How many more years of pain for the Perth market?

Home prices keep rising, Melbourne overtaking Sydney

"In stark contrast, the resources-driven markets of Perth (-7 per cent) and Darwin (-6 per cent) continued to slide on an annual basis, with no end in sight to the correction.

CoreLogic said both markets have now suffered double-digit falls from their property price peaks.

Tim Lawless said homeowners in these two cities should not expect conditions to improve soon.

"We're still seeing pretty steep rental falls in both these markets, as well as very high listing numbers," he observed.

"So until we start to see stock levels coming down and the rental movements starting to level out, I really can't see that the negative trends we're seeing in dwelling values reversing just yet.

"So probably during sometime in 2017 we'll start to see these markets levelling out, but I think capital gains are still some way away."

 

Just a quick thought guys.

We are now in the period of record low interest rates. It was on the news today that RBA won't cut official interest rates unless Australia is in a very dire economic situation. Therefore it looks like the only way for interest rates from here is up.

So at the moment we're having a falling Perth market with record low interest rates. The interest rates can only go up. Isn't the rest of the equation quite obvious?

 

I remember people saying this the other 2 or 3 times we had record low interest rates.

 

.... and Perth property prices are falling, is it really wise time to buy in Perth market? Stick it in the bank at least you have 2%??? and not losing money

If job stats hit 7% ... and its ugly now, just wait and see what may happen. I hope it does not happen as I am from Perth and want this market to improve but I am a realistic.

I keep hearing its a great time to buy in Perth, that is absolute madness, easiest way to lose money... the best time to buy was in 2013 and sell in 2014, protecting and managing risk is critical in the investment game.
Sorry for the rant, but its hard for me to comprehend that people think they are buying a bargain today... in the Perth market..... Buyers dictate the market and which way it will go always, problem is there is an oversupply, buyers have choice and many are sitting on their hands because its a falling market

 

That's a valid point. But the house prices are falling with decreasing interest rates. Surely at some point interest rates will have to start rising, right?

 

is the vacancy so high purely as people have left Perth with the ending of the mining sector ?

 

The mining sector is actually going along quite well. The construction boom has ended though, and a lot of the constructors and the supporting businesses have packed-up and left.

I'm guessing that we are close to the bottom, but I'm not prepared to bet on it yet.

 

So it would be very wise to pick a vacancy with high demand and low vacancy then.
It would be impossible to call when the bottom is reached, unless there is some new positive on the horizon then this downward price and high vacancy would be remain, right ?

 

I don't get that impression.

I am expecting downward pressures on prices and high vacancies to continue. I am not getting a feeling on the ground of when this is going to turn around. 6 months ago I said 12 to 18 months. I recently heard someone predict 12 to 18 months. There is not guessing really. The only thing to do is keep watching the market and see when things turn around.

Speaking of which, how do we know when the market has turned? I can't use days on market as a metric because I am watching Bayswater, Bedford and Belmont and days on market is already super low for well priced properties. Number of properties on the market is not a good indicator either because with prices so low it has put many sellers off. I guess rents (vacancies and rent prices) are the only reliable indicator?

 

Just because I think we're near the bottom doesn't mean I think it will turn around anytime soon. I just think that people's incomes have stabilised somewhat and the level of job losses has also stabilised. That means the pressure is coming off for people to sell. We're already seeing that because properties are on the market longer, and the sellers aren't reducing their prices (unless they really are desperate to sell).

 

Downward prices are caused by pressures on the vendors to sell. I think we're seeing less of that now, which is why I think we're near the bottom. I think we'll see it flat-line for another year, maybe a few years, until something happens to drive demand again.

I'm generalising with a ~15-20km radius of Perth.. the new estate, outer-suburbs might be a different story though (maybe further to go).

 

Which metro suburbs have been the hardest? What's a 728sqm r40 site in girrawheen or koondoola worth.? Didn't they hit 500k?

 

Iron ore price, coal price and gas prices are going into a rising trend.
Also bear in mind that mining companies have been paying down their loans and refinancing.
Soon they will monopolistically tighten up the supply somewhat so that they can make more money from each tonne of ore.
They will show some excellent profits on stocks soon and draw some investors in and then use that money to start new projects.
Perths future is absolutely fine. It's an isolated economy with loads of opportunity that does not exist elsewhere in Australia.
Nobody is buying at the moment because there is apartment and house oversupply, new properties and established, people prefer to rent and pay down their mortgages. This will make them richer. Perth dwellers will enjoy having less debt and higher salaries in the 2-3 year term.

 

In search of Perth’s property bargains

Good video in the link above showing areas, price drops etc.

 

Current rental market is woeful. I hope none of my tenants leave.... I think I will be in for a rude surprise

Was chatting to someone yesterday who was renting a townhouse in Subi for $500 per week, they have now decided to not renew the lease because they can rent a magnificent house in Floreat, nice location for same price.

 

I think one or two might have gone for very high $400's.

Most are now going for very low $400's, but not moving much stock by the looks of it.

This is the most similar to my rezoned place in Marangaroo: 11 Horton Crescent Marangaroo WA 6064 - House for Sale #123327950 - realestate.com.au

I doubt they will get much over $440k if they're lucky.

 

Yes, thanks to the low interest rates, sudden oversupply of iron ore from Brazil, all the shale gas projects around the world coming online at the same time, incredibly stupid politicians not able to make hay when the sun shone and loads of mine site workers out of work and moving into home and apartment construction, people returning back to the eastern states, we now have a massive oversupply of properties.

Catching falling knives is the situation. It's a great time to buy in the best suburbs of Perth.

 

I would buy within Perth CBD if positive geared with 20% deposit. Are there any?

 

Most high rise apartments ?

 

Dropped rent in Glendalough from $520 to $390. Painful experience but new tenants already so only 2 week gap.