WA Perth or Melbourne??

I would be buying in Perth now. I think the tide will turn soon. New job hopes in construction boom

 

The threads and comments i have read on PC lead me to believe that Melbourne would be the preferred city to invest among members. Although i've also found various comments suggesting that it might be too late to go to Melbourne. the survey results in the thread "Where will be your next investment" indicated that Brisbane / Melbourne is where the majority of investors are looking. Perth came in with a pretty low percentage.

My PPoR is a 4x2 in Canning Vale just next to Livingston Shopping centre. Been valued around 650k.
I'm considering using a BA as i'm very aware that the performance of my first IP can make or break my investment journey and i think engaging a BA may reduce my chances ending up with a dud or having to wait longer to purchase the second IP.

Thanks so much your comments!

 

Do you think you can make money following the herd?

No one knows what will happen to the markets over the next 2 to 5 years. We are all guessing.

 

Not so much by following the herd, but by leveraging the knowledge and experience of people with a much better understanding of the economy than I.. until my crystal ball arrives in the mail anyway.

 

Two charts from an Aus Bureau of Stats update I covered recently:




The long short: VIC and NSW have huge amounts of dwellings under construction, but completions have not fully ramped up. WA's number of dwellings under construction is in freefall and that means completions will start falling soon too.

VIC/NSW rate of supply is increasing, WA rate of supply is decreasing.

 

Does no one build in SA? Their line looks very low

 

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”
― Warren Buffett

If you are buying into a hot market you need to be extra careful, if you are buying into a weak market you can be a little greedy.

I own in Melbourne but would I buy here now, not likely as I feel there is less upside but I don't think there is less downsize. Instead I purchased in Brisbane (started look 12 months ago) and bought in Nov and settled in March 2017. The purchase was not what I was looking at when I first began but 12 months ago I was looking at Melbourne/Brisbane then it turned to Brisbane/Melbourne. Being IP I didn't care where we bought but I see a lot more upside for Brisbane compared to Melbourne.

I also see upside for Perth 12 months ago it wasn't where I was looking due to my lack of knowledge plus it declining. However if I was looking now I would probably be Brisbane/Perth and depending on how the year/s go change to Perth/Brisbane.

 

Its because of a much lower population, so much lower demand by numbers. the line is even lower for ACT, NT and TAS.

Two things for its relatively flat appearance; if you look at SA in isolation it does have a bit more movement than shows here. Just such a small movement that it doesn't register on the Y-axis scale (same reason I don't list the minor states).

The other is that SA has a more consistent population change profile, so there is less 'boom and bust' in their building industry, and accordingly a flatter profile.

 

interesting looking at the graph ( over the year) seems like the winners would be more Canberra followed by Hobart. Brisbane is the 3rd lowest after perth and Darwin. that being said you right that Melbourne and Sydney has grown too much

 

That sounds like a change in the strategy or purpose for which the property was purchased. A PPoR is often very different to what you would likely buy as an investment. I understand circumstances change and I'm really sorry that it has turned out to be such a poor investment for you. That's a tough gig.

I totally agree with you. People are out there on the streets every Saturday paying silly, silly money for properties at auction. Prices well over reserve.

The Melbourne market is a very delicate micro system with many moving parts, some of which you've identified. Many of these parts rely upon each other. It will only take one or two of those parts to shift even slightly and the entire market could be affected. That's what the media don't report on, until after the fact.

 

Kindof goes with my thoughts.

Melbourne was to hot and grew to much with Brisbane having a lot more upside.

There are many many markets and markets within markets however my personal strategy is only Sydney, Melbourne or Brisbane. If I cannot find anything in these three cities then there must be bigger problems.

These are the 3 largest cities and personally if I was looking to invest in Perth I would more than likely invest in mining stocks which will likely have the same return but with less hassle and costs.

You cannot have Syd and Melb at 800-1m for a house and Brisbane at 500k there is too much of a gap. A person who bought a house for 500k a couple of years ago in Sydney could move to Brisbane and live mortgage free. There is also a thread about Mexicans retiring up north as they could walk away with 1M after sale and purchase of new home. This 1M to use towards retirement at 5% income would be $50,000 p.a before tax and this isn't counting anything else the person has.

 

Timing is everything, buy on a rise and sell prior to peak. Otherwise your gains may turn into losses

Did the same as you, purchased/developed in boom 2013/2014 Perth but sold my developments as I saw Perth market was changing/peaking late 2014, jumped into Syd and developed in Melb, have sold developments in Melb and Sold Syd and taken profits. perhaps too early but I don't want to be the last person shuffling the deck chair on the titanic. I am not a greedy person and buying in boom markets presents the opportunity to make quick gains

You can always pick the rise but harder to pick the peak

I am cashed up and currently developing/buying in rising markets, just keep growing capital and cash flow


Mtr

 

Why are you thinking of moving into your next property? Are you talking long-term as I don't understand why you'd downsize from a $650,000 property to a $500,000 property. Do you have any ideas where you would purchase? I've heard a few agents comments recently that their isn't much good stock available/listings. Rob Druit - sells Scarborough & surrounds, and two other agents that sell in Innaloo and City Beach area. Kingsley agents have been running out of listings for months also. If you have an idea where you'd like to purchase I'd start getting an idea of the local market from agents.

 

yup - but Brisbane is no Melbourne or Sydney - they maybe ppl who want to move up there but has it seen any melb like or Sydney like demand booms where properties can jump 30-40% in 6 months?

 

I honestly can not recall when Brisbane had last boom cycle, anyone know?

 

Given population size being a demand on ownership of property the values are normally Syd > Melb > Bris. If a city comes close to taking over Sydney they will be due for a correction (e.g. Perth 2006-2010 didn't change and then Sydney went off.

2002 went from ~200k to 300k in 12 months or 50% growth
2006 wen from ~350k to 450k in 12 months or 28% growth

Source: (bit easier to read the numbers)


Looking at how Brisbane compares now with Syd/Melb



Today the median house prices is;
Median house prices in capital cities
– Australian median house price $695,788 (down 0.4 per cent in December quarter)

– Sydney down 2.5 per cent to $1,025,478

– Melbourne down 0.1 per cent to $718,000

– Hobart up 9.8 per cent to $392,000

– Canberra up 3.7 per cent to $593,000

– Brisbane up 3.2 per cent to $490,000

– Darwin up 0.5 per cent to $608,750

– Perth up 0.4 per cent to $535,000

– Adelaide steady at $430,000

Source: REIA. Weighted average median house price for eight capital cities at December 2015 quarter. Median house price falls in capital cities for first time in three years: Real Estate Institute of Australia

So in theory someone who paid 500k for their first home about 10 years ago in Sydney could move to Brisbane buy the median house and have no mortgage.

500k Syd purchase = Loan 400k + 10% Buying/Sell Costs = 450k
Sell Syd for 1M less loan = 600k.
Buy Brisbane for 500k and less costs = 50k spare.

Yes the person would have to move to Brisbane but having no mortgage is a number of peoples dreams and aspirations.

If Brisbane was at 800k median and Syd was at 1M with Melb at 900k I would say there is very little growth in either city but with Melb being 720k there is only 180k to my made up number where as Brisbane has 310k (or nearly 2x as much). Sydney is the better city for property yes (same they cant win any football) but is it really 2x better?

 

If you take stats as gospel you will completely get it wrong, way to simple.......because time frames can fudge the figures that is the issue.

For example Perth had the mother of all booms during the cycle of 2001-2006/7 median house price was higher than Sydney over $700K close to 2007. However, if you look at the chart/ figures to 2012 then you get a different picture, but its not the real picture, this is why I disregard stats. During the period of 2001-2007 property in Perth was doing exactly what Syd is doing today, but you wont see this in your charts.

 

Considering I had to Google 'these charts' I hardly think I am using them as gospel.

I don't know much about Perth and I don't pretend to, like I said earlier if I was considering to buy in Perth I would probably buy shares in mining stocks and get the same results. There is waaaaaaaaaaay to many markets to keep abreast of and for me Syd/Melb/Bris are the location I consider. There is plenty of options in all of these locations some might have none (e.g. Sydney very little interest myself right now), whilst other would have a whole lot more (e.g. Brisbane, which I just purchased March 2017).

There is always going to be a better deal out there but I don't know the capacity to find this deal and I would rather take action and get 80% of the return then trying and find a deal that will give me 100% return and end up with nothing.

 

Sorry, not intended to personally offend you and I get what you are saying

Many people reply on stats and I just get frustrated because they will never be able to provide an accurate account of what is happening on the ground, that's all.

 

In 2005 I was priced out of selling my home in Perth and moving to where I'd like to live in Brisbane. In 2010, when prices dropped a bit I purchased an IP in the area. The value of the Perth home and Brisbane home would have been on par about a year ago. Brisbane has risen a bit more in the year so their is a bigger gap now. The Brisbane property has only risen by about $200,000 since purchase. It's good value IMO.(around 46% growth- was good buying in 2010)