The bear gang is out in force.

True but it is dependent if property is actually a business, and can make money in all cycles, that takes a certain skill set IMHO... and I have not met too many investors that actually do this successfully and not referring to anyone on this forum... so please don't shoot me.

From my observation most investors are buy to hold so my gut tells me in current markets there may be a very good chance of eroding capital

 

If you try to catch a falling knife, you end up cutting your hand. So the analogy trying to convey that you could hurt yourself financially if you buy a property in a falling market. Nothing to do with your kitchen floor. You're overthinking it.

 

There are lots of properties in Perth for sale at very close to build cost with a very small amount for land value or just land value depending how you look at it.

 

Iron ore say no more....mines might start to reopen and we might see a positive change in Perth.

 

It actually does. Catching the falling knife is picking it of the air before it hits the floor and trying not to cut yourself.

The other option is letting it hit the floor and picking it up. Much safer.

The only problem with the analogy is markets don’t make a clang at the bottom.

 

One indicator I've noted in the past for a good time to buy ( seen this on at least three occasions in Sydney ) is when the sale price is BELOW the cost of a new build .

So IMHO , if developers can still make money , or at least cover their costs , the worst may not be over .

Cliff

 

Exactly. It's not the end of the world it's just an opportunity cost and delay to financial freedom. One of my best friends relocated to Perth and purchased a property in Forrestfield in 2015 for 485k. Despite the announcement of zoning changes, infrastructure (e.g. train lines) the value is now worth <400k. However, it's a PPOR so it's only a paper value loss unless he sells it. In hindsight it's easy to say he would've been much better not purchasing and saving up a larger deposit / purchasing an investment interstate. Although, if Perth had acted like Sydney in 2015 houses could've shot up 20% and he'd be locked out the market.

 

It certainly does get emotional sometimes - topics about house prices seem difficult to keep calm and rationale about (perhaps some have gained/lost a lot and it drives an emotional response).

On the flip side, some of the 'bears' are actually high quality contributors, provide great charts/analysis and some quality insights about how things work. I've learned from people who have different views to me and enjoy that part of the forum. Also bears who are open minded and reasonable can easily switch to bulls over time too. At times (like 2018), a healthy dose of skepticism/realism can help the hip pocket and avoid poor decisions being made .

 

But does this mean we should buy? just asking?

If investors are servicing debt and waiting for recovery, would it make more sense to wait for recovery and then buy in early stages, especially if gross yields are 3-4%???

 

Perth had a 2 year boom between 2013-14, driven by FHB

In late 2014 Perth market peaked

I think investors in main are collectors, never sell , winners and losers

 

Not sure they can at the moment. Most will not be selling, buying and selling costs will kill it

Builders have better margins and are probably making it work

 

But its a property forum .....in the main everyone wants to hear the good stuff, and there has been plenty of good stuff....... since 2013 oz has had 4 boom cycles that I know of, and plenty of threads on this, do a search

Now the worm has turned, if we are prepared to report on boom cycles then lets also be prepared to learn and share views on the current downturn.

 

I actually think for those types of investors its even more important to buy at optimal parts of cycles. No one can get it perfect every time but for me close enough is good enough. Like I said I'm not advocating to go out and buy anything now. I'm just saying I see value and opportunities and even more so I predict over the next 24 months.

Despite what some may think, im not a bear or a bull and the whole notion makes no sense to me. I just look for value and when I see it i pounce.

 

The post was in reply to current Perth prices still being too high hence stopping the poster from (I assume by the post) stopping them buying a PPOR

 

I'm obviously positive for the Perth market but always up for healthy debate.
I heard Exclusive homes went into liquidation the other day, so maybe the builders are not making money any more.

 

Guess that makes you a tiger then

 

That's a shame, he built my 3 villa development, he was a good smaller builder

 

What kind of market is it when its not a bear nor a bull...??

Bearabull.

OK that's my daggy joke for the week.

 

Builders go broke all the time. My BIL built in one of the booms. His builder went broke, moved to another builder who went broke them finished the build himself. Ironically they went broke because they took on too much work.

 

There are so many suburbs in Perth where established houses are selling well below replacement value. Plenty of established suburbs I watch where the difference between a vacant block and a 30 year old solid 3x1 house on the same land size is about $20K - $50K. Clearly a) land has held it's value and b) the house clearly has more value than this, hence great buying established in these cases.