Perth to become most expensive city!

[Celeste]

Hi all

I have shifted up to 3 x 1 duplex's put an offer in for a pair this morning, waiting to see if accepted.

I tell you, they were disgusting, one empty one tenanted. I didn't know where to walk in the tenanted one food and #### everywhere. YUK!

But thats ok, if accepted bargain price and I will be doing a complete reno anyway.

took possession of my next project this afternoon, my day of yuk, they left a pile of furniture and the fridge is disgusting and leaking all over the floor, crap everywhere, nothing cleaned. Has no one any pride.

Oh well, no rest for the wicked. now whats for tea?

Celeste

 

[kph]

Hi all
Oh well, no rest for the wicked. now whats for tea?
Celeste

Ummmmm....takeaway ???

 

[The Fence]

My own strategy (based on my view of cycles) is to buy cities where the current growth rate is lower than the long term average. Currently, that would mean Brisbane, Melbourne and Adelaide.

My opinion only, and I could very well be wrong. China might manage its bubble without blowing up. But in the long term, I believe that the basic strategies will win out over betting on new paradigms.
Alex

I'm with you Alex, sounds like a sensible approach, not based on the heat of the moment stuff that's going on in WA now.

I have this vision like the cartoons......all these feet running to one side of the boat, then realising it will sink and then all turning around and scurrying to the other side only to find the same thing will happen, with just a few wise ones who cross over in the opposite direction to the mob, staying high and dry. Just my view

 

[Simone]

I have noticed in the last couple of months that houses around the 700 plus are staying on the market longer - and a couple have dropped their price.

Simone

 

[Kennethkohsg]

When you look at the backlog of houses required to house people in both the metro and regional areas, it will probably take 2 to 5 yrs to complete these.
Therein lies the opportunity. Basic demand for roofs over peoples heads.

kp

**********************
Dear Kph,

1. What are the figures which you are referring to, with respect to your claim of a present housing backlog in Perth?

2. Care to further share and elaborate on your statement of claim, please.

3. Thank you.

regards,
Kenneth KOH

 

[Kennethkohsg]

The only way for land prices to go backwards would be for the govt to reduce their cost impost on land and development, and for building costs to go down.
Otherwise the real COST of property will underpin the curent market price.

kp

************************************
Dear Kph,

1. If the WA State Govt bothers to remove/lower its stamp duties payable on the property/land sales in WA, the average local land/property price will be much cheaper as compared to those presently in Melbourne.

2. Subject to further confirmation, I recall reading somewhere that annual land release is about 11,500 lots per year in Victoria as compared to only 4,800 lots in WA while at the same time, the median land price in Victoria is about $115,000 per lot as compared to about $215,000 per lot in WA as reported by REIWA.com.

3. Is this reported land price difference a natural outcome of the different levels of land supply in these 2 States, all things being equal?

4. If WA is already experiencing a super resource boom and experiencing acute labour shortage already and with the WA State Govt continuing to expand on its infrastructural development projects and increase its state budget spending during the present boom times, thereby "exaggerating" the demand /aggravating the present acute shortage of skilled labour and high labour costs in WA, at the expense of its Eastern States, I wonder what will truly happen to WA eventually when the market is starting to "over-build" itself into excess capacity/supply, in the near future?

5. This is especially so when the inter-state migration levels may soon start to reverse itself too in the near future, once the recent resource boom has officially ended.

6. For your kind update and further comments/discussion, please.

7. Thank you.

Cheers,
Kenneth KOH

 

[Celeste]

Hi all

Kenneth - I am in Perth, average block $215k try closer to $250 - 300k at least within 25k of perth GPO. Land releases are sold in a matter of days here with people lining up the day B4, or by ballot, expressions of interest etc.

1 girl I know who's investment strategy is to buy land build rent hold, is looking for new avenues to invest as she cannot get land.

Building time - most builders quote 18mth - 2 years to build a new home in Perth - 2 going up around the corner - funny both blocks were cleared in the same 2 days june last year - 1 is at lock up, 1 has just had the roof put on.

Celeste

 

[asdf]

I'm glad investors are starting to get a reality check in Perth. This is actually very healthy for the market. The rotation from investors to home buyers will bode well for the future. Something like nearly half of all approved loans in WA were to investors last year. That is ridiculous! Hopefully these media influenced first timers will realise their diminishing profits and move on to another fad. The reality is that serious money is only made by 20% of the population so the very wealthy will keep buying up the Cottesloe and Mossy Parks whereas the outlying areas will be hurting. The 80% who bought in these area will not be able to afford the negative carry with such abysmal rent returns. This is what happens when you buy cra* at the top of the market. Just ask the struggling taxi drivers who bought out in Blacktown and Mt Druitt in 2003...

 

[Kennethkohsg]

Hi all

Kenneth - I am in Perth, average block $215k try closer to $250 - 300k at least within 25k of perth GPO. Land releases are sold in a matter of days here with people lining up the day B4, or by ballot, expressions of interest etc.

1 girl I know who's investment strategy is to buy land build rent hold, is looking for new avenues to invest as she cannot get land.

Building time - most builders quote 18mth - 2 years to build a new home in Perth - 2 going up around the corner - funny both blocks were cleared in the same 2 days june last year - 1 is at lock up, 1 has just had the roof put on.

Celeste

&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
Dear Celeste,

1. According to REIWA.com, median land price was $215,000 in Perth and $203,000 in WA as at 30th June 2006.

2. Scenes of people queueing for land purchases in Perth again? I no longer recall seeing this scene anymore nowsadays when I am driving around the various new/old housing estates with the new land releases.

3. A lot of vacant land lots has "suddenly" come into the market for resale from nowhere after the last August 2006 interest rate increase.

4. After this week's expected interest rate increase, I am expecting to see even more vacant lands to appear for resale again and with the land owners starting to lower their asking prices, to a more realistic levels, in the resale market.

5. I say this, based on my own observations of what is happening in the Anchorage Estate at the Rockingham-Shoalwater suburbs, of late, on a real time basis.

6. If we care to read the last few weekends newspapers, we will find that the builders are no longer advertising the 18-24 months long building time requirement, as before. This is much unlike the building situation during mid-late 2005 period.

7. Today, the builders are openly "promising" to be able to complete building a new house for their customers within 7 months of construction time. They are also resorting to giving freebies like plasma TV, aircon units, quality kitchen oven/cooking set etc to attract potential customers to sign up for their new building jobs, on the ground.

8. For your kind update and further comments/discussion, please.

9. Thank you.

regards,
Kenneth KOH

 

[kph]

I'm glad investors are starting to get a reality check in Perth. This is actually very healthy for the market. The rotation from investors to home buyers will bode well for the future. Something like nearly half of all approved loans in WA were to investors last year. That is ridiculous! Hopefully these media influenced first timers will realise their diminishing profits and move on to another fad. The reality is that serious money is only made by 20% of the population so the very wealthy will keep buying up the Cottesloe and Mossy Parks whereas the outlying areas will be hurting. The 80% who bought in these area will not be able to afford the negative carry with such abysmal rent returns. This is what happens when you buy cra* at the top of the market. Just ask the struggling taxi drivers who bought out in Blacktown and Mt Druitt in 2003...

AMEN !!
Pretty much sums it up as dispassionately & analytically as you can.
I think time will prove your sentiments to be correct

KEvin

 

[kph]

**********************
Dear Kph,

1. What are the figures which you are referring to, with respect to your claim of a present housing backlog in Perth?

2. Care to further share and elaborate on your statement of claim, please.

3. Thank you.

regards,
Kenneth KOH

Ken,
The 'backlog' is based on all the blocks being released and yet to be released ( sold but no titles yet) which will need a house built on them.
Not all land releases are able to be 'resold' or 'flipped' with restrictive covenants in place forcing the owner to build before they can resell ( or rent out or inhabit, whichever the case may be) It will take 2 or more yrs to achieve all this.

My 'statement of claim' is based on my own vacant land holdings as those of my fellow investor buddies who have invested in the same subdivisions.
We need to build / are in the process of building and therefore are acutely aware of the problems incurred due delays in the building process.

Also, I mentioned 'regional' areas as well, as this is where I have more on the ground and hands on experience.

As an example, Landcorp are in the process of releasing approx 1,900 blocks in the Pilbara region alone to cater for demand.
This is not 'speculative' demand but demand for roofs over poeples heads.
Its a basic requirement to house people.
They are conducting a meeting next week for interested parties who are capable and interested in building the required houses ( Any builders out there...CALL ME !!)

The resources boom is not over, with 10 yrs of construction to go ( based on what is currently in the pipeline).

As far as I am aware, the nett migration into WA is still occuring, and not the other way round.

KEvin

 

[kph]

2. Scenes of people queueing for land purchases in Perth again? I no longer recall seeing this scene anymore nowsadays when I am driving around the various new/old housing estates with the new land releases.

3. A lot of vacant land lots has "suddenly" come into the market for resale from nowhere after the last August 2006 interest rate increase.

4. After this week's expected interest rate increase, I am expecting to see even more vacant lands to appear for resale again and with the land owners starting to lower their asking prices, to a more realistic levels, in the resale market.

5. I say this, based on my own observations of what is happening in the Anchorage Estate at the Rockingham-Shoalwater suburbs, of late, on a real time basis.

regards,
Kenneth KOH

Ken,
The market in Perth/WA is a bit bigger than Rockingham/Shoalwater/Anchorage.

Maybe you need to start observing a bit further afield ??

Kevin

 

[stretchy]

From the latest HIA economic forecasts (http://economics.hia.com.au/media/ForecastOct06.pdf):

HOUSING STARTS (thousand dwellings commenced):
WA
2005 23.95
2006 24.97
2007 21.40

Underlying requirement:
WA
2005/06 21.1
2006/07 22.6
2007/08 22.5

Guesses and extrapolations certainly, but I dont see a huge housing shortage on the horizon. If the 2006 figures are correct, there will be a 2000+ house surplus by the end of the year.

Im presenting these figures as a different perspective. Dont start arguing how accurate they are, because no one really knows. Its no worse than the anecdotal evidence we normally get.

 

[alexlee]

Sydney, supposedly, has had a housing shortage for years. Doesn't necessarily mean house values will go up. It probably means rents will go up to catch up with prices, though.
Alex

 

[Celeste]

Hi all

1. According to reiwa !- I have been keeping an eye on land prices and checking the latest sales figures for Perth, I haven't seen a block for under 250k within 20k of Perth for a very long time, unless it was the little triangle of dirt around the corner of me - still cannot beleive someone could fit a house on a postage stamp. anyway

I do not rely (do not actually use/read/quote medium pricing at all) I look at listings and I have a file every sat/sun I update it and the current actual sales figures. I like actual figures, I also like to realise my profits. "show me the money" " show me the actual sales figures"

2. maybe I was exaggerating the ques, can not say I have heard of any for a couple of months. sorry I get a bit excited. forgive me I am a aries

3. flood of blocks - my theory, my old boss has a cousin who sells house/land packages for a large developer - he is privy to land releases and buys early B4titles organised 12-18 mth settlement periods. talking to my old boss yesturday he owns 78 blocks at this point and a few million dollar apartments.
He has just put a bunch of them on the market.

I figure purchased during last years land releases, about the time there was all the hoo ha about investors buying all the land . I bet there are a few other investors doing the same. recycled blocks.

4&5 I agree

6. true - but we were originally talking back log those that were started / signed up for last year etc. ie the example of the 2 around the corner, I assume those that signed up a month after them (with the same co.) are still waiting as well.

7. I agree

now I forgotten what we were originally talking about.

Oh my offer was accepted on the duplex pair. excellant I am all booked up for reno's until a least june next year. I guess I am going to have paint in my hair for a while yet LOL.

final note: Perth market is not the same as it was 6 mths ago. I have my fingers X'ed to actually make any profit out of my latest reno, the bottom has fallen out of the second hand apartment market, prices are dropping. hence the duplex's

celeste

 

[kph]

final note: Perth market is not the same as it was 6 mths ago. I have my fingers X'ed to actually make any profit out of my latest reno, the bottom has fallen out of the second hand apartment market, prices are dropping. hence the duplex's

celeste

Reminds me of a conversation I had with a fellow investor last year about trying to figure out when the market had topped out and it was no longer viable to keep turning over properties for a profit.
I said that you just keep going till that last one which was no longer profitable or only marginally profitable, and then you know that the market has turned. You're still in front based on all the previous properties sold, and this last one provides the proof that its time to find another strategy or another market.

kp

 

[Kennethkohsg]

From the latest HIA economic forecasts (http://economics.hia.com.au/media/ForecastOct06.pdf):

HOUSING STARTS (thousand dwellings commenced):
WA
2005 23.95
2006 24.97
2007 21.40

Underlying requirement:
WA
2005/06 21.1
2006/07 22.6
2007/08 22.5

Guesses and extrapolations certainly, but I dont see a huge housing shortage on the horizon. If the 2006 figures are correct, there will be a 2000+ house surplus by the end of the year.

Im presenting these figures as a different perspective. Dont start arguing how accurate they are, because no one really knows. Its no worse than the anecdotal evidence we normally get.

************************************
Dear Stretchy,

1. Taking the data at face value, I agree with you that it is quite likely that there is going to some excess housing supply occurring at the end of this year and probably more in 2007.

2. The second thing about your data is that the annual housing demand seems to have increased to 21,100-22,600 units per year from 2005/2006 onwards. This is some 62% more than what was previously reported ( around 13,500 units per year).

3. I wonder if the annual release of vacant land lots has gone up similarly?

4. It was last reported to be about 4,800 lots per year, which is some 41.7% less than annual 11,500 lots released in Victoria.

5. If annual housing demand has increased by more than 60% and land release still remain low at 4,800 lots per year, then I wonder how are they going to achieve the high annual housing start figures of more than 20,000 units per year.

6. Anyone care to comment and discuss further, please?

7. Thank you.

Cheers,
Kenneth KOH

 

[Kennethkohsg]

3. flood of blocks - my theory, my old boss has a cousin who sells house/land packages for a large developer - he is privy to land releases and buys early B4titles organised 12-18 mth settlement periods. talking to my old boss yesturday he owns 78 blocks at this point and a few million dollar apartments.
He has just put a bunch of them on the market.

celeste

**************************
Hi Celeste,

1. Please introduce me to your old boss and his cousin.

2. I will like to get to know them and learn from them regarding their investing success, please.

3. Please PM me or contact me at [email protected] /Australia Mobile:0418758123.

4. Thank you.

Cheers,
Kenneth KOH

 

[Kennethkohsg]

Ken,
The market in Perth/WA is a bit bigger than Rockingham/Shoalwater/Anchorage.

Maybe you need to start observing a bit further afield ??

Kevin

***********************
Dear Kevin,

1. I know that and I do agree with you to a certain extent. It'just that I happen to be living at the Anchorage Estate and is thus, most familiar with this local situation.

2. Though it may not fully reflective of the entire Perth property market, at least the local suburb and market trend at the Anchorage Estate is telling me something about the Perth property market which I may not otherwise know, with a certain level of confidence.

3. Sorry, I am not ready to go over/invest in the mining areas at this point in time where the housing shortage is probably most acute, with the mining companies actively expanding to increase on their production capacities.

4. Thank you.

Cheers,
Kenneth KOH

 

[Kennethkohsg]

My own strategy (based on my view of cycles) is to buy cities where the current growth rate is lower than the long term average. Currently, that would mean Brisbane, Melbourne and Adelaide.

Alex

********************
Dear Alex,

1. How's about Sydney?

2. Is it above its average long term growth rate already?

Cheers,
Kenneth KOH