reflections on the Perth market

[Francesca C]

Hi MTR all we can do is learn from it

It's hard to say when a boom starts I guess... unless you know a formula.

I thought it was the auction clearance rates being over 95% in the most affluent suburbs??? anyone???

 

[TheBacon]

Hi MTR all we can do is learn from it

It's hard to say when a boom starts I guess... unless you know a formula.

I thought it was the auction clearance rates being over 95% in the most affluent suburbs??? anyone???

Might be an OK qualitative indicator and show market sentiment. However auctions are still realtively rare in Perth so the numbers are not reliable.

 

[Francesca C]

Does anyone else know the ingrediets of the start of a boom besides hearing about it in media or from property gurus around the country?

 

[Aaron Sice]

when demand outstrips supply....? LOL.

seriously, that's like askign how long is a piece of string. we all know it's twice as long as half it's length, but you still don;t have a definitive answer.

 

[Francesca C]

Hi Bluecard

Once demand outstips supply doesnt that meant that its the middle of the boom not the start? I know where you are going with your comments tho

There isnt a definitive point in time however, there would be warnings and the only one I know of is auction clearnance rates in affluent areas.

In W.A. obviously it was the mining and immigration that started the boom. I guess you could pinpoint it there because its obvious demand will outstrip supply. However, I dont know details of other booms on the east coast?

I know a similar thing happened in QLD a few years back because of resourcing boom too.

What happened during the last booms in Sydney/Melbourne?

 

[MTR]

Don't know whether this was a warning but I was purchasing in 2001 in undesirable areas, development sites within 10km from Perth and so were investors from East, some coming over purchasing 10 at a time, they were as cheap as chips then.

Never really gave it much thought at the time, as there was plenty for everyone. This changed within about 12 months, prices started to rise quickly, RE agents stopped contacting me and I started having to chase them.

Perthians are now doing the same over East purchasing in Melb/Bris/Adelaide.

There's plenty of information available to work out when a particular market is rising.

Cheers, MTR

 

[Francesca C]

Hi MTR

I dont ever want to be caught up at the same time that everyone is buying, and want to beat the bull rush.

It is so hard keeping up with all the changes going on in different states and suburbs and dont want to follow what everyone else is doing. Once you hear about it, its already too late.

 

[MTR]

Hi MTR

Once you hear about it, its already too late.

Hi Francesca
I have read this many times, purchasing prior to a boom would be ideal but not necessary to make money.
In saying this, good luck if you can get in prior to a property boom, you will certainly do better than most.

As long as you purchase in the early stages of a rising market you should do well.

I have also read that the later stages of a property boom is where most money/CG is made. If you look at WA stats I think there could be some truth in this.




All the best. MTR

 

[jaycee]

and see the debates abut where this WA boom will end / go ?

how long is that piece of string again ? !

 

[Francesca C]

Hi MTR

I just remember turning up to home opens and 50 cars being at the front. Felt like part of a herd.

I would love to be sitting back and watching my portofolio grow and not be part of rush hour.. ...I guess that is time in the market rather than timing the market..

I want a crystal ball!

 

[kph]

Does anyone else know the ingrediets of the start of a boom besides hearing about it in media or from property gurus around the country?

If you are active on the ground yourself then the last place you would look for feedback is in the media or even from the property gurus.
The 'real' gurus seem to be from over East, and they tend to have jaundiced cookie cutter views of the WA market.

I had this discussion with Ausprop a few yrs ago when we were trying to figure out when this 'boom' would end and whether it was better to go hard or ease back.
There were no 'experts' out there who could say either way with equal numbers predicting and ongoing boom vs an impending bust.

To me the best idea was to keep going till that last property signalled a stall in the market and then you knew it was over.
Thats pretty much what happened, but its not over yet!!

I think its better to change tact at this point instead of sitting it out on the sidelines waiting for the next 'boom' ( I'm really bored hearing that word!!)

Diversify into other areas of property. Look into Commercial. Look into regional areas. They both continue to 'boom'.
We're going to be busier in 2008 than in any of the previous 4 yrs.
Probably busier than all those last 4 yrs put together.

I've coined it 'Bush and Beach' ( Bernie the Salt eat yr heart out...)

Buy the 'Beach' anywhere close to the coast in virtually any state, and the 'Bush' specifically in regional WA and QLD near mining centres.
(can't comment on regional areas in other states as I haven't done any homework)

Beach for the demographic push for lifestyle requirements, both from within the country ( baby boomers) and from migrants and visitors seeking that hard to find coastal experience in a safe and pristine environment.

Bush because these centres are fundamentally under supplied with quality housing, and current demand far outstrips available supply and will get worse before it gets better for all sorts of systemic reasons. ( eg. available urban zoned land, available contractors to carve up the land quickly enough, available builders to build houses on new land subdivisions, etc, etc)

All this evidenced by the symptoms on the ground of hyper market rents and spirallying property 'values' plus denials from govt leaders that there actually IS a problem in these areas, as per ministerial reply to a letter I wrote expressing both the current problem as well as a solution to help with a fix.

The reply was that "land is getting released, houses are getting built, where is the problem ??
Sooooo.... rents at $2000 pw for a colorbond ( tin) house and property values at $900k ++ is 'normal' now ???

It all spells opportunity for some, but comes at great cost to those regional communities.

I'm done ....

kph

 

[Aaron Sice]

i like to buy when money is expensive.

we bought our first property when rates were 8.5% - they then dropped to about 4.5% - that start of the uptrend in 2001.

we are buying our next property now while rates are high again so that when money is cheap again we would have got in ages ago.

 

[Kennethkohsg]

Dear All,

1. In its attempt to extend the present economic boom, the Australian Federal Treasury is reportedly trying to promote and increase inter-state migration to the resource rich states of Western Australia and Queenland as well as calling for the lowering of the housing stamp duties in the various States, at this point in time.

http://www.theaustralian.news.com.au...52-601,00.html


2. Should these measures be successfully implemented in 2008, it is quite likely that the Perth Property Market will soon be quickly "rejuvenated" and may further rise again, later this year, as a result of this anticipated increased housing demand, (arising from the increased inter-state migration and population increase), and not withstanding the present housing affordability related issues. This is especially so when the Perth's average household annual income level has reportedly increased signifcantly over the last gew years to become the highest in Australia in 2007, even surpassing the income levels achieved in Sydney.

3. Thus, I agree with KPH that it is quite likely that the Perth property market may soon "re-sparkle" itself again in the near future.

4. Consequently, it appears that the Perth property market is unlikely to suffer some 10%-20%fall in its median house price soon during 2008-2009 period at this point in time, as previously projected by some of market analysts from the Eastern States.

5. For your further comments and further discussion, please.

6. Thank you.


Cheers,
Kenneth KOH

 

[Ausprop]

reading some of Buswell's plans for Perth, there is a possibility that a change of govt may be on the cards soon... someone with some vision and determination to drive the state forward. His plan to cut nuisance taxes such as payroll tax and real estate taxes e.g. stamp duty can only be positive

 

[kph]

I don't think that quite right Ken,
The resource boom will continue for reasons other than Federal forces trying to manipulate interstate migration.
The migration is a symptom fo whats happening economically.
The jobs are in WA and QLD.
Supposedly there is a shortage of 40,000 required just in the resources area, let alone in all the other areas of employment.
We are simply short of qualified and skilled workers in WA.
The reason for promoting migration to WA is more to prevent the boom from stalling due to lack of workers rather than to pump it up.

The forces that will detrermine the length and strength of this boom reside overseas from the countries that are buying the resources and investing directly into these resources.
If they pull the plug, the boom will end. ie.. its not controlled from this end of the rope.

kp

 

[kph]

reading some of Buswell's plans for Perth, there is a possibility that a change of govt may be on the cards soon... someone with some vision and determination to drive the state forward. His plan to cut nuisance taxes such as payroll tax and real estate taxes e.g. stamp duty can only be positive

Labor is in power despite itself, and due to a lack of any credible opposition.
The libs may have a chance now.
And with the new leader in place and expousing 'vision' etc, I predict they will oust reporter Carps at the next election.
That is unless they go back into meltdown with inhouse factional fighting and back stabbing within the party.

kp

 

[TheAnalyst]

I support Kenneth, KPH and Ausprop's comments.

I believe Liberal now may have a chance but they must work hard and present few more quality faces. I really dislike labor for the last few years.

 

[Kennethkohsg]

I don't think that quite right Ken,
The resource boom will continue for reasons other than Federal forces trying to manipulate interstate migration.
The migration is a symptom fo whats happening economically.
The jobs are in WA and QLD.
Supposedly there is a shortage of 40,000 required just in the resources area, let alone in all the other areas of employment.
We are simply short of qualified and skilled workers in WA.
The reason for promoting migration to WA is more to prevent the boom from stalling due to lack of workers rather than to pump it up.

The forces that will detrermine the length and strength of this boom reside overseas from the countries that are buying the resources and investing directly into these resources.
If they pull the plug, the boom will end. ie.. its not controlled from this end of the rope.
kp

&&&&&&&&&&&&&&&&&&&&&
Dear KPH,

1. I fully agree with you that the ultimate driver of the resource boom is its external demand coming from countries like China, India, USA etc.

2. Given the existing tight labour market conditions in Australia, I am personally encouraged that at least the new ALP Federal Govt is positively trying to curb down the existing domestic inflationary pressures within Australia, through a better match and more efficient use of its (limited) available labour to alleviate the existing labour shortage in the resource rich states of Western Australia and Queensland through inter-state migration, removal of housing stamp duties payments, as well as through other measures such as the proposed achievement of A$18 Billion budget surplus for Fy 2007/2008, encouraging private saving, tackling skills shortages and infrastructure bottlenecks, and increasing workforce participation.

http://www.smh.com.au/news/national/pm-targets-18b-surplus/2008/01/20/1200764081341.html

3. All these measures will augur well for the various existing housing markets in Australia in particular those in WA and QLD.

4. Thank you.

Cheers,
Kenneth KOH

 

[TheBacon]

4. Consequently, it appears that the Perth property market is unlikely to suffer some 10%-20%fall in its median house price soon during 2008-2009 period at this point in time, as previously projected by some of market analysts from the Eastern States.

In the areas I look the market has already dropped 10% from mid 2007 and is now stabilising.

Buswell seems a reasonable candidate for Liberal leader (finally). However, although Carpenter hasnt been your typical political leader (he's quite reserved and downbeat), I dont think he's going to be a pushover in the polls.

Ah, more elections that will have little effect on the property market, despite all the noise to the contrary from some quarters.

TB

 

[Kennethkohsg]

In the areas I look the market has already dropped 10% from mid 2007 and is now stabilising.


TB

&&&&&&&&&&&&&&&&&&
Dear TheBacon,

1. I agree with you that some Perth suburbs' median house price has fallen by 10% or more by now ( similar to the Western and South-Western Sydney suburbs after the post-2003 market boom situation).

2. However, collectively, the Perth Property Market is still holding "firm" in 2007 with about 2.8%-3% annual growth being reported.

3. Thus, I believe that if the Australian Economy is able to remain largely "un-affected" by the wider global financial crisis, as in the past 16 years, then, I am personally confident that the Perth property market is likely to rise further given its present housing fundamentals, including its growing population, tight labour market and strong resource economy etc.

Cheers,
Kenneth KOH