WA Perth market 2018

Not at all. Reports like this can help identify potential shortages 6 to 12 months in advance and that coupled with other specific market info means you have a greater chance of finding a strategy and then specific sites to fit that strategy, regardless of overall market performance

For example, in a flat market it may support the idea of buying an expensive ppor on a large block with a rezoning coming up and then waiting the 2 years while living there.

Sometimes the combination of future shortage of supply of new lots and rezoning bonus would result in a capital gain far in excess of what a development would return, and be a lot less risky and capital intensive

Looking just at a market wide stay liken commencements without deeper concideration and analysis will narrow your options and lead to lost opportunities

 

I just see it as more land coming onto the market.

Likely from infill subdivisions, HBH etc. I can't see it being a good thing for subdivision of land-only.

Seems Perth continues to shoot itself in the foot.

 

Thanks for the insights. I grew up in Mandurah and recall a family friend selling a quarter acre block with fibro shack in central Mandurah for $700K in around 2007. They did well for themselves; wouldn't want to have been on the other side of that transaction. The old house got demolished shortly thereafter and the block is still sitting vacant. Ouch.

 

Okay, but I still don’t know what that report is telling us. Specifically, if it is foreshadowing a supply uplift.

There is pretty much a golden rule here: prices and supply rise in tandem.

 

I realise you don't know what it is telling us, what I'm saying is that if you did, you would be armed with knowledge to outperform the market.

If you insist on taking an approach that seems to be one of "if I don't understand it it isn't worth knowing" then you'll never get to the stage of understanding it

Saying prices and supply rise in tandem ignores so many factors like demand, changing demand(eg in gentrigying areas) affordability, what kind of supply, etc

Happy to agree to disagree though, it's no skin off my nose

 

No, I'm asking you to tell us what you think the report is saying. You seem to be suggesting that you do know, but wont say for some reason.

Prices and supply do rise in tandem. If you don't believe me do the research. Supply rarely if ever increases without there first being an increase in prices. It gives the supply side the price signal it needs to borrow and build.

for example, prices and supply have fallen in Perth, in tandem, for four years now.

 

I've gone into as much detail as I will, I'm not going to share a specific example that has taken me years of experience to be able to identify when I can use it to find something for myself or be paid to do so for someone else

I'm comfortable that my history of accuracy on this forum at the very least supports the idea that I am not talking out of my @rse

You insist on pointing out that the marker has fallen as some kind of proof that there weren't opportunities, couple of weeks ago I pointed out lots of examples of properties that saw up to 50% growth, Many of which I had discussed on this very forum at the time they were on the market.

Ultimately I don't really care if you get a good or bad result and you're certainly entitled to your own opinion as well as your own lack of profitability in last couple of years

 

I asked you what you believe are the key takeaways form the report in question. Specifically, what it might mean in terms of future supply.


Your response, from what I can tell, is about lots of issues not related to the question I asked.


If you can’t answer the question or don’t want to answer the question, that fine.


Just say so.

 

The state lot activity report dates back to 1999. That's one hell of more than one year of data.

I posted the report to answer a specific question: is there an urban infill subdivision boom occurring in Perth? This report is the closest data you are going to get to answer that.

For example, looking at 2.2 - Final approval: top suburbs and localities, Willeton is ranked #1 with 121 lots released. In Willeton, is this greenfields or infill?

Then compare to 12 months ago, where Willeton had 4 lots released for the Quarter (report here: https://www.planning.wa.gov.au/dop_pub_pdf/State_Lot_Activity_Mar_Quarter_2017.pdf)

So, 4 lots 12 months ago vs 121 lots today.

You can also look at Subdivision statistics by local government. This quarter vs the same quarter last year.

https://www.planning.wa.gov.au/dop_...cs_by_Local_Government_March_2018_quarter.xls

https://www.planning.wa.gov.au/dop_pub_pdf/Subdivision_Approvals_by_Local_Government_March_2017.xls

Take a local government that is not doing a lot of greenfields, guessing it's a lot of infill as far as I know. We are just looking at final approvals, because these are lots actually created.

From the March 2017 quarter to the March 2018 quarter,

Bassendean increased by 142%
Canning increased by 149%
Claremont increased by 125%
Joondalup increased by 223%
Kalamunda increased by 181%
Victoria Park increased by 925%

Maybe you could argue that Joondalup and Kalamunda had greenfield but Basso, Claremont and Vic Park are definitely infill. Vic Park is up by 925%, which indicates that infill subdivision activity is increasing.

I posted that this would answer the infill question and it did.

 

Cheers. So this should start showing up in the ABS supply stats. When supply is as low as it is now it has, in the past, sharply rebounded. Maybe this is a sign of that happening again.

 

First, it's about Lots, not houses. This is vacant land to build houses.

What area are you interested in? Metropolitan Central sub-region?

You only need to consider Final approvals because the rest is irrelevant.

In the March quarter 2018, 557 lots were approved.

In the March quarter 2017, 545 lots were approved.

This is only a small increase but shows that infill is trending up. There will be more supply of vacant land.

What the report does not look at is demand for that vacant land. If demand increases then prices for that land will increase. If demand decreases then prices for that land will fall or people will hold off selling.

This report is only a starting point. It tells you vacant lots are being released in the Metropolitan Central sub-region. The next step would be to select some specific markets within that region, have a look at lots coming to market, days on market and price per square metre. If you track this data over time, is the number of lots on market increasing or decreasing? Is days on market falling or increasing. Are prices per square metre trending up or trending down?

 

You could use the lot activity data in conjunction with the ABS housing approvals and housing commencement data. Remember they are only loosely related though. Housing approvals could relate to vacant land released years ago and infill development can occur prior to subdivision. If you follow the trends for each it should give you a picture. For example, if prices of land is falling then would people want to create more lots?

 

I don't know. That why I am asking questions. I am not sure about what an increase in land being released means exactly. Suggests that there is increased demand and that demand should flow through to new builds to me.

 

If 50 people want to buy in a suburb and ten lots available they will pay more to get it, if 100 lots are available and 50 people want it they can bargain

 

Yes, but are the lots being released in the face of actual demand now or expected demand in the future?

 

What does the data tell you?

it clearly says "assessed", "projected" etc

 

It tells me **** all if I’m honest. Because I don’t know what the relationship between additional lots coming online and future supply is.


Maybe you would like to have a go: Does an increase in lots being approved typically translate into a supply response?

 

Yes.

Hence my response about Perth shooting itself in the foot.

 

Supply responses rarely (if ever) occur in an environment where house prices are falling.


As such, if this does translate into an uptick in supply after four years of declines in will almost certainly mean that the bottom is in and prices are rising again.


On the other hand, the lot releases could just translate to the supply levels we are at now which is not enough to drive price inflation.

 

Here you go. Another piece in the puzzle

https://www.communitynews.com.au/ea...sales-increase-for-third-consecutive-quarter/