WA Perth a safer bet than Sydney?

Not talking long term....but right now....today... Perth is starting to look like a safer place to buy than Sydney...if not now, It's got to be getting close.

Sydney's growth has been astronomical....but if you had to buy right now....it'd be a fairly risky move.

Perth's growth has been the opposite...but if you had to buy right now....maybe it is less risky?

The mining town story has been well documented on here, but I wonder if any of these places now (Gladstone, Karratha, Darwin, Townsville) are moving further up the food-chain, not due to performance, but simply due to the deficit of risk?

Thoughts?

 

Isn't it falling......Valuations dropped 25% within a matter of months - between September and December!

 

Generally speaking, Perth has been a declining market of late. Vacancy rates are up and rental returns are falling. I can't really see a reason to buy there atm.

Maybe it's hit rock bottom and plateaued? Or maybe it's still got more to fall? I really don't know. But buying in a declining market really isn't my cup of tea. Trying to time the bottom is just a gamble. Then how long until recovery begins? 2 years? 5 years,10?

Id definitely not be looking at Sydney at the moment either.

 

I would and did. One IP settled last year in July. But that one was a no-brainer for me. It's a potential development site <10km from the CBD and it pays me to hold it. What's not to like?

I would go again in Perth if I was looking. Yields aren't great but rents may have stabilised.

Some markets within the Perth market seemed to have bottomed out now. If not, it seems they don't have too much further to fall. I wouldn't recommend a buy and hold at such low yields but something where you can add value (renovations or development) could be worthwhile subject to DD and numbers stacking up of course.

 

Im kind of in agreement although I have been consistently wrong about Sydney since 2004.

The scary thing about Perth is still the high vacancy rates and decreasing interstate net migration.

There is a great article here which in a nusthell states that W.A's population is still set to increase substantially over the long term.

Is it all doom and gloom after the boom in Western Australia? | .id blog

If risk is defined as the amount of money to lose ( I concede that's just one definition and fairly loose at that) then The mining towns and Perth etc are much safer as they all seem to be flattening out from their highs. Pilbara is down to 60-70% from highs and Perth has more mellowed out at lets say 10-15% of highs. The capital city will always be less volatile and with much larger 'inertia' than mining towns.

There are a lot of articles out there now about cashed up mining companies with money to spend again. Looking again at the Pilbara. Port Hedland and Karratha are 60-70% lower, yields are 7-10% and vacancy rates are troughed. One can happily wait on capital growth with 7-10% yields if vacancy rates are back in the middle single digits....which they appear to be. Iron Ore price has tripled since Dec 15 lows and Australia and the world seems to need more and more LNG.

Perth is a bit more problematic. Perth has 'issues' the complete opposite of Sydney. Every one in Perth seems to think that prices will always go down, mining has finished and that the end of the world is nigh. Perth is irrationally dispirited to Sydney's uber-hubris.

This should be a great buy signal, but as we always know, moods and sentiments take a while to adjust to 'reality' and realistically with an excess of housing stock with population growth that has dropped from 3-3.5 % p.a down to 1-1.5% p.a, will take a while longer than expected before things get full again. The other kicker with Perth is that yields are not yet attractive for the relatively high vacancy rates.

 

Depending on what you are buying perhaps and risj you are willing to take but if I am buying units, Sydney still makes a lot of sense for me vs Perth. I posted in another thread that Perth unit yield looks to be similar to what I can find in Sydney. I am not an expert with Perth market though but have checked a few suburbs in Perth.

Vacancy rate in Perth is too high for my liking. In Sydney, I think I can rent out my IP very quickly and have done so for one of my IP recently (taken in 1st open). Hence, choice to me is easy, similar yield but one looks to take much longer to rent out. Btw, I am not buying in Sydney now, happy to wait.

 

Leave perth for the local investors who have intimate knowledge and leave sydney for the next 5 years!

I think neither of the above! There's a lot of country between sydney and perf

 

Happy to hear where the local investors in Perth are finding the good stuff.

 

I'd also like the lotto numbers!
Research and a good strategy will help you

 

Depends on what you are looking for.

 

Probably more wish list than reality :

For units: <$400k, good yield (is gross at 5% asking for too much?), low vacancy rate

For houses: <$1m, reasonable yield (gross at 3.5-4%), good CG potential, low vacancy rate

 

Unfortunately low vacancy rate is very very hard to achieve at the moment but the yield part of your equation is easier. But if you were looking at a house sub $1m at a yield of 3.5% then there is probably quite a few that would rent quite easily and therefore achieve the low vacancy rate

 

What? Where on earth did you hear/read that?

What a pile of rubbish. If all of Perth had dropped 25% in valuations there would be a blood bath.

 

How are your perth properties going?

 

Just to be clear didn't say all properties.

 

But you didn't say what did drop 25% so I assumed you had read somewhere something.
What did drop 25% and where?

 

Majority of Perth threads have the same theme
High vacancy, dropping or no movement. Ppor upgrading markets in demand

 

I think there are opportunities in Perth right now but you just have to be alert and know the zoning inside out of the areas/suburbs you are looking.

I know of some investors who are buying in some suburbs of City of Joondalup. Subdividable lots, demoing the old house and then splitting the Lot and selling off the blocks. I've seen proof of 20-30% return after all costs including holding. I can't afford this at the moment but seems like a decent enough return for local investors.

 

Right, you will need to provide addresses for me to believe this one

 

Properties have fallen back dependent on product, location and price point will determine how much in terms of %

Someone recently on forum got a valuation that came back 20% below their purchase price, do a search, I can't be bothered finding the link