How the Boom Happened

If they're coming to study, they only need to get here once.

 

Well they do go back btw terms and years. Family members also visit etc so yeah. If high school u go back 4 times as well

 

That's true.
There would be plenty of other flights from China though surely?

 

there is southern China airlines that flies to Brisbane but majority of students come from south east asia which has the biggest matriculation programs with the universities.

 

Where do Malaysian Chinese come from?
I'm guessing Malaysia or China, but now I'm not sure

 

Malaysia - 4 generations ago, was China well 100 years ago.

 

And now it is probably the best place in the world for food Malay Chinese and Indian all in the one place for next to nix.

 

Yeah mate...Perth exists in an isolated bubble (http://dro.deakin.edu.au/eserv/DU:30055303/ma-rippleeffectsofhouse-post-2013.pdf) and is immune to Macro-economic factors (http://www.lse.ac.uk/europeanInstit...y/CMS pdf/Publications/GreeSE/GreeSE-No88.pdf). There is no effect of interest rates, credit tightening, yields, NG/CGT requirements, oversupply. There was also no foreign investment in mining and even if it was there, it did not flow to broader economy in Perth (especially property).

Even blind Freddy can see the temporary price falls are only due to receding economy. The best guide to the property is the local pub. And as already remarked any analysis is akin to chicken little and inflected by schadenfreude.

Some more schadenfreude from chicken littles who are shaping the country's policies:

• Ken Henry warns taxpayers won't be immune from future bailouts
• Australian banks are still vulnerable to global stocks, according to APRA's Wayne Byres
• It's time for banks and regulators to collaborate, according to CBA's Harrison Young

 

@melbournian are you Australian of Malaysian Chinese descent?

 

i can speak and write in 5 different asian languages (so what say you?)

 

Yeah, I can tell

 

You are a very fast learner

 

nope - i'm just addicted to weekly korean, hong kong, china, indonesian dramas series

 

Please point out where I said that interest rates, credit tightening, yields, NG/CGT requirements, oversupply have had no effect on the Perth market. You can't. Because I did not say that and have never said that. Nice try but I am calling you out on this one. All these things impact the Perth property market downturn. They are impacting and will continue to impact both the severity (how much the market drops) and duration (time to recovery) of the downturn. However, none of these factors were in play when the downturn started in Perth, which means they were not causal (they did not cause the downturn). You have linked to some interesting articles which do not demonstrate that any other factors caused the downturn in Perth. Remember my post was about what caused the downturn and not the factors that came into play after that. So if you would like to point to any actual evidence you have of what actually caused the downturn in Perth, I am happy to critique it for you

No idea what you are saying here mate. I am not sure if you are aware of what the word schadenfreude means but in this context you are accusing me of deriving pleasure from the fact that the market is falling. As a Perth investment property owner, I am not happy that prices are falling. On paper, I have lost significant equity myself and I am not revelling in the fact that other investors have lost money. I am calling you out on this one too. Chicken little? I am not saying the sky is falling. However, it is a fact that property prices are falling. Do you have any actual evidence that prices in Perth have stopped falling? Didn't think so.

The situation is what it is and I will find investment opportunities when the time is right. But that does not mean that I am glad that people lost money. It is very poor form of you to accuse me of that.

 

So they fly here from China right?

 

Can you see the contradiction. It is extremely difficult if not impossible to assign causality of property prices to a single macroeconomic factor. If we assume that the contraction is solely caused by termination of mining boom, then when that causative factor has lapsed, so should the drop in prices and they should stabilize at a lower value. But that is not what is happening (as you agree), suggesting that other factors are at play.

Please reread the post if not the thread to find the origin of schadenfreude and chicken little. There is no way that you are accused of schadenfreude. It is actually the other way around. It was a defensive argument against the accusation that all predicting a fall in prices are guilty of schadenfreude. My interest (or lack thereof) in Perth is academic at best. I have no reason or intent to accuse you for anything. I might disagree with POVs but try my best not to resort to personal accusations and will endeavor to write in third person.

 

This is a simplistic analysis at best. Any drop in prices can be precipiated by a single event (i.e. GFC, end of the mining boom, Brisbane floods etc). This does not mean that when the event ends that the impact on prices will end because other factors come into play after that initial event. For example, in the case of Perth, the end of the mining boom triggered a drop in prices. Since then, many other factors have come into play to impact prices including tightening of credit, reduction in net population growth, interest rate increases for property investors, the Sydney boom, the Melbourne boom etc.

I don't see any contradiction. What caused the downturn to occur and what is impacting the severity and duration of the the downturn are different factors.

As a concrete example, in Perth, the GFC triggered a decrease in property prices. However, once the GFC ended, prices did not stabilise at a lower value. The assumption that they should is incorrect. Other factors take over and drive markets up or down.

Interest rates could be low at the start of a downturn and therefore not the cause of the downturn. However, after the downturn starts happening, interest rates could be (and have been in the past) increased, which could affect both the severity and duration of the downturn. Higher interest rates did not cause the downturn but they do impact the downturn.

 

So what does this actually mean? I'm still trying to figure it out.

 

Sarcasm..

 

Now we have looked at the Perth market in a bit of detail, it might be interesting to revisit the original question, which was:

The answer to this depends on the market. For example, the "boom" ended in Perth with the end of the mining boom. However, at that point Sydney and Melbourne were just at the start of their "boom" cycle. So while the end of the mining boom signalled the start of the downturn in Perth, it did not slow down the Sydney and Melbourne markets.

Tightening credit may have impacted Sydney and Melbourne but you could hardly call either markets in a downturn.

High interest rates are an interesting one. They have been previously associated with booming markets, not declining markets. They seem to follow markets, not drive them.

It doesn't seem like high house prices have been enough to slow down either the Sydney or Melbourne markets and regulatory uncertainty does not appear to have had much impact at this stage.

It seems certain that oversupply (particularly in the apartment market) is going to impact in Sydney and Melbourne but possibly not until after the "boom" ends.

That leaves reduced foreign investment and a receding economy as primary drivers of a housing price downturn in Sydney and Melbourne. I think that will be reasonably accurate.

As far as Brisbane and Adelaide are concerned, some would say they have not boomed yet, so there is no "end to the boom" for those markets at this stage. It is possible that the Brisbane market will benefit to some extent from investors exiting Sydney and Melbourne markets.

It's possible there won't be some grand event triggering a crash in either market. With analysts predicting a soft economy for the next 2 years at least, these markets could simply fizz out.