Perth Market is hot say the stats but on the ground I'm starting to hear different

[Keen]

All the statistical indicators indicate the Perth market should continue to be strong at least in the short term.
But I have heard from an agent in Rockingham that the over $400k market is slowing, in Merriwa I seen a house similar to mine reduced from $299k to $290k and seen rentals sit from 3 weeks to 6 weeks on the market. In Bunbury my PM says they used to have 5 vacancies at any one time during the boom - however they now have 15 vacancies.
Are we now seeing the slowing of the market? The stats do have a lag time to going to print.
Is any one else seeing this? How about Paulie (our resident REA) - are you seeing stock moving slower particularly at the top end of the market where affordability issues first start to bite?
Put the press aside for a minute - what is actually happening out there on the ground?

Regards
Keen

 

[Cheeks]

Remember we are in winter now so it will be slower. Vacancy rates are normally higher this time of year.

We also have mini cycles within the larger cycle. Just take the past 3 years; I have seen the +400K in some areas slow-boom-slow-boom.

These mini cycles are also reflected in suburb growth. In my experience suburb growth is never consistent, some years single figure growth, some years double figure growth, sometimes negative growth (this is why I suggest people spread their investments across a number of suburbs).

Perhaps Merriwa became overpriced and you are seeing a correction whilst the surrounding area catches up. Perhaps some properties are over priced as people try and take advantage of the boom and over estimate the booms impact (greed factor).

Also from my recent experience (just had two bank valuations performed in the last 2 weeks) some suburbs are still going strong

 

[paulie]

Hi Keen,

No slowing at the moment, as far as I am experiencing. Stock levels are still dangerously low at all levels of the price brackets where I work, even the $1million plus mark, and demand is still amazingly strong.

Along a similar vein, I have been writing a short market update over the last week for some of the suburbs where I work, the nature of the article is comparing the lasted REIWA registered sales against the property reports published in the local weekend newspapers. My research shows that the lag in published information getting to the general public in WA is still a good 3 to 5 months behind the actual market values (in some cases longer). I found that in almost every suburb in the Shire of Kalamunda the market has moved another 8%-10% beyond the publicly published information, so i would guess that the next quarter of published WA capital growth figures would again be in this vicinity (8-10%).

I have been guilty of just shaking my head at the strength and duration of the present Perth boom, and wondering aloud with many people on when it will end? History suggest that 8-10% per quarter, which equates to 32% to 40% per year, can not be maintained for significant periods. How long that significant period will continue in Perth, you might have to ask someone smarter than me.

Cheers


Paulie

 

[redwing]

Agree with Cheeks, more renters around at the moment from what I'm seeing, the market isn't as *tight*..see what happens over the coming months..may return to the norm (whatever that is at the moment)

Redwing

 

[asdf]

I thought it slowed same time last year too, plenty of land available in estates Sth Perth but from Sept 05 the market just took another leg up to where we are now. I think the population growth can easily soak up the impending supply. I know there are going to be a few projects coming to the market in the next 12 months, providing more accomodation. A few more starting up too. But as long as the mines keep their lights on, people will come. I heard the WA govts about to start mass advertising campaign to recruit quality people from out East. That migration process itself will take another 12-18months just like Syd folks heading up to Brissy from 01-04. I reckon we may be close to getting back to single digit returns now - still a whole lot better than out East ATM.

 

[Dazz]

I'm looking at slightly different land to most of you, but we've seen dirt in the last 12 months appreciate by anything up to 80%. There isn't a suburb we are watching that hasn't increased by at least 40%.

I attended three auctions 2 weeks ago in Perth and posted details on this forum, all 3 attaining record prices per sqm of dirt. One very attractive chunk of dirt sold 5 weeks before offers to purchase were due to close.

Owner occupiers are going head to head with investors.

Demand is very strong supporting the resources sector.

 

[the.j]

It's all good!

As a mining pro I have finally succombed to being back in the West...

I left ~10 years ago, but now I am finding myself (FIFO) 2 weeks in Perth/ 2 weeks in Brisbane.

As a result I am relocating back 'home' to Perth and looking for a rental because the PPOR price feels way too risky for me at the moment.

I'll take charge of a Perth IP 'valued' at 400K+ and rent it @ $300pw and buy on the east coast to hedge my bets.

From a personal standpoint - I truly hope that the resources cycle is stronger for longer, but seeing the likes of recent AUM activity rear it's head I am getting concerned...

Good luck!

Cheers
J

 

[yadreamin]

I know 2 people who bought OTP at the Raffels.They got their keys a month ago.To date have not been able to find tennants.One of the owners spoke with a pm today and she admitted that it looks like its going to be difficult to rent the place out.This pm had a lot of these units on her book to find tennants.There are many of the units available to rent, l would also guess there will be a lot of these units for sale, if not now they will be very soon.
I have the gut feeling that its starting to slow up here in the west, not by much but the frenzy buying is dropping off.
Cheers yadreamin

 

[Ausprop]

the raffles is ultra premium real estate though, hardly an indicator of the real world. What sort of rent are they asking out of interest? whatever it is, I bet it's cheap compared to the repayments on the place!

 

[yadreamin]

Ausprop, yes it is premium realestate.One couple started out being told they would get $700+ per week their now being told maybe $400 mark for 3x2.They paid $790k.OTP
The fact that there is little interest in the place would be a worry.
cheers yadreamin

 

[sparky23]

On the ground still seems pretty hot to me, on Saturday the latest release at Yanchep was sold by ballot and more than 100 people turned up for the 48 blocks available.

Sparky

 

[alexlee]

Ausprop, yes it is premium realestate.One couple started out being told they would get $700+ per week their now being told maybe $400 mark for 3x2.They paid $790k.OTP
The fact that there is little interest in the place would be a worry.
cheers yadreamin

Ouch. Is this due to oversupply or just that there isn't enough demand at the $700pw rent levels?
Alex

 

[yadreamin]

l dont know alexlee.
They were also saying 3 months ago they could expect 1.3mill if they sold.
Time will tell on this one.
Both parties l know bought on speculation and never once have they evaluated the actual investment figures.
I am following the journey with a quiet interest.
cheers yadreamin

 

[Ausprop]

maybe it's because the building is so ugly... oops did I say that aloud

 

[Lacasa]

I have a couple of IP's in Innaloo, from the prices I am seeing in realestate.com the value of 3x2 is starting to hit the 500k mark, which from what I can see is approximately a regular $5000-10000 increase per month for the last 4-5 months...just an overall impression I'm getting based on the type of 3x2 properties I keep an eye on.

Lacasa

 

[yadreamin]

dont worry Ausprop you are not alone with that thought.
I must admit though the apartments l have seen have been finished off to a high standard of fittings.Nice roomy hallways.Tiles only in wet areas every thing else is carpeted.Main walk ways should be timber or tiles l think.
Everything is White or beige.
The gym is amazing, no expence spared on equipment.Indoor pool.24 hour consierge.
The BC fees will be very high by the looks of things.The main tower has a garbage shoot in the apartments[no carrying rubish in public this lot].The first weekend it got jammed with a carboard box.Crownies no doubt.
For 750k + l really would expect a bit more bang for my buck though.
cheers yadreamin

 

[allblack]

From what I can see area of Perth market I am looking at for further investment (Brighton Estate, Butler) just hit the turbo button. Existing properties seem to have gone up 10-15% in last 6 to 8 weeks!!. Land releases (by ballot) have 180 people after 40 lots. All the people registered to buy blocks have to have finance pre approved and blocks must be built on. Therefore with this huge demand of pre approved buyers it doesn't look like things are slowing down real soon.

 

[redwing]

adding to the madness I see from the paper that the possible building (subject to council approval) of a Beachside Resort in Jurien Bay has created hype in the area..

There seems to be something happening wherever you look, I counted five cranes whilst driving through South Perth yesterday

Redwing

 

[Kennethkohsg]

From what I can see area of Perth market I am looking at for further investment (Brighton Estate, Butler) just hit the turbo button. Existing properties seem to have gone up 10-15% in last 6 to 8 weeks!!. Land releases (by ballot) have 180 people after 40 lots. All the people registered to buy blocks have to have finance pre approved and blocks must be built on. Therefore with this huge demand of pre approved buyers it doesn't look like things are slowing down real soon.

**************************************************
Dear Allblack,

1. With investors making up 42% of all the new house loan borrowings in WA, I will be cautious in concluding the present "effective" housing demand in Perth.

2. Secondly, in view of the present land supply shortage, I would expect the land developers to self-regulate their own industry practices by insisting that the land sold be built on some within 18 months upto the Brick Wall Stage, as in the case of Bradford Grove Land Release Project as required by the Capricorn Village JV, failing which the Vendors reserve the rights to re-purchase the land from the purchaser, at their original purchase price etc.

3. If the land developers fail to adopt these token measures to help curb down the land market speculation, then they are going to cause the State Govt to intervene directly and regulate the market practices, for them. This will not augur well for all parties concerned eventually.

4. Thus, while we may actually still see a lot of buyers queueing up to buy the limited number of vacant land released at many housing estates, it may be part of the market's play at the superficial level that we are actually seeing.

5. What we see now only serves to confirm for me that the land developers are actually having the upper hand over the buyers, in terms of setting its selling terms and land selling price per se.

6. To me, it does not neccessarily nor logically lead us to effectively conclude that the market demand for land is still there or/and that the present housing boom will continue further indefinitely for next few more years.

7. It will be interesting to see how the Perth housing market will actually respond once RBA will to further introduce another 0.25% interest rate increase in September 2006 /end of 2006.

8. For your kind update, please.

9. Thank you.


regards,
Kenneth KOH

 

[Lizard King]

Land releases (by ballot)

Comrades

With reference to Land releases (by ballot) in this thread, I was unsuccessful at a ballot at Satterleys Grove Estate in Ashby on 24 June 2006 and was assured by the Estate Manager that our refund checks of $1000 each would be in the mail within the week. To date, I have yet to receive the refund.

The same old shonky wheelin' and dealin', even with a 'reputed' builder like Satterley. It sucks.

BTW, there were 146 ballots for 24 lots. Was re-entering investment in this estate after buying and selling one of the first blocks across the park in as I thought no one would be interested in it, especially as there were another 1000 blocks coming up . I was told by the Estate Manager when I went for the ballot that the same block could fetch $295K today.

So I drove past it 'for old times sake' and found it still had not been built upon.

I felt a knot in my stomach. Ouch!

The Lizard King