Will the WA/Perth Housing Market Bubble Burst?

there is some really good buying around ATM. I see some places selling brand new for below replacement - not feasible to remain like this with an underlying housing shortage.
 
there is some really good buying around ATM. I see some places selling brand new for below replacement - not feasible to remain like this with an underlying housing shortage.

A number of things can happen then...
1. Prices rise - possible but limited prospects at the moment, a few percent maybe but the 'boom' seems dead in Perth.

2. Building costs decline - not likely. There is construction all over the state sucking up materials, and more importantly, workers. Build costs to remain high for the short term.

3. Land costs decline. Possible - anyone see signs of decreasing sales in new estates yet? When there are no longer waiting lists and when a new stage takes MONTHS or years to sell (not weeks) then land costs will decline. Although the drop might first take the form of landscaping bonuses, extras in the development, early completion bonuses, etc etc.

4. Developers stop developing and buyers stop buying. If there is little profit to develop, and its still too expensive to buy.... Rent rises coming.

I was sceptical of big rent rises as late as a few weeks ago - but I reckon the writing is on the wall...

Either - a decline in prices (land and house/land) - not likely given there is still a lot of demand, especially in the lower end, where most renters come from.
OR - increased rents. Renters not buying because its too expensive = more renters = more rent rises.

OK - time to put the crystal ball away and get back to work :)

Take care

TB
 
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I would completely rule out option 2... I recently read that new home builders can expect an increase of $30k this year. expect dramatic inflation pressures, not price reductions.
 
I would completely rule out option 2... I recently read that new home builders can expect an increase of $30k this year. expect dramatic inflation pressures, not price reductions.
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1. ... however are the number of new building contracts effectively secured by the builders still on the increase or heading towards a steep decline?

2. I do not think that there is still much money to be made investing in the "land and house package" at this stage of the property cycle for the Perth property market.

3. This is especially so, when newly completed houses are presently selling below their real market value/ expected market replacement value in the Perth property market.

Cheers,
Kenneth KOH
 
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Kenneth - Some comments from Coldwall Banker a few months ago were that Perth's building costs were increasing by 1-1.5% per month (12% per annum).

Demand for vacant blocks in $190-250k is increasing while demand for blocks $250-$350k is decreasing.

Ausprop - Where are the properties selling for less than replacement? Two Rocks area?
 
Demand for vacant blocks in $190-250k is increasing while demand for blocks $250-$350k is decreasing.

QUOTE]

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Dear Invstor,

1. Extrapolating from your a/m post further, with Perth median land price presently reported at A$265,000 as at 30th Sep 2007 at REIWA.com, we can then expect this median land price in Perth to fall soon in the near future if what you are saying is indeed true at this point in time.

2. Incidentally, do you have the specific data details concerning the present ongoing effective market demand vs market supply as well as the various ongoing sale of vacant land lots within the Perth property market, to share with us here, at this point in time?

3. Is the vacant land sale still generally on the increase or has it started to decline drastically since July 2007?

4. According to Residex, the total number of house sales achieved for the Perth Property Market in 2007, has amounted to 30,749. It is stll some 1.65% higher than that reported in its previous 12 months in 2006.
http://www.residex.com.au/newsletter/source2008_01aMC.html

5. Based on Residex house sale data/trend and with WA continue to report a strong State Economy and tight labour market situation, I see no immediate fall in the Perth housing price.

6. Casper007 has further suggested that with an average of 500 new migrants arriving in Perth per week, we can expect the Perth Property market to take off again in 2008.

7. For your further comments and discussion, please.

8. Thank you.

Cheers,
Kenneth KOH
 
Dear All,

1. In its attempt to extend the present economic boom in Australia, 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/story/0,25197,23075052-601,00.html


2. Should these measures be successfully implemented in 2008, it is quite likely that the Perth Property Market will be further rejuvenated and may further rise again as a result of increased inter-state migration and population increase, not withstanding the present housing affordability related issues.

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

4. Thank you.

Cheers,
Kenneth KOH
 
The old supply and demand will operate if Treasury is successful.....Guess we'll start to see the ads on TV soon.
Up in Pelican Waters recently on Sunshine coast, they had 30+ vacant lots for sale starting at 600K+ and rising to over a mill. The lot was gone in 6 mins!
So a friend told me.....
JB
 
Ausprop - Where are the properties selling for less than replacement? Two Rocks area?

an agent told me a newish 4x2 recently sold in butler for the gob smacking price of $330k... must have been 'buy the block, house comes free!'. mandurah central, new villa asking $339k, 12 months ago they were selling at $399k, yanchep, two rocks, even anchorage in rockingham, seascapes has suffered
 
Thanks for reply Ausprop. I wish I bought that house in Butler! I have heard from friends with IP'S that it's difficult to get tenants in some coastal areas, (Warnbro, Merriwa) low quality tenant and long vacancies. I was interested in investing in Butler a while back but when I started researching I noticed Property Managers were reducing the amount for rent so I became concerned demand is weak. Does anyone agree? Thanks
 
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Ausprop if the agent was talking about Brighton then I can believe the 330k price tag. Brighton covers Butler, parts of Merriwa and Ridgewood and you can get a 4x2 for that price in the Merriwa and Ridgewood parts. Some 4x2 terrace houses (group of 12) did sell in Butler recently for 330k but thet were only on 220square metres with a small courtyard. They sold out in quick time. Next release was 355k.

Invstor, there is a shortage of rentals in Butler. We had friends recently arrive to settle from overseas and they were always in a line of about 5-10 families wanting the same property. Luckily we were able to get them a rental through a personal contact. IMHO there will be strong rental demand in Butler in the forseeable future due to the number of overseas people who settle in the area and build. It is like a domino effect. People from overseas settle, family comes for holiday and decides to move as well etc etc etc,.

Finally there is still definately a profit to be made in building. I am building a 4x2 on a 360sq metre cottage block in you guessed it Butler (Green's area). Completely finished including site costs, complete landscaping, air conditioning, flooring, window treatments, fencing, painting, stamp duty, interest during building, settlement fees etc etc, the cost is $358,600. I have had the finished house anticipated price assessed at $390,000 by a real estate agent. Rent appraisal is $350 a week and I will be keeping it long term as I believe that prices are low for such a quality subdivision so close to the sea.
 
i think rentals are going begging in yanchep... brand new homes, 300m to the waters edge. a bit of a drive anywhere but where isnt these days.
 
Once Marmion is through rental properties in Yanchep will be in demand and also make purchasing a house there an option for more people than it is at present.
 
hi all, I'm not trying to sell anything!! Just letting you know if you are interested in joining a Perth property investing group, please take a look at meeting point. We would like some like-minded members to join us on a monthly basis to be further educated and enjoy networking. It is a fun, educational, casual group looking for more investors. I hope to meet you soon. :D
 
By the way Ausprop and Allblack, I'm feeling so confused about WA market right now I don't know which way to go. Eventually I want to go coastal though before all the Poms buy it. I hear Aus is in great demand from the rest of the world.
 
By the way Ausprop and Allblack, I'm feeling so confused about WA market right now I don't know which way to go. Eventually I want to go coastal though before all the Poms buy it. I hear Aus is in great demand from the rest of the world.

ah dont worry about the poms..theyre only in joondalup and rockingham..:D
 
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