NKSK version 2

[QUOTE=renth]The dream treble - Perth prices drop, UK prices stay the same/rise exchange rate $3 to the pound. Can't see it happening though.
QUOTE]

This made me laugh! I thought "Bloody hell, he must know what I'm thinking and he's taking the p*ss!!"

steve99

Perth average house price hasnt reached $360K yet to my knowledge I thought it was still hovering around the $300K mark. Im not sure what average salaries are but I would imagine $52K is pretty low as the total household income, I would think its more often than not nowdays that there are two incomes, maybe not at the same level but I would think it would be nearer $75K.

There's no real reason why long term the East coast should be more expensive than the West,I would think the demand from people wanting to relocate from overseas to Perth will be as strong as it would be to Sydney/Melbourne.
There seems to be a big influx of people into WA that are already well up the ladder, For example I would think a lot of people coming in are seeing what they can get for say $750K here in Perth and comparing it with Sydney/Melbourne and realising how much cheaper it can be in Perth, I bet a lot of them wont be working at all, and those that are are likely to be well above the average salary.

It would be interesting to know what you can actually get for you money in other states, maybe im thinking what we have as a lifestyle and for the money in Perth is actually better than it is.

As an example: If you wanted to live in say a 4/5 bed 2 1/2 bath house with pool, 2mins to beach/ocean, 15-20mins peak hour drive into the CBD on about a 900SqM block what would it cost?
I dont know the other cities well enough but it may not even be possible to get this anymore?

Steve

Siren & Brian

Well then I know nothing about real estate.

NKSK version 2

I still think the price differential is the key. No matter how wonderful you and I think Perth is, it isn't Sydney. It just isn't the drawcard that Sydney is - and in reality it isn't going to be (at least not for many,many years).

So, unless there is about to be a fundamental change in how property is viewed all over Australia and a more equitable price structure emerges (where Perth and Sydney house prices are more equal), there will always be a differential - and this I suppose will be the ultimate ceiling for Perth house prices.

So, if historically, Perth and Sydney have never come closer than a 20% difference in house prices and Sydney's median price is currently $520K (but set to fall further) then we can expect Perth prices to top out at somewhere around $400K. (if you believe this theory)

Can anyone add some meat to these hypothetical figures or got any data on long term price differentials between the cities?

BlueToffee

Hi all

First time posting on this site !

We have just returned from getting our visa stamped and plan to fully emigrate this time next year. We spent a good 3 weeks looking at property from Sorrento up to Iluka. Our experience, for what it is worth, is that the prices are going mad and we are in the process of buying now rather than waiting until next year as we feel houses will have gone up by at least 5-10% by then. I have just locked in the dollar at $2.38 as this is jumping all over the place as well!

I agree that the property boom in WA probably wont last, but I went through the crash in the late 80's in the UK and was in negative equity for a number of years but that pulled back and we are now in profit. So I suppose, what I am saying is that it depends on whether you are looking to make a quick buck or to buy a home you intend to live in for a while. We just feel that when we come out next year the properties we are looking at will be $50-$75k more expensive - but thats a gamble we are taking and we could end up with egg on our face, but all the signs and trends are that is not the case, for the short term anyway.

cheers

Perthforme

Long term its all good i will buy a plot and build the home i want for us and not worry about the market as we will be there for a long time #
If you want more WA info lookie here;
http://www.expatsinwa.tk/

steve99

I agree I think there will always be a price differential at the average level of both Perth & Sydneys housing markets, just the volume of houses/people over East will keep demand higher which will maintain the higher average price. I would say the reasons some would see Sydney as being more of a drawcard over Perth others would see as reasons not to prefer it...
Based on your $520K vs $400K example I think it would take a while for the Perth average to get that high, I cant see it gaining more than 5% per year over the next 5yrs. If they did get that high I could see a higher likelyhood of a sudden fall in prices.
I would assume the average prices we see for each city are based on similar citeria in terms of the property, but I wonder if they take into account things like location, travel times etc? are you really comparing like for like, I dont think so, for the Perth average price you could probably live within 10mins drive of the beach and 30mins of the CBD, could you in a replica house/land and do this in Sydney? I doubt it very much.

Where I think the money is still to be made in Perth is around the $600 to $1M bracket, the property in these areas is only going to become more and more popular as people move up brackets locally, plus people coming in from overseas and interstate etc etc are largely looking in this price bracket not at the average level.
As I said previously I can see the market still pushing on relatively strongly in these areas over the next 5yrs.

Whichever way I look at it I still cant see any real reason for a drop in Perth property prices, Id be more than happy if they do but I certainly wont be holding out much hope, and I certainly wouldnt be holding of making a purchase in the hope prices will come down. I've missed out on 2 investment property's in the last 12months because I was nervy about the commitment, both would now of gone up by around 20%.
Steve

NKSK version 2

Further to the possible direction of Perth’s housing market and the analysis of Sydney vs Perth prices…….
The data below shows the median prices for Sydney and Perth since 1981. (Thanks to ABCDiamond for the data). (excuse the formatting)

The third column is the ratio of Sydney to Perth. There is a vague cycle with a period of about 12/13 years between peaks/troughs. The biggest discrepancy occurred in 1988 when Sydney property was 2.28 times as expensive as Perth’s.
The least discrepancy was in 1994 at 1.55 times. (But note that the ratio dropping below 1.60 is extremely rare – just for two consecutive years 1994 and 1995)

Translating that to today’s prices……Sydney median price is $520000 so median Perth price should be no lower than $228000 (making Sydney 2.28 times as expensive) and the highest median price should be $335000 (making Sydney 1.55 times as expensive).
Perth’s prices – depending on which source you read seem to be around $300K making a current ratio of 1.73. The long term average ratio is 1.83 times so on long term averages, Perth prices (using the differential) should be $284K.
Forecasters have predicted a drop of 4.5% over the next 12 months for Sydney making the median price $497K. If Perth prices rise again by 9% the Perth median price will be $327K; in which case the new ratio will be 1.51 – lower than it has been over the last 24 years!

Now this to me – and I invite peer analysis!! – together with the lack of affordability with regard to salaries makes for precarious reading. For Perth house prices to continue rising will mean a fundamental shift – the like of which has not been seen for at least a quarter of a century – in the economic geography of Australia.


Year Perth Med.Price($) Sydney($) Ratio
1981 43800 82700 1.888127854
1982 48200 82600 1.713692946
1983 49000 82700 1.687755102
1984 48200 85800 1.780082988
1985 52100 93500 1.79462572
1986 58,000.00 103600 1.786206897
1987 61,200.00 120600 1.970588235
1988 78000 178300 2.285897436
1989 102500 199300 1.944390244
1990 95800 173800 1.814196242
1991 95,000.00 181300 1.908421053
1992 100,600.00 178,000 1.769383698
1993 110,600.00 178,000 1.609403255
1994 123,900.00 192,800 1.556093624
1995 126,800.00 200,700 1.582807571
1996 127,600.00 212,300 1.663793103
1997 135300 235000 1.736881005
1998 142,900.00 258,100 1.806158153
1999 148,500.00 286,300 1.927946128
2000 156,700.00 309,500 1.975111678
2001 171,000.00 350,000 2.046783626
2002 185700 388000 2.089391492

Long term average 1.833533548

Steve99 you know the biggest rises are always before the fall!! (Look at Perth 1988)

nixstuff

A word of warning to all those coming this way, as there seems to be as much chatter as ever about the subject - Perth isn’t cheap anymore. It’s a micro-market, very different from overpriced NSW and VIC, but eastern states investors, high salaried mining employees and brits with money to burn will keep pushing it a while yet. A serious skills shortage is pulling people in - there’s a wide variety of vacancies right now, particularly resources, engineering and construction related. As the populaton creeps up so does demand for services, so retail and service sector jobs are ten-a-penny. And there is always money around, so while eastern state prices take a dip (more like a market correction), developers and investors simply turn their attentions to a market with cheaper entry level prices...

Nosing around at Real Estate Agents and the listings this weekend revealed an absolute sellers market - SOLD, SOLD and SOLD. My former landlord sold their house in 4 hours (City Beach, as Steve well knows), a colleague sold theirs in even less time (Booragoon). These are excellent, established areas in high demand, and $700k+ houses, but it applies across the board - anything under $350k is being snapped up like there’s no tomorrow, because there isn’t for many areas: we’re being told a build today will take 18-24 months because of the backlog.

We’re lucky enough to have just finished building, but affordability just went through the floor. If we were starting today our house and land together would cost $140k more than 12 months ago, and would take at least 18 months to complete (our was finished in 9). Don’t expect to be able to build a family size home within 20km radius of Perth for less than $400k (land, build, finishing) and bear in mind you get what you pay for - some of the cheaper volume builders aren’t exactly high quality and we’ve heard plenty of horror stories. We hoped to buy a second piece of land to sit on, but the slow rate of realise means pressure on prices, and with the blow out of finishing our house, there’s no chance. Once you’re earning aussie dollars...

My advice - buy an established house that you’re prepared to work on, or buy a nearly new home that just needs finishing touches (because replacement cost is much higher). Building at this point of the current cycle is an extreme test of finances and patience - it’s time consuming, costly, and frustrating, believe me. There are still areas with good houses up for grabs in the $350-$450 bracket, but Perth is really a city state - if you want genteel established, you’re talking home counties prices, if you want ocean views, you’re facing a hefty mortgage, if you want a mortgage free life then you’ve either got a monster deposit or are happy to live further afield (not necessarily a bad thing).

steve99

There's a lot more rising than there is falling going on in those figures! the Perth 88 to 92 numbers just look like a slight correction, I dont read that as a proper fall in 90 it still jumped nearly 30% over the 5yr period.

NKSK version 2

Yes I agree - but I still think that the biggest indicator will be the Sydney/Perth price differential. Just reading nixstuff's post also. It all makes sense what's being said but it just doesn't fit.
If perth prices continue the upward trend that a lot people are predicting and Sydneys continue to stagnate or even go down - again as a lot people are predicting then we're heading to a situation where prices are very close to each other (i.e. Sydney and Perth). I suppose that this is possible but again, bearing in mind the size of WA's population, the salary levels and the isolation it just doesn't seem sustainable or even possible.

nixstuff

Sustainable or possible - I have no idea. I'm just reporting from the ground so to speak - WA is in another upward spiral, and right now it's fairly feverish. Personally I think it's ridiculous and we're counting ourselves lucky we got what we got when we got it. Doubtful there's Perth investors buying NSW to fuel the market artificially, but that's what's happening vice versa...whether the local population can afford or sustain it or not.

steve99

I've never got this whole isolation thing people keep going on about how isolated it is in Perth and how that should somehow impact prices or peoples choices to come here, isolated from what ??? Its nearer to London that Sydney is
I see being this far away from Sydney as being a benefit to Perth, it may as well be considered as being in another country for the impact Sydney has over it. Sure there's some historical numbers which show Sydney as being more expensive and a rough trend in how much cheaper Perth always is, but Sydney grew a lot faster than Perth did for obvious reasons, I doubt its growing at the same rate as Perth is now.
There's no long term reason why buying in Perth shouldnt cost the same or more as in Sydney.
The salary gap between Perth and Sydney is coming down all the time, I just checked a number of roles in our Sydney office that have been filled recently, without looking into them to specifically they look to be very similar rates to those we would of achieved in Perth, (I doubt there would be more than a 10% variance)

CORKER

Anyone do a site like this for Adelaide..?????

walla

Today's West Australian:

According to the Real Estate Institute of WA median house prices have "crashed" through the the $300k barrier for the first time. House prices have risen 21% in the year to September. The national median house price is now $330k having risen 2.2% over the past year, in comparison WA prices have risen 4.4% in the quarter up to September alone