WA Perth market 2019

Perth?
Pre 2006 - I'd agree.
Post 2006 - I find this less and less likely.

We have so much oversupply that the second a "higher median price" story breaks - we get a flood of 2500 listings.

We have so much over supply we could grow our population 2% and still not make any bumps because of the above; prices will stagnate while rents rise because no-one wants to tenant something they're trying to sell.

Perth is strangled by people not liquidating their assets and allowing a system re-set like the 90s. Therefore instead of having 4-5 years of downward/bottom cycle, we've got roughly 14 years and counting bar a lil' blip in the middle there.

 

Agreed.

Lending still remains the biggest handbrake for WA at the moment, but the rent market has shown significant, consistent improvements.

• According to the latest data from SQM research, Perth has recorded a 6% rise in asking rents over the past 12 months, a modest $10 increase in median rents across a number of Perth suburbs, and a vacancy rate of 3.1%, down from 4.1% last year.
• WA also recorded the strongest rent expectations for the next two years, according to the NAB Residential Property Survey for Quarter 2, 2019. This was the highest of all the Australian states.
• One third of first home buyers (36%) are electing to "rent-vest" as a property investment strategy, and experts are predicting the next boost for the Perth market will be when investors trickle back in to challenge FHB for the market share.

When rents rise, this stimulates the sales market as it becomes cheaper for tenants to purchase their own property (than it is to pay the same or a higher rent for someone elses mortgage). And so the cycle goes.

 

Yes, in a normal market with stock resets.

Perth post 2006 is not a normal market.

 

How do you know lending remains the biggest handbrake? There is no evidence to support that assertion at all. But happy for you to prove me wrong.


In fact, all the evidence points to a lack of demand and a surplus of supply.

 

Could you say a bit more on this? Sounds interesting

 

Don't forget that most property investors buy 1 house only, they are around 30-40yrs old and it's a long term game 20 years or so. Sure the economy in Perth has been terrible and it's forced a lot of people to sell. But once the economy starts up again, wages increase, values start increasing holding on to that property won't seem like such a bad idea.

 

The value of the investment is a function of the opportunity cost.

The opportunity cost of investing in Perth property at any point during the last decade is massive.

Bank interest, the various holding costs, low rents, vacancies, etc.

It’s been a dog and you would have been better off putting your money in virtually any other investment.

 

There is probably no shortage that bought IPs whilst still carrying large debts on their PPOR.
Works fine in a market that keeps on going up.
But can be disastrous if the market goes no where for 10 years and backwards at the same time.
Their income is split trying to pay of 2 properties, when they could have almost knocked one on the head.

 

As per usual everyone's strategy and time frames are different, if you bought a home and land package and waited then you would probably be spot on.

However people have made money in this market and have added to their portfolio waiting for the market to turn.

 

Maybe but it's probably somewhere in between. So when the both properties double in value who would you rather be ?

 

I know you are making generic statements but that is not true. I know many people (including myself) that actually made money from Perth market in the last decade. I also made money from Melbourne and Sydney markets in the same decade (paper profit for the Sydney house as I haven't liquidated). Maybe I am a very lucky guy but I highly doubt it. I don't have any special skills other than a keen interest in property and lots and lots of on the ground research to pick locations and set my entry and exits and see if I got it right. I bought 4 in Perth this cycle and started researching Sydney and Melbourne again for potential locations and entry points.

Maybe I'll loose money this time or maybe I'll get "lucky" again, only time will tell but I am not loosing any sleep over my purchases. Good yields and lower interest rates are only helping my net position.

 

Depends on how you define making money. The facts are these:

Rents down over 25% since 2014
House prices down over 20% since 2014
Vacancy rates at record highs for much of the same period.

Sure, there might be isolated examples in any market of people doing well but most investors got in with the expectation of steady tenants, good rents, rising house prices.

The opposite has occurred.

 

When do you see it turning around? Just in your opinion of course

 

When are you expecting property prices to be double of what they are today?

 

I’m really intrigued to see what rentals will do this Spring/ Summer.

If rental vacancy rates nudge another one percent lower we should see some broad based rent increases and that would constitute the bottom in my view.

Aaron and others are worried that any signs of price increases will see the market flooded with IP owners looking to get rid after years of losses.

They may well be right, so some decent population growth is going to be needed for a head of steam to be built up. On that front, full time jobs data has been pretty good for the last two quarters. Hopefully, that trend continues and translates into population growth.

 

Just had a look at Ellenbrook/Aveley where there seemed to be massive overbuilding and shrinking blocks..vacancy rates falling

 

I'm guessing 5 - 6 years will be top of the next cycle it may not double but 80-90%

 

Im in the engineering field currently working on the lithium plant in Bunbury. We are now having to fifo workers in from Brisbane as there are not enough locally. Hopefully this same skills shortage transfers to construction once the time comes.

 

There are more people working now than ever in WA.

67,000 jobs added since the recession low at the end of 2016.

Unemployment people still number over 80k though; about 30% more than it was during the boom. It’s on the way down. 83k in June 19 down from a peak of 98 k in March 2018.

Things are looking up.

 

I define making money as making a profit after factoring in all costs and taxes.

Rents and house price decreases are part of any correction and some are worse than others. Interest rates have also come off quite a bit so the most hurt people are also the most leveraged and were late to the party. Vacancy rates more of an issue for out-there burbs.

Perth is officially the most affordable major capital city. I understand that some investors need to see broad based uptick in stats but don't forget markets within markets.

The bulk of the "investors" are always late to the party and only slightly ahead of FHBs. When every man and his dog are talking about how great the market is doing, that is the signal to plan an orderly exit. Likewise, when every man and his dog are talking about how bad the market is, that is the signal to start looking for potential entry points. As Buffet puts it:

Be fearful when others are greedy and greedy when others are fearful.