies itself that it only captures 60% of the total sale data within the Perth Property Market.

9. So, the remaining 40% of the total market sales have gone un-reported by REIWA until DOLA releases its official annual house sale data statistics.

10. How close/different is the DOLA Statistics and the REIWA's statistics in the past? What's about the statistical reporting outcome in the future?

11. I have similarly seen the official HDB Resale Flats Price Index in Singapore similarly been re-defined/"re-indexed", such that things now appears/look more positive than what it is really on the ground, to the average un-informed public and younger flat buyers.

12. Thus, I find it equally interesting that REIWA should choose to re-define its House Price Measure and reporting now, without first clarifying how the things have changed under the old and new House Price measure.

13. presently, I remain open-minded and made no specific conclusion as to change in REIWA's New House Price Measure or as to its actual real intentions.

14. What has happened in Singapore needs not neccessarily be repeated in Australia in exact forms, though it can be at times, too.

15. Perhaps, the more informed members who are REIWA members, can help to clarify things further, for our own further self-education, please.

16. Thank you.

regards,
Kenneth KOH

 

[alexlee]

Not referring to this situation specifically since I haven't read it in detail, but when measurements that have been used for a long time are changed, it usually means someone is trying to cover something up.

So if the REI is changing how they measure 'house price' (whatever that means) and moving away from the median price, it might mean that the median price is falling and the REI wants to keep talking up the market?

Kind of like during the .com boom they valued companies based on page views (eyeballs), revenue, potential revenue (based on projections of "we'll take 10% of the pet supply market"), etc. Why would the REI change its method of measuring price unless there was something in it for them? Better yet, why would they drop a measurement that most people are familiar with (or think they're familiar with) unless it was detrimental to them?
Alex

 

[Kennethkohsg]

Kenneth,

I believe the real turnaround in addition to increased listings is when net migration falls - when homebuyers find it simply too unaffordable to live in such an "expensive" State and additionally when Investors find yields too low and believe the market has peaked and invest elsewhere.

Keen

*************************
Dear Deen,

1. I think a clearer picture as to where the Perth Property market is actually heading and to the actual extent which it will eventually/has "slowed down" since June 2006, will probably emerge at the end of December 2006.

2. At this point in time, while it is clear that the prevailing market sentiments hgas changed siginifcantly and are no longer as "feverishly hot" as it used to be some 3-6 months ago, there are still conflicting market signals evolving out at this point in time, with REIWA adding to the confusion, by using a new terminology such as the "average house price" as compared to the median house price.

3. We need to be aware of 32%-40% investors house sale data reported by REIWA and its attendant impact on the Perth property market, as well as to closely monitor the on-going nett immigration figures into WA and new building approvals figures.

4. Assuming the accuracy/reliability of the data remains "up-disputed", a 7% quarterly growth rate in the Perth median house price is still a "signficant" growth achievement, as far as I am personally concerned. This is despite the present 1% drop in its recent quarterly growth rate.

5. Consequently, I can agree with Pete that this continued high growth rate may suggest the presence of some immediate "un-met" market demands in the short term.

6. Like you, I am presently happy with the various house sale prices I have achieved for my 4 houses in July/September 2006 respectively ( as they have all exceeded my asking price and house market valuation figures), and have signficantly reduced my own Perth property portfolio, I remain open-minded as to where exactly the Perth property market is heading, at this point in time.

7. As a result of the on-going stong market momenteum achieved over the last few years, I still do see some more increase in the Perth median house price and for the houses at the Anchorage Estate in the immediate near future until the Perth-Rockingham-Mandurah New Railway Line Project as well as the Kwinana Freeway Extension is fully completed in 2007.

8. I am still actively monitoring this Perth property market for my own self-education as to further learn and truly understand how the property market goes about cooling down on the ground from its expected property boom peak into the initial stages of the Slump Phase.

9. This is despite the fact that I am not likely to make new investments into the Perth Property Market in the near future;- other than those which we are presently having/having invested in them previously.

10. Presently, I am looking to commence the double-storey house construction, at Lot 2012, 26 Eldon Street, Shoalwater WA 6169, at the end of 2006.

11. I have also started to look into other property markets in Sydney and Melbourne.

12. For your kind update, please.

13. Thank you.

regards,
Kenneth KOH

 

[Bulldog]

Kenneth's Post

I think Kenneth hit the nail on the head as it were with his comment in terms of some growth left in the Rockingham-Mandurah areas.
Those that have invested in Rockingham area starting a few years back (My wife and I started investing in 2000) were always waiting for the train line as the ignition point for growth and never expected this resource driven boom to actually happen - as it has occurred, it is a bonus, a real big bonus.

I am positive that the rail extension and associated development in and around the area will have an upward effect as we originally predicted back in late 2000 when we began.

Bully.

 

[Glenn]

My personal thoughts (guess) is that it will slow and even retreat in the future, maybe 5-10%; it cannot continue forever, there has to be some point where it settles or slows..where that point is and when it will occur, who knows; up until that point i think demand on housing and rents will still be a steady albeit slower rise.

If we are only building 19,000 houses a year and immigrants numbering around 21,000 entering the state, let alone interstate migration, young people moving out of home etc then there seems to be some demand still?


*

G'day Redwing,

This graph is telling an interesting story...it took 7 years after the peak in 1988 for Perth's median house price to reach this point again.

If we were able to zoom into the graph we may see the same pattern repeated in the 1970's as well. Maybe there are some Perth investors who were around then that could clarify this?

Good hunting

Glenn

 

[Pete]

Hi Glenn,

I think with the different market drivers for this boom - the resource super-cycle - that there is limited value in comparisons with the 1970s.

IIRC, there was the credit squeeze in the early 70s and then the resultant recovery. I recollect a good discussion of the times in one of Fred Johnson's books.

regards,

 

[cabo wabo]

If we are only building 19,000 houses a year and immigrants numbering around 21,000 entering the state, let alone interstate migration, young people moving out of home etc then there seems to be some demand still?


*[/QUOTE]

I'd be interested to know if that figure of 21,000 immigrants to the state was workers only, adults only, or everyone including children. The figure of 21,000 people per year sounds a bit low to me.

I think the last i heard was about 120 people per day, or was it 120 new jobs created per day, ... i can't remember, but 120 x 365 is 43,800 somethings per day.

Redwing, where did u get those numbers from. I see immigration numbers v's house approval numbers occasionally in articles but never think to write them down. When i happen upon them in the future i'm gonna write them down.

Very interesting also regardiing REIWA changing its terminology... definately one to watch. How long was greg rossen the big cheese? Maybe this new guy has been wanting to change terminology for some time?... or maybe as u say, he is trying to color things the way he wants them.

i wait in curious anticipation to see what the effect of another 0.25% will be over here in the west.... but i'm still an optimist and still have faith in the long term stabilising effect of the resource boom.

 

[redwing]

Redwing, where did u get those numbers from. I see immigration numbers v's house approval numbers occasionally in articles but never think to write them down. When i happen upon them in the future i'm gonna write them down.

I recall it being in the paper and possibly even in last Fridays Homebuyer?

From memory (and as with you I never write it down), "Total" numbers (immigration, interstate movers etc) at one stage coming in were 800 p/wk and now down to 500 p/wk

*There was also an Article somehwere about the Mining Industry (as a whole) needing another 42,000 people over the next five years as different projects *ramp up* wasn't there?

 

[Kennethkohsg]

+++++++++++++++++++++++++
1. Wow! this equate to a 37.5% (300/800) fall in immigration figures.

2. I am actually expecting to see a higher nett immigration figures into WA at this point in time, in view of the recent A$3000 Grant- "Work West" policies and increase in the mining industry capacities.

Cheers,
Kenneth KOH