Discussion in 'Property Market Economics' started by Gen-Y, 1st Oct, 2019.
Why it will take more than a rate cut to fix Perth's housing market
Don't you have an opinion?
With high unemployment people can't get credit. With house price decline banks are likely less willing to give easy credit. With a massive oversupply of housing still to be absorbed there's far more supply than demand. All of this means house prices aren't going to shoot up any time soon. In saying that a house with decent land close to the CBD should give a decent yield and over time may give good capital gain. Just don't expect the capital gain to occur in the next 24 months.
The only thing I don't see is how Sydney isn't in the same position as Perth in 5-7 years time.
Sydney is a global city with a more balanced economy and doesn't have an over reliance of mining .
When I originally got involved in property , i had access to stats going back further and my recollection is that in the past , there was an episode where the eastern states boomed and that didn't translate to a boom in Perth .
Just makes me a little hesitant to buy in Perth while trying to pick the bottom , just in case the bottom lasts longer than expected .
But they have a huge reliance on residential property construction which is taking and consumption which is looking incredibly weak. Prices are also way higher than they ever got in Perth.
I don't invest in Perth for many reasons. It isn't a diversify market.
Yes I do have an opinion, just don't want to upset the Perth viewers.
I do quite agree with many points in the article. Though you could say that as Perth boomed in 2013/14 that we were before the other booms and our lagging behind is contributed to not only the items in the article but other reserve bank manipulations to benefit/control the eastern states markets that negatively impacted WA. The reserve bank has to work on the country as a whole and with a 2 (or 3) speed market the impacts of controlling Melbourne and Sydney was felt as double pain in Perth who really needed some rate cutes in 2015/16/17.
I don't have an answer for it. I don't think the RB is ever going to have different rates for different states so it is what it is.
Perth has been steadily eating into it's oversupply for 4 years now and I don't think anyone will be able to trot out the "over supply" line for much longer as we will be going close to balanced supply and into under supply. The move to under supply will be felt quite sharply as there just hasn't been enough new construction starts in the past 4yrs to maintain balanced supply. There will always be areas with over supply (typically outer ring) as that is where it's most affordable and most risky in terms of CG due to the plentiful supply.
Perth missed out on the big late 90s boom that the eastern states had, but then had it's own boom a few years later (out of cycle with the rest of the country) where prices more than doubled.
Fingers crossed this happens again. Unlikely but we can always hope...
I agree, the oversupply issue has nearly resolved itself, at least Perth is now not much different to some of the other capitals in terms of new supply vs population growth.
I think a big issue is sentiment and that confidence in the market has been completely lost. This is often overlooked because it's hard to quantity, but I get the feeling that price declines now feel entrenched. Its a bit of a classic deflationary viscous cycle of people holding off purchasing waiting for prices to be cheaper next year, which reduces demand and pushes prices further down, etc and will take a while to turn this sentiment around, regardless of the fundamentals.
Seems like a really generic article that has pretty much zero use for any investor actually wanting to do some useful DD.
I was in Sydney around 8 years ago and may people were saying it was in a recession.
Perth gets the old it's a "boom and bust mining town" used too often, it's just part of the cycle.
It needs population growth to turn it around that is for sure, supposedly being the 14th best city in the world to live you wouldn't think that would be a problem, so where the bloody hell are they ?
Perth market snapshot for the week ending 29 September 2019
01 October 2019
Sales activity increased 24 per cent in Perth this week, with REIWA members reporting 675 transactions compared to 551 last week.
The strong sales activity is the highest weekly reading since August 2017.
This increase can be attributed to a 21 per cent rise in house sales, 16 per cent rise in unit sales and 50 per cent rise in vacant land sales over the week.
Listings for sale
There were 13,749 properties for sale in Perth at the end of this week, which is one per cent less than last week.
This week's total figure is 11 per cent lower than levels seen a year ago and the lowest since October 2014.
Perth rental market
REIWA members reported there were 6,187 properties for rent in Perth at the end of this week, which is two per cent less than last week.
This week's rental listings figure is six per cent lower than levels seen four weeks ago and are 19 per cent lower than levels seen a year ago.
Leasing activity increased one per cent in Perth this week with REIWA members reporting 1,019 properties leased.
I have been watching this data for a month or so now. Vacancy rate has gone from over 7,000 looking like it will drop under 6,000 within 2 weeks at this rate. It's falling very fast.
And sales activity up, with listings at their lowest since 2014.
I think this is fairly significant. Seems to be all the fundamentals lining up well.
I’ve had two agents contact me in the past months for two different properties asking if we wanted to sell. The better properties are starting to move. I think we are going to be in a much better market in a year.
For Perth to boom, one condition, although not necessarily the only one, is to have someone desperately wanting what we dig out from the ground. The previous round was China s infrastructure projects. The next round, when? God knows! I agree Sydney and second to that Melbourne are good bets.
Similarly in my area I have had hand written notes and letters asking if we are interested in selling. People particularly hunting for 4x2 homes under $1mil. Difficult to find anything that is move-in ready for OO's at or below that price. As cliché as it sounds "markets within markets" and Perth is not excluded from that.
Unemployment - economy excuses. PPl were saying the same thing about Hobart a few years ago....
Perth rent prices record strongest annual growth in six years
Perth rent prices record strongest annual growth in six years
We are exporting more than ever before, higher than during the Perth properties boom
it just we are in phase 3 of mining boom and there are no jobs in Phase 3
it volume export and automation.
what drive Perth market is Phase 1 and 2, opening and expanding and construction of mines that is now done and dusted, we are in Phase 3 for a while now.
Some form of employment will be coming back for more volume but it wont be like the last boom
The people who were saying the same thing about Hobart were wrong , because they were ignoring the evidence of a change that was visible to people who looked .
You can't extrapolate from " People said Hobart was crap but it boomed" , to "People say Perth is crap so it will boom ".
Perth will eventually go up , but when is the question .
I have a two key indicators I use to give me an idea of whether it's worth while looking at an area . Just spent a few minutes looking at a few suburbs and none of them give any hint of an impending boom , but than can change quickly .....
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