How many more years of pain for the Perth market?

A year ago, Perth real estate sprucers were saying the market would begin to recover in 2016.

Yet the market has been getting worse with each month that passes, with no recovery in sight. Property values and rents have been on the decline since 2014. Vacancy rates have skyrocketed.

Low population growth, a sluggish economy heading towards recession, increasing unemployment, slow wage growth, and supply of housing increasing have created the perfect storm of the worse property market in decades for Perth...and that's with interest rates being at a record low.

How many more years do you think the Perth property market will be in this mess for?

 

You will see a recovery when we see a recovery in State economy, unfortunately we don't have anything to replace mining.

 

A pickup in mining construction activity seems a way off- Perth seems one of the few major markets depending on decisions coming out of a handful of boardrooms. Have huge soft spot for Freo but rebound may be a few yrs away ...

 

I have a soft spot for freo too. What's the market like for south of Perth?

 

Another Freo fan, North and East parts too

 

Iron Ore prices is key to Perth economy . With Iron prices low and not predicted to recover in near time future , what can fire up the Perth property market?

 

Sounds similar to the Brisbane market

 

people have said this on this forum and elsewhere before- that the Brisbane market is analogous to the perth market.
5-7 years ago, I too would have agreed. Brisbane has come a long way since then. Perth has not. The market also thinks so- rewarding Brisbane with 14 straight qtrs. of house price growth. Perth has not.

 

Perth seems to be a bit of a bloodbath atm. I can't understand why there are thousands of vacancies??? Where did all the people go? Did they move interstate or purchase their own houses or are there just more people living in each household.

Anecdotally one of my best friends lives in Perth he moved over in 2011 from Adelaide with his wife Initially he got a job in the mines as a supervisor, but he got retrenched earlier this year and is on around 50k a year (huge pay drop from what he was on). His wife still has the same job in Perth, but they dropped out of the rental market because they purchased their own home. Even now they are not struggling they just have less income, but it's still managable with their expenses etc.

 

In fairness, Iron Ore prices are up 40% this year.

 

Where did the people go????? back home, we had lots of interstate FIFO workers who lost their jobs.
We were once number 1 State for immigration, that title has long gone now.

 

People moved back to Sydney and Melbourne when the mining boom ended. There was a time lag between people leaving, the Sydney and Melbourne boom and the Perth market dying but ultimately, many people left to return to Sydney and Melbourne markets boomed and the Perth market died. But house prices aren't driven by supply and demand

 

.... and that is why Brisbane did not repeat history and follow the usual boom cycle after Syd and Melb
Unfortunately QLD is also heavily reliant on mining industry.

 

OMG... who are the 2 who voted 1 year???? Only joking sort of

 

New housing estates and net migration loss.

I voted 4 to 7 years. Falling Market for next 6 to 12 months and then signs of stability for 2 years until cashed up east-coast investors start buying followed by the general mass market and it's boom time.

 

Yeah that's why I always think population growth is one of the most important aspects of residential property. People in Sydney don't earn twice as much as people in Adelaide, but the prices are at least twice as high.

 

Not really. Mining, oil and gas only accounts for about 30% of WA's GDP (GSP). Yes iron ore is the majority of mining here in WA, and the drop in prices has resulted in decreased royalties to the state's coffers, but Iron Ore price does not drive the entire WA economy.

Business confidence is low due to sentiment from the commodities correction, that was always on the cards (double whammy of iron ore and oil and gas). Gold has been going well though, nickel is picking up too. Once business realise that things really aren't that bad here, you'll start seeing business investment and employment pick-up.

I think that the majority of leavers have left, commodity prices have stabilised somewhat, and unemployment is around the same as the national average.

I don't think Perth property will boom again for a while, but I think it will start to recover steadily in 2-3 years time. Outlying suburbs/new estates will feel the pain for longer.

 

Perhaps not sure? investors, in particular those who don't reside in Perth don't realise that the property market in Perth actually rose during 2013/14, bust cycles can last for 7-8 years, I don't see recovery for years, in fact as I mentioned many times higher end blue chip $1.5M+ has still not recovered from 2007?? Why????

MTR

 

I think the high-end blue-chip market was driven by non-financed sales ie literally cashed-up buyers.. There were lots of people who had done well on the stock market up to 2007/2008, particularly small cap junior explorer/miners. There were also a lot of wealthy Indian and Chinese buyers piling into Perth at that time. Post-GFC the small-cap rock stars are broke and the foreign money has moved to Sydney and Melbourne.

Now, there are far fewer buyers in Perth that can afford the $1.5M+ properties, fewer wealthy stock market darlings and fewer H-DINKS (high,double-income no kids) compared to Syd/Mel.

That would be my guess.

 

I agree, and I just don't see this end picking up anytime soon. Unfortunately its a bummer