La Vida loca

Perth house prices are crazy and unrealistic.

Drive more and more people into rental market, good for investors, what happens long term?

Have an ageing population heading for disaster as Super wont cover it will it.

Short term vision by alot of the Baby Boomers with greedy values.

ABCDiamond

And why blame the Baby Boomers in particular ?

WA prices were pushed up by all the new workers arriving in the area for all the high paid work being offered, and needing to take any accommodation at any price.

The prices may also have been influenced by all the new migrants to the area from overseas.

What age are these Baby Boomers that are moving to WA and taking all the jobs and buying all the houses up ?

La Vida loca

Not all about migrants, residents too I must add.

Look at the demographics that arent published regards people in the property market, and thosearound us.

Those who didnt get on the market are now pretyy much screwed aslong as an affordable existence goes.

As for the baby boomers what a greedy bunch they are, and they have the cheek to complain about how their Super is stuffed, I feel sorry for the generations they have let down in pursuit of their own wealth.

Baby Boomers inherited the wealth from the WW1&2 generation who basically were very conservative and then splashed it out on new cars, 2nd homes etc....

High wages are ficticious if you have to pay higher outgoings, its capital greed.

I say means test it all...and drop all the free handouts from the government. Puts people on a equal pegging.

ozzieeagle

Uptil now I've been pretty well bullish on the housing market. In fact prices in my own particular municipality went up over the last quarter.

Something is changing though. I sense a huge downfall in the FHO's market coming through, which may well flow through to the rest of the housing market.

Should be ok, for people without debt though.

I definitly wouldnt be buying a new house at present.... Changing over or up is something else though.

ABCDiamond

The WA population has increased enormously, but the stock of housing didn't keep up. This supply and demand feature, in itself, would have been a major cause of property price increases.

northernlights

Here’s a snapshot of a few Northern Suburbs in Perth from the REIWA website. These are popular migrant suburbs and there are quite a few homes/land that haven’t been sold in particular areas despite the FHB Boost and 50 year low interest rates. So much for the shortage of homes/land argument.

Suburb, Homes/Land 4 for Sale, Under Offer/Sold
Butler 115, 25
Carramar 59, 12
Clarkson 124, 22
Currumbine 79, 8
Ellenbrook 135, 23
Hillarys 74, 15
Iluka 59, 4
Joondalup 74, 11
Kinross 37, 14
Lansdale 129, 17
Madeley 49, 5
Merriwa 29, 16
Mindarie 110, 4
Mullaloo 45, 10
Ocean Reef 72, 13
Pearsall 98, 2
Quinns Rocks 110, 5
Tapping 105, 38
Wanneroo 100, 16
Yanchep 63, 2

ABCDiamond

Things have changed recently, less work, less people moving to WA, more properties available and lower prices.

This graph shows that property prices rocketed in 2005-2006, especially in comparison to the Australian average, and then began to drop a little from the end of 2007.

Todays property market bears no relation to the time when prices were booming, and employers couldn't find enough workers, and workers couldn't find enough accomodation.

northernlights

Your chart says it all, Perth is overpriced, even now.

With the latest US Retail Sales figures showing that spending on consumer goods (mostly imported from China) have dropped more than anyone expected, says to me, that WA has a lot more downside regarding property prices.

La Vida loca

Only in the wrong places, that have exploded through greed of the buyer and cruel manipulation of the RE agents, knowing so well that a load of cashed migrants will spend there cash.

Location Location Location, thats the area which will hold up and never see a decline in people wanting to move there...

northernlights

You say, location, location, location but New York (centre of the universe as far as I'm concerned) has had Deutsche Bank say that house prices in NY will fall 40% from peak to bottom and Goldman Sachs 58%. If house price crashes can happen in London, NY and everywhere else in western world then I can't see how Sydney and rest of Australia will be different. Oh yes, it's 'different' here, no sub prime, banks are more prudent, etc, etc. The financial world is globally connected.

In Perth, the traditional 'well located', i.e expensive suburbs are getting hammered.

Cashed up migrants are no longer the norm. Exchange rate = crap, house values in UK, Europe and everywhere else in world are falling.

A bit of anecdotal evidence: I have 2 mates/families who have recently come over to Perth, can't sell house in UK so renting it out until prices improve. They have no money for deposit for house here and cannot afford a $700 + a week mortgage on a bog standard home, so will rent. Great news for landlords but I see the DREAM fading for my friends.

La Vida loca

MaybeI am one of those friends, as that is a situation I am in.

Thing is, I have saved, I dont recieve first home owners, I used that chip a few years ago.

Maybe its about balancing things too, you can get a second home if you select the right area, and are willing to live modestly.

Too many people want it all now, which is why we are in this mess in the first place.....

IvanM

Investors in Australia have traditionally gone for capital gains over rental income as the CGT is taxed at a lower rate and rental losses can be written off against tax. Right now higher rental incomes and capital losses are less tax efficient.

The interesting thing about super is that to be maintainable there still needs to be a productive population as well as a sufficient pot to live off. The real fun of this crisis is that the cash handouts and stimulus packages are leaving many a western nation with huge debts and little left to fund bludging retirees.

northernlights

I would not touch an investment property right now, regardless of price/rental yield/negative gearing. Cash/Gold is king, you are doing the right thing La Vida by not buying and saving. Too many amateurs in the market these days, heard about the shoe shine boys in NY in 1929, same story now, everyone's a property investment winner/expert.

Too many people are getting levereged up, borrowing against 'house price paper gains'. If this ponzi scheme shows any signs of crumbling then they are all in for a big hit.

Anecdotal evidence. A few very experienced property investors I know ( been in the residential/commercial for 15 years plus) are sitting on the sidelines regarding Perth. The fat has gone out of residential and commercial market. They said they would put their money into stocks but seeing the ASX failed to get above the 4200 fibonacci trendline/4000 long term trend line, the stock market is also looking dodgy. Looking forward to the next 6 months.

the troubadour

My sentiments exactly.But rest assured our time will again come.
And i would not limit myself to the Perth market either.
There is very likely to be some real deals coming up in time
in the international market.

northernlights

Yeah, 2:1 AUS/GBP. I could buy a nice semi detached Edwardian/Victorian house in the outskirts of London (£300K), or a 'Perceptions/In Vogue' $600K prefab in Perth, in a non descript suburb. What a joke.

Perth has the one of the most expensive real estate on the planet, re: income/price. Mining is the major boom industry in Perth and that's on it's last legs. The world's banking system is on it's knees.

I wonder how many people on this site who would move back to UK if the exchange rate got to 1:1 ?