Perth is real weird now it is a bubble on a boom, or a boom boom or…..whatever.
Rest of Oz floating (except NE Qld and Darwin…..) US RE going backwards for while … and I think it recently became official but Perth is Nuts.Reminds me of Japan late 80’s or Gold Coast 1982 ( even Four Corners did a program and featured the reasons why this bubble would not burst ) probably fired the program manager, these days they would get a class action against them.
We are watching wild rampant specualation, made without rational judgement.
But ain’t it great to watch !!!!!!!!!!
Agree with your gut feeling.
Originally posted by simple:Quote:Originally posted by gmh454:[
Had my Jaguar XJS V12 5.3L coupe years back. Absolutely loved the car, smoooooth power. You can be going 180km/h and enjoy silence. It had 100L fuel tank which needed to be refilled twice a week for a city drive. Glad I sold the car, it would send me broke with current fuel prises! [blink]
Ahhh those were the days, if they sprung you cruising down the freeway now at 180kmp you would be item 4 on the evening news.
gmh454 – now that was a very bad run if I have ever seen one but then again as you said yourself these are purchases based on emotion more than anything else so probably are not investments – just my 2 cents.
I recently thought I needed a new car a took a few for a test drive – then I realised the only thing that need the car was my ego. I’m sticking with the honda. [biggrin]
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Originally posted by DLPP:gmh454 – now that was a very bad run if I have ever seen one but then again as you said yourself these are purchases based on emotion more than anything else so probably are not investments – just my 2 cents.
No you’ve got it completley wrong you don’t buy children, well not as it is recognised by the law, but I agree it was a emotional issue.
Me personally, I wanted hamsters, much easier to keep,
Oh… were you talking about the properties..
HOUSING
I too am in Perth. My GF and I have been looking at acreage for a while so that is what we have been mainly concentrating on, though, I do keep an eye on other property as well.Not that it as a true indicator, bt then what is, I have noticed a change in the typres of listings that are getting emailed to me. Again, you can’t really draw conclusions from this info as agents seem to go through phases as to whether or not they list properties. Anyway, the type/area we are looking in seems to have slowed in listing, yet, vacant blocks seems to be increasing (sadly no acreage or we’d be really happy) and housing under 300k also seems to be increasing, admitedly, a lot of that is country properties. Draw whatever conclusinons you like but my ‘feeling’ is there is some ‘settling’ by some – maybe its a re-evaluation period, or maybe its a ‘hmm lets not sell now as the bidding over the asking price seems to be coming under control’. Not sure, just watching to see if I can see patterns. I am a full time share trader and I see similar ‘moods’ in that market from time to time.
I haven’t done the figures on what our yield will be as yet as at the moment I am living in my ‘home’ and my GF is in hers with the IP under construction. They’ll all be rented out from next year when we go o/s. We have found what may become ‘our home’ and are in the throws of all the background checks as we speak – but this will be rented out for the 1st 12 months anyway until we get back, which is kind of handy as the current tennants need it till then as they are building. After many many years of riding a rollercoaster and thinking I was going backwards more than forwards finally things seem to be dropping into place – yippee!!
CARS
The CanAm, yes its from South Africa. Hmmm, strange that you’ve even heard of it, 99.9% of people get a glazed look – LOL. There was 100 made for homologation purposes to go and beat the Perana Capri (factory v8 too – just sold mine to help finance other projects). It is essentially what Harry Firth’s XU2 could have been except its smaller, a real handfull due to the short wheelbase but a gloreous sound on full noise and pulls like a train with 217kw (factory spec in 1973) and about 1000kg’s. I love doing hillclimbs, classic rallies and the like and the looks it gets on the street is amazing
XJSC – I drove a new one (friends) back in maybe the mid 90’s and was stunned at how good the wind noise was cruising the highway with the top down. May still get one one day in a moment of weekness, though, an XKR would be better May have to wait though as I think I just committed to buying another Brock.Ok folks, time to report back, done my sniffing around now regarding the bottom end of the Perth market. Just to recap, 2 weeks ago I stated that for a lil while now I'd been purchasing the crappiest houses in the worst suburbs of Perth ,as I thought it was the safest place to be when the heat comes out of the market. (I forgot to mention that I was reno'ing and holding).
The response I got back from my fellow forumites was that the experience of Sydney was in fact quite the opposite, and that the bottom of the market was the most risky, the general reason stated was that the bottom of the market gets swamped with investors during a boom, but then they all sell up when the heat comes off and the bottom end freefalls.
To re-evaluate my position and get a better understanding of my risk going forward, I emailed some estate agents I know and also chatted to a couple of investing buddies of mine. Here's what I reckon:
I agree with all that was stated about Sydney – can't argue with it. And yes, the bottom of Perth is full of investors – can't argue with that either. But I've come to the conclusion that Perth is indeed a “different kettle of fish†to Sydney for a number of reasons – and those reasons will help buffer & protect the bottom of Perth's market.
I've always figured that when a market softens, and interest rates go up, the most attractive place to buy will still be at the bottom because it is there that mortgages will be the smallest. If someone in a middle tier suburb sells their house because they can no longer afford it, then they would have to go buy in the bottom tier, or rent.
Either way, I've always figured category 1 would consistently be in demand. What I believe I have been missing is: I've always looked at the Perth market as a “closed†loop. That is, if the bottom was the cheapest, no-one would bail out of the bottom,. BUT investors, especially interstate investors are able to bail out and go to more profitable markets.
1) My confidence in Perth is based on the fact that Perth is driven by the commodities boom. So long as there is the commodities boom there will be positive migration into WA, good employment prospects, a housing shortage and good rent.
What drives the commodities boom here in WA? – a booming China. I'm a firm believer that the demand from China for Australian commodities will be sustained for years to come. The rest of my argument is based on this premise.
2) In Sydney, when the market softened and investors bailed, people also left the state in search of jobs and cheaper houses. This was a double blow to the bottom sector. Here in WA, if things soften, and it will, there will still be +ve migration into the state by workers associated with the mining sector to help fill the gap left by bailing investors
3) When Sydney and Melbourne went up, comparatively other states looked cheaper (considerably) so people went to those cheaper states. The thing with Perth is, because we lag behind in the cycle, when we have a bull run and prices increase to what we West Australians think is exorbitant, we are simply equalling the affordability, or lack thereof, of the eastern states. Sure WA has edged in front regarding median house prices, but not but a large margin.
What I'm saying is an interstate investor who bails on WA, will not do so due to the promise of a much cheaper investment property in another capital city – as they don't exist. They may be lured away in large numbers due to promises of higher returns, but not by better affordability.
4) While Perth HAS to slow so that West Australians can adjust to the change in affordability, the commodities boom will maintain steady appreciation.
5) Interest rates affect the whole country. As the average mortgage in Perth is similar in size to the average mortgage in the other states, the interest rate hike wouldn't make Perth any less affordable or less attractive than over east.
6) If interest rates went so high that many investors sold their bottom tier investment properties, then many middle tier PPOR owners would also be forced due to affordability issues to downsize into a bottom tier PPOR, or look at renting.
Rising interest rates would create increased rental returns as more people sold up and rented. Many investors would sell their rental properties to those who were down sizing PPOR's. The rental pool would diminish as rental demand increased.
I'm not saying “come buy in Perth now†as I think we are near the point where we will see a slowing, but what I am saying is that I do not think Perth will experience the hardship now being felt in Sydney etc. Perth will level out, not drop, and if the bottom of the market does drop, it won't be by much.
If the commodities boom ended tomorrow, then in the short term, we'd be royally screwed, , but it WON'T, of that I am certain. It will be around for a long time propping up and maintaining our property prices.
As such, I once again feel relatively safe in my position. I've half at the bottom and half in the middle so I'm still hedging my risk I guess. This posting is part of my way of doing my “due diligence†on my “risk†so I welcome all comments and arguments to the contrary please. Go on, let me have it!
Back on cars, I've been restoring an XJS for years now. Before I pulled it apart I and chopped it up (literally) I remember the glee of doing 220kms on the long straights between Kalgoorlie and Southern Cross. Great fun in the middle of the ass end of nowhere! wwhhhoooooosssssssshhhhhhhhhhhhhh! [strum]
Cabo Wabo
All you boys and the cars, i really don’t know at least you’re no into Minis …
Yes for me i just can’t understand Perth and why its holding for so long, the resourses boom has put too much money into peoples pockets and they want to burn it some where.
An acquaintence of mine left Sydney (bad market) and set up an office in Perth selling Queensland properties … they can’t keep up with the enquiries.
Sydney people are so nervous and negative it’s hard to get people motivated about real estate, oh well one day they will be back!
D
Hi,
I’m thinking about entering the Brisbane property market as an investor in mid 2007, (currently overseas), and I’m worried that the property will lose value over the next 5 years, ie, negative capital growth.
I’m only worried because I plan on using 100% finance on an interest only loan due to a lack of capital.I know that growth rates in Brisbane are third only to Perth and Darwin, however as we all know nothing is certain in this day and age. And after reading some of the replies to this post, it seems that the property market has a pretty bleak outlook for the short-to-mid term.
I’m also aware that you can make money regardless of the current cycle if you choose carefully and buy the right property for the right price, but as you know, these opportunities are few and far between.
I guess I’m asking for opinions on a 5-year outlook for the inner Brisbane property market and whether or not you think an interest only loan is wise for the period 2007 – 2012.
Cheers.
[king]Hi Guys,
I am new to the forum and love it. I have been investing in property for 5 years now. It’s great, but as you all know it can be challenging at times too.
All this talk of where to invest is excellent. The more dicussion there is the better we are informed.
My view is that I don’t think that now is a great time to look at shares if you are in them for buy and hold (China and the commodities scenario notwithstanding). Just this morning the Wall Street stock exchange was holding it’s breath waiting for the market to hit another record high.
I am sure you can still make money, but you would want to be in and out relatively soon if you looking to buy right now. I think that financial advisors telling their clients to “buy and hold shares for the long term and diversify” and “work on dollar cost averaging” are at best uneducated and at worst negligent. They should be telling their clients to get educated – fast, and watch the market closely.
Warren Buffet said “I made a fortune from buying too late and selling too early”, but I bet he isn’t buying too much right now.
A very interesting read is the “Rich Dad’s Prophecy” by Robert Kiyosaki to put the share market in perspective; especially the next few years.
I like the other quote from Warren Buffet – “I buy my straw hats in the winter”. I think he will be waiting until after this current boom ends and the bear returns – as it always does.
This means that with the current climate of a contracting housing market in many parts of Australia, there will be a lot of cheaper properties coming on the market over the next 6-12 months. But there are few buyers, so I think it is nearly winter time!
Buy low and sell high; or better still – never sell and leverage the growth to buy more!
Never follow the crowd and walk the path less travelled.
The good news is that everyone on this forum is following the less travelled path – the majority of Australians don’t even know this site exists.
Cheers, and happy investing.
Marc[smiling]Here are a few extra interesting future facts.
1. Developers are producing different products to accomodate new entrants into the market at affordable pricing.
2. House and land packages are getting smaller in size, some starting now at 300 m/2
3. The cost to develop raw land and build houses is increasing.
4. Baby boomers are moving to warmer climits close to ocean front locations or in intergrated resort facalities.
5. 50 year home loans are on the way.
6. Building your own duplex and renting out the other half is smarter than owning a house and land package.
7. Peoples need have changed in the last 20 years.
D
Originally posted by wealth4life.com:2. House and land packages are getting smaller in size, some starting now at 300 m/2
Wealth think you are in the wrong forum …. this is not “pet friends”
and I know that kennels are being marketed like that, but frankly I think people are wasting a lot of money on buying there dogs things that they just can’t appreciate.A two storey kennel with garage…rediculous
W4L – LOL – I race a mini, well, a mini based motorkhana special anyway – wicked fun, and teaches you good driving skills too!
SHARES
When to buy and hold and sell – I like the important point that was “Get better educated”. Extremely important. This is the main reason why the share market gets so many negative comments compared to R/E. People ‘dabble’ or listen to their broker’s mate’s boss’s budgy for information. One thing to remember is if something is ‘such a bargain’ or ‘great deal’ as in R/E or cars or whatever, then you have to look at why is the other person selling it, and all too often people buy shares because of this great deal they’re going to get and its because someone else has realised what a dog it is and has to dump it before they go broke.Also, just like R/E (I feel) there is no “wrong time” to get in the market. A lot of my friends are saying (in terms of R/E) that its the wrong time and its priced too high and no-one can afford it. But that is what everyone has said since day dot. I rememebr when I bought my house in the height of the 17% rates @ $89K that I thought “If I don’t do it now I could never afford it”. Well, that property stayed dormant in price for over 10 years but it put a roof over my head and made me broke every payday – but at least I started. Now, I have sucked equity out of it several times to trade shares, import classic cars, start a business, and now looking at what will be a 4th property between myself and my GF.
This property was always a long term project. Now, had I applied the same logic to shares, I would have the same result, well, actually I would have done better as my $89k would now be worth around $500k and my house is only worth $300k. I know its not comparing apples with apples and there’s a lot of variables and “what ifs” in there. I don’t think I can post pictures here otherwise I woudl show you the trade simulation.
I guess what I am trying to say is, is, there are those that do, and there are those that say they will (most likely when the time is right -whenever that is LOL).
My comments are based on nothing more than buy and hold, no refurb, flip, or any other kind of strategy.
Cheers
Seth
Just some interesting data with no where else to put it.
Heard on ABC some business person who made two addresses in same week one in Perth and one in Fairfield, in Sydneys west.
Commented that in Perth was told of building laborers earning up to $80 per hour, while in Fairfield unempolyment has hit 11% with property down 25% in a year.
GO WEST YOUNG MAN….then everyone can work in the building industry building more housing for more people coming over to work in the building industry … oh sorry forgot that is what is already happening
Also ABC midday news covered the rise in arears on new loans up from around .02 in 2001 to .05 today with 1% in Sydneys west.
Lowest employment in 30 years and historically low interest rates.
Hmmmm strange.The Property Council (or something ) came out with that Sydney market will not bounce back until 2008. (hey next year is 2007..maybe I should get in now and beat the RUSH ….)
Got to go now and see my finance broker about a new kennel, maybe my dog could use a low doc loan, must be an accountant out there who can give me a tax return
I thought the “experts” were saying the market will bounce in 2006?? So now its 2008. Gee, they must be right then. Maybe we’ll give em another shot at it in a couple of years…
Indeed your synicism is well founded. Nobody can predict how assets prices will change in the future, especially for residential property which at a broad level is basically driven by income growth and interest rates (and credit conditions). Most measures suggest that property is “overvalued” still, this of course doesn’t imply that it can’t get more overvalued soon, but the medium/long term future trends are dictated by macroeconomics as much as anything else, and Australia’s macro outlook isn’t strong and won’t look strong until we have some serious depreciation in our currency and i suggest this isn’t coming anytime soon…
Originally posted by asdf:I thought the “experts” were saying the market will bounce in 2006?? So now its 2008. Gee, they must be right then. Maybe we’ll give em another shot at it in a couple of years…
Ohhhh you are soooooooooooooo cynical !!!!!
not wrong though,
Its funny when you button hole an agent and he knows you are just browsing you can get some very depressing stories about the market
Originally posted by CanAm:W4L – LOL – I race a mini, well, a mini based motorkhana special anyway – wicked fun, and teaches you good driving skills too!
Seth my hat is off to you. Always wanted to but never had the time (lousy damm time management system…..)
GMH its easy…,
because now developers have developed anti growth drugs so your children stay smaller longer, while you pay off your 27% interest free store account that you had to refinance because the term ran out.
Tthe home loan issue has been fixed also now that the banks have introduced 50 year home loans which mean lower repayments and less pressure on first home buyers. Very smart!!
The other great saving is now that people will be living on smaller allotments of land there is no need for a lawn mower, this yearly saving in itself is enormous.
The other reason for the smaller allotments is that due to the increasing divorse rate there is no need for a double bedroom which cuts down the size of the living space.
As to the Mini Minors return well this actually is the size of the new garage so all the boys with the big toys (cars) will be alloted a strata storage unit nearby at a guaranteed 8% return, lets call it a developers assurance package.
The dogs will now be housed in a dual kennel/letter box arrangement, with a sign on the box saying – please take me for a walk because i can’t move my legs.
All in all i think that Australias future is looking rosey!!!
Don’t forget that my prediction will be no housing slumps in the future, because it just can’t get lower than that.
D
wealth4life.com – LOL, this story reminded me Europe. Dense, crowded place with few castles around (not for private use any more)
[biggrin]
On the brighter side, ozy’s build queenslanders using space inefficient, you can have a much more specious hose on the same block of land but will end up with garage under the house and bedroom on the second floor (not a bad set up anyway) [biggrin] Keeps the kids away and you get nice view from the window.
And again, I guess it mast suite your lifestyle and liking…Originally posted by wealth4life.com:GMH its easy…,
because now developers have developed anti growth drugs so your children stay smaller longer, while you pay off your 27% interest free store account that you had to refinance because the term ran out.
That’s great news wealth. Now to come up with a good long term investment stategy.
If this trend continues and developers keep shrinking people to fit in these mini deveopments, it won’t be long until, the developers will not need to build anything, just wack on a house from Matel built for Barbie and Ken.
Better stop wasting my time here and get out there and start buying those Barbie houses right now…..wonder what Britney wants for hers…..
May have to wait though as I think I just committed to buying another Brock.
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