WA Perth is entering Boom cycle

2006/2007 crash/correction, and
Yes, 2008 GFC, share market crash and this is also a time where the wealthy were selling off their holiday homes in Dunsborough etc. margin calls
Pretty sure mining executives got their jobs chopped.

If anyone thinks that the above events would not impact on blue chip property then perhaps I am missing something

I think also a time when they abolished lo doc and no doc loans this had a serious impact on some investors who used this product to access equity which no longer available so they got cut at the knees as they could not access full doc loans.

 

The mini boom started in 2013 ended 2014, from what I recall ?? There is a thread on this on Somersoft regarding this and listings went as low around 7000. I have tried many times to find the link but can not, gives an accurate account of what was happening in Perth at this time on the ground. Perhaps someone can find this link?

Not sure whether you have read this post, interesting read.

 

Perth property listings - under 12,000.
July 2012
going down..

Perth property listings - under 9,000
Nov 2013

 

Thanks

yes balanced market is 12000
2013 stock tightening....boom

 

Fantastic guide to Perth suburbs Tips on choosing a suburb in Perth, Australia

 

I bought in the City of Belmont LGA in 2011. Prices started moving up fast in 2012. I was attending regular auctions so I literally watched the mini boom happen.

 

Investor vs oo mix

What product is selling

Phone lots of re agents, one wsy of keeping them honest

 

Just in case anyone was in doubt about whether the Perth market is booming or not... it's not. I was laughing about this property because of it's weird kitchen and creepy basement but then I looked up the sales figures... not laughing now

Sold May 2007 $690,000
Sold Aug 2010 $710,000
Sold Mar 2017 $640,000

127 Lawrence Street, Bedford, WA 6052 - View Sold History & Research Property Values - realestate.com.au

Really harsh!

 

2002 - 2007 what a great run.
From 2007 - 2017... not so much...

I think we will be a few years before we see the good times again.

Blacky

 

Can this block be subdivided?
Dont you love the blue

 

Also - just because I am a nerd - I usually read the annual reports of the 4x major banks - even though I am not a shareholder.

One thing which I continue to note is the banks imparement charges, albiet they remian 'safely' low, there are repeated comments.
1) Some areas, esspecially with appartments, are over supplied. The banks are cautious lending to these areas.
2) Imparement charges in WA are increasing - somewhat significiantly - to individual mortgage borrowers.
3) some commercial property sectors are struggling

these comments are largely repeated throughout the reports. I am watching and waiting to see imparements increasing in commercial/business lending. This is a signficant trigger - and one I tentatively believe WA is approaching.

Blacky

 

Potentially... yes. In reality? I'm not sure. It could be quite steep in which case the cost of subdivision may outweigh the value of the land. Or I could be thinking about another property.

Beautiful!

 

Impairments should be starting to tick up soon. Perth has had a breather the last half year, but things are slowing down again in China and iron ore price is taking a hammering. The Trump infrastructrue stimulus doesn't seem to be coming as well, so more downside for next half year at least.

 

Some suburbs are still doing OK at the moment. Although prices haven't increased but they haven't dropped either.

As lot of guys mentioned there is still a market within a market.

Of late real bargains are also disappearing very quickly

 

China isn't slowing down compared to last year. The IO price spiked over winter which made absolutely no sense, now it is just correcting. The current IO price trend just means no new Iron Ore mining investment, most other operations will keep humming along.

 

That's because it's not in south karrinyup..if it were it would be booming

 

Perhaps you are unaware that China had a big rally in property prices during 2016? This was mainly due to massive infrastructure spending started towards the end of 2015 by the Chinese gov and relaxation of property ownership regulations at about the same time as their GDP growth was on the downtrend.

All this fed directly into pushing up IO prices as well as coking coal prices, especially towards the end of 2016 and into the early part of this year.

Now that their GDP is back on track, the Chinese gov has since put in place measures to clamp down on the shadow banking sector funding property developers and put in place stricter buying curbs.Check this out, even their top property developer is being scrutinised...
Xi’an Shuts Down 12 Vanke Projects After Accusing Top Developer of Illegal Sales

This more recent article shows whats happening in Beijing.
Beijing homebuyers protest rule that cuts value of units by half

Also due to pollution smogging up their big cities last winter, china will cut 50million tons of steel production this year.
China promises to cut 50 million tonnes of excess steel capacity in 2017 - SEAISI

There's always a slight lag period from property curbs + steel production drops filtering into the iron ore price. Hence I reckon further big drops in IO prices coming in the next half year at least which will not just hit perth/WA but qld state and the rest of australian economy as well. There will likely be a corresponding drop in coking coal prices too, but may not be as bad as IO price drop as the seaborne IO supply is set to further increase this year.

And it hard to call but IO prices could go back down, maybe even lower than $40+. BHP could be doing sub $20 pretty soon.

 

A rally in property prices does not warrant a 50% increase in IO prices. The IO spike only kicked off in Oct and lasted until March this year. This is weird, because construction activity in China slows during winter, and stockpiles are typically rebuilt and you normally expect to see a price dip over the winter months. My guess would be more along the lines of big bets in futures trading in IO and coking coal driving the prices up..

The cut in steel production has been known about for a long time, and is part of a phased shut-down of old, inefficient low-tech mills, many of which are already closed.

I am aware there is something of a personal debt bubble building in China, but I'm sure they'll find ways to keep rolling it over until inflation eats the problem.

 

I think they will end up like Japan did in the early 1990s. Something they are trying to avoid but I think is inevitable. Their asset bubble and aging demographics are certainly pointing in that direction and history is looking to repeat itself. My "older" friends in Brisbane have told me "stories" of how the rich Japanese were buying up everything back then, much like what the Chinese are doing now.

IMHO an age of deflation is coming for china, it will be seriously hard for them to inflate the debt away. This will in turn hit us pretty bad, especially the mining reliant states and their capital cities.

 

Areas around karrinyup ... Murdoch will hold values well. Used to live there and loved it.