Property Boom is Over, what's in store for 2016

Im pretty sure he mentioned Gold Coast from that part of the quote. Honestly, Ive had a quick look at the gold coast, and low affordable housing im not seeing much. Gold Coast market is always harder to fathom and those on the ground will know more, but I think it has traditionally been a harder market and geared towards more to the aggresive investor.

 

Gold Coast because there was an oversupply of apartment, units, what has changed today?

 

Good question.

 

That's possible too.
I don't mind reading his email updates.

 

Re: the Gold Coast and what's happening up here

From what I'm seeing here, not much has changed since late 2015 price wise. There are some sales doing well close to to the beach.

The rest of the area is fairly stagnant, particularly in areas not so close to water, like Helensvale, Parkwood, Coomera and there are some noticeable price reductions. It looks like we are following the Sydney pattern where there are now two different markets, whereas in 2015 everything was going up. The time it takes to sell in these outer areas has increased quite a bit.

The type of RE flyers we are receiving are now different in that they are warning about new housing and/or apartment developments in the area and their influence on price, and suggesting people should now sell, instead of stating that it was a buoyant to hot market which was prevalent last year.

There is a ton of Chinese people here at the moment. I don't know if they are holidaymakers or locals, however, there are not the number of Chinese or English ex-pats attending open homes like there were in 2015 where I'm attending. There are typically 3 to 6 Australian couples attending an open house, which is similar to last year, just now it's without the Chinese attendees or as many English ex-pats.

As mentioned in news reports, there are lots (LOTS) of high-rise apartments being built which is somewhat worrying.

There's a bit of development and upgrading going on as Big Max has said, and I admire his enthusiasm for the Gold Coast, and wish it was to be reality, but the development and upgrades don't seem to be making much of a difference to things overall. I believe in a year or so we will be looking back at 2015 as being the peak of our market, and in reality we are further around the property clock than we thought and hoped. I suspect Brisbane too is closer to a peak than I'd hoped.

I still haven't purchased anything since selling my two IP's (had initially planned to buy in Brisbane) and I still have one to sell once the lease is over.

I hope some find this info useful. I've really appreciated reading some of your insights on Sydney and it's surrounding areas, so thank you.

 

Chinese are not buying now:
- worried about crash back home... Things are out of control but productivity has fallen off a cliff in many places
- very tough capital controls because Beijing is worried about attacks on its currency
- lack of borrowing power

 

How did they manage that?

I didn't witness any Pollies at the Sydney auctions with guns to the heads of the bidders..

 

Here you go, Perth not looking pretty, here are some sobering stats.

An unprecedented 10,200 vacant residential properties are now available for rent in Perth, according to an ABC news report published today.

Perth City now has a distressing vacancy rate of 6 per cent, while the suburbs hover around an highly elevated 4 per cent, about three times the long term average.

REIWA president Hayden Groves remarks, “It really is quite startling.”

With every Australian aspiring to be a negatively geared multiple property landlord, and with a chronic shortage of renters, tenants are the big winners.

Groves told the ABC, “Tenants certainly have the rental market in their favour at the moment.”




Data from SQM affirm the challenge facing landlords as rents plunge across Perth and Western Australia. In the past twelve months, rents for houses in Perth and surrounding suburbs are down an average of 12 per cent. Units are holding up only marginally better at 11 per cent. Over three years, rents for houses have fallen 26 per cent and units 23 per cent. The data shows no signs of abating.

Regional centers exposed more heavily to the mining downturn have notched up even larger falls. Northern WA including the Pilbara region has seen rents fall for houses 35.4 per cent in the past twelve months.

Sale transactions down 40 percent, crash could be looming

In the March 2016 quarter, Perth Real Estate agents observed a 40 per cent collapse in the number of property transactions. This has even the most bullish agents running scared, as a slowdown is normally the precursor to price falls.

 

for one the official interest rate drop/s, policy pertaining to foreign investing

 

Hi Luka
I have not been following the QLD/Brissy market, however when you say its close to peak, but it has not yet boomed? so how can it be close to peak? Trying to get my head around this.

MTR

 

Doesn't look great.
How much further do you reckon it's got to go?

 

I would only be guessing, no idea. I just know its not time to be playing in this market. I am holding off any development projects

 

No worries.
I'll check back in another 12 months

 

Just to give you an idea, my Perth/Spearwoodroject (3 villa development), I sold last financial year would actually be down by $150,000 therefore making no money whatsoever. That is why I like to take some money off the table, when markets turn it is a real loss, not a paper loss.

 

Crikey, that's a big difference.
How do you quantify that sort of thing, ask the people who bought it to get valuations?

 

I sold 3 villas
Front $520,000
Middle $505,000
Rear $510,000

Prices have dropped by 10% at least which equates to $153,500.
Its not clear whether they will continue to drop further, but I am very happy I sold

Rents have also dropped by 10%+.

 

I know a few people who were buying ips in Perth a couple of years or so ago on IO max lvr. I did suggest to them to try to pay down some debt because it will help if they ever hit a dip in the market or other money issues. Anyway they looked at me a bit blank and probably thought I was being too conservative. I think these people will be in financial stress now. Sometimes you have to live through a downturn to realise what could actually happen to you if you're overly exposed. I would imagine there's a few distressed sellers around.

 

Ah Ok, that sounds reasonably accurate.
Very happy, especially if it's still on the way down.

 

not funny for those who purchased.

the argument has been raised here many times that there is no point selling as you pay too much tax, but in the scheme of things its much less than the drop in value of the property and if its structured/purchased in a Trust there are many ways to reduce the tax liability and then you move onto better markets where you can actually money.

 

My Views on the Perth Market until at least the end of 2017

The Over 1 million dollar market (which is a huge chunk ) is yet to fall. We will see many forced sales until the end of 2017. Heard along the grape vine that areas such as Burns Beach have some of the highest mortgage defaults.

The 500k-1million , not much movement and discounting dependant on how desperate the seller is.

Sub 500k the market is reasonable active and will remain so as interest rates are low and may drop further.

With the lots (mainly south or the river, hilbert, baldivis , willard etc) which are sub 200k there seems to be lots of activity as these are affordable to many first home buyers. This will continue to increase again with further rate cuts.