WA Perth Market 2015

Interesting times indeed

I had one of the larger volume selling agents in Spearwood phone me regarding site in Spearwwood at least $100k below value some 12 months ago. Also another agent dealing in Willagee area and surrounds, he said the market is down at least 10%.

Both said they are still selling but vendors need to be realistic when setting sale prices.

You always know when things are going pear shaped by the number of calls you receive, these agents don't want to know you in boom times.

MTR

 

Haha I don't normally venture into the Perth thread but it looks like I'm missing out.
Well played.

 

I am helping my mate trying to find a place in Bayswater. Good, well priced properties are selling like hot cakes there too. Good location, good price... gone!

 

Yes, markets within markets. I never expected Willagee to fall back, I should have paid attention, it's so simple supply vs demand, problem is I wanted to ignore this.

When I purchased there was very little suitable deve sites so prices soared, However I knew the perth market had peaked but I ignored this and let emotion get in the way, I loved the area and surrounds, suddenly market flooded, sellers wanted to cash in, damn oversupply prices fall back.

End values still stack up but my concern is if the Perth market continues to fall it will be too tight so now I am putting this on the back burner and watching.

So back to Bayswater - the sites your friend wants are tightly held, not much stock right?

But is there a lesson here? I don't know, however look at my example..? Market is in decline, what do you think? Even though there are buyers jumping in we are still in a declining market, eventually all markets will be effected and are these buyers getting it wrong?

 

He is looking in a very particular pocket, so yeah, very tightly held. It doesn't matter to him the market is falling because he is looking for a family home, so a very long term hold. He still isn't willing to pay ridiculous prices, so has missed out on a few. Still, we are keeping an eye on the market and I think later this year there should be some good buying opportunities.

 

No pressure then, keep us posted on what he buys

 

Good post, its important to always go over last deceisions and see what weve done well and what we couldve done better.

Ive not been interested in sites for nearly 2 years as margins have been low, to me id rather not do something than feel the need to constantly be developing.

 

Good move, am now sitting on Willagee.
Let's see what happens over next 12 months
Blue chip high end still flat, since 2007

Mtr

 

Ill be doing something soonish, i actually like flat markets because the cream can rise to the top. If you are bang on it in terms of feasos and provide a great product you can make great money. If youre **** like a lot of the recent developers that came down in the last shower then you'll get found out and thats a good thing.

People like that helped to ruin the market by driving up prices to ridiculous levels for sites

 

Ok, watching and learning.
Great product is everything. Looking forward to progress on this

MTR

 

I just put a cheap offer on a reno property with future development yesterday. It got signed within 5 hours. so just waiting on finance approval now.

 

Congrats...what area/suburb

I just got my finance approval through yesterday....was very nervous due to the new APRA rules/guidelines. Still came through with no issues..(bankwest)

 

Girrawheen

 

This area has dropped off significantly

 

It has indeed, but I'm paying under $350,000 for 692sqm

 

Prob with 692 is that u need to do 2 storey townhouses to make it work, if you qrent doing multis. Would need end product to be worth at very least 550k for the numbers to stack up imo.

As a buy and hold it could work i guess, price certainly is a fair bit lower than 12 months ago.

Wasnt there someone on SS who was insistent i had no idea what I was talking about and girrawheen was going to be highly profitable? Does anyone remember who that was? Fron memory prices were over 400k at the time

 

please correct me if i'm showing my inexperience, but if you bought well (desirable location, good future prospect) timing is not as important, just have to ride it out a bit?

people will still want to live near CBD/beaches/rivers/hubs of employments, so in medium/long run you should do well?

 

I think that can be true, but it depends a lot on your goals. It could be argued that the money could be better spent in a rising market rather than spending that time waiting for growth.

You could then access equity in the growth property to buy in Perth when it's at the start of an upswing.

There can be a lot of opportunity cost in buying at the wrong time.

 

You are correct, but my strategy is to develop property or flip property when the market is rising. Buying to build now, or in my case as soon as zoning has been ratified for this area. Just not comfortable building until I see a change in the market, because end values may actually still fall back further.

I don't buy property as a long term buy/hold because I am just not interested in feeding the debt monster and waiting for growth. Buying and holding for long term is probably what most investors do, nothing wrong with this, but it will be a long, slow process with resi property.

MTR

 

Correct. Do your own in depth homework and trust your instinct. If your margins are better than the normal 15-20% that most ordinary developers achieve you have built in your margin of safety. In Perth, I would assume builders would be chasing work now. This will ultimately lower build prices (builders will renegotiable rates with trades) adding another margin of safety. Plus you will have less competition as most newbie developers will be scared to develop. Add in good location etc as you described above and you're looking ok.