Prospect of a sudden & dramatic drop in prices should not be ignored
- Thread starter hobo-jo
- Start date
*sigh*.
do the research yourself.
look at the graph from the time time Lang Hancock opened up the NW of WA.
before then there was no reason to buy on Perth unless you lived here or were retiring here.
now we have changed course.
there are new fundamentals and new reaons for Perth to pull itself out of a lull.
it's not a direct and measurable effect, random.
the issue is the pressure it puts on skilled labour in this state - already at capacity at 4.75% UE.
that's expected to drive wages higher - i'm not so sure either myself, but that's the argument.
if wages DO grow in this state you can expect prices to move - quickly.
currently the cap is about $135k. if that moves, even to $150k then you can expect a return to strong (but not boom) growth. the Barrow Island guys are expected to be STARTING on $150k - which will blow the wind in the union's sails for equal pay.
god forbid wages move beyond that, though.
the issue is the pressure it puts on skilled labour in this state - already at capacity at 4.75% UE.
that's expected to drive wages higher - i'm not so sure either myself, but that's the argument.
if wages DO grow in this state you can expect prices to move - quickly.
currently the cap is about $135k. if that moves, even to $150k then you can expect a return to strong (but not boom) growth. the Barrow Island guys are expected to be STARTING on $150k - which will blow the wind in the union's sails for equal pay.
god forbid wages move beyond that, though.
If you have efficient land release and efficient approvals etc housing though should move like any other asset in line with production costs. Iron ore has about a 4 year lead time for new capacity, housing about 12 months. Iron ore prices can move out of sync with costs for several years at a time as it is now. I wonder though whether as per my other post today in this sub forum whether it is just a case of the government releasing more than enough land to prevent a situation like in 2005 - 06 - early 07 where land prices skyrocketed. They (Liberal state government) have said this is what they are trying to avoid?
It really is in their hands. If they wanted too in the face of increasing wages and immigration they could in my opinion with land release still drive down the price of existing homes.
It all comes back in the long term to production costs including that very volatile of inputs residential land procurement / rezoning.
If developers can make a quid even in a falling property market if land can be procured for peanuts then land will continue to be developed. If they make it ever harder to develop as is the case in Sydney than even with strotospheric prices developers will still ease off the qty supplied.
I think wages / affordability / immigration are only enables for high prices you have to have supply restrictions for prices to really take off. At present from all accounts Perth does not have any such restrictions anymore. As I have said before around development and infrastructure they are very progressive compared to the east coast.
I personally don't see a skills shortage at the moment in Perth in the mining or building sector and wouldn't expect to for a couple more years.
I think that will keep the inflated salaries stagnant while the economy reforms and balances which will probably be over the next 18 months or so.
I think that will keep the inflated salaries stagnant while the economy reforms and balances which will probably be over the next 18 months or so.
