Hey guys,
I couldn’t help but notice in some of the property investing magazines, they are saying that Perth are at the bottom of the housing market cycles, it’s a good time to buy, but the clearance rates are the lowest in the country? Y would you have the lowest clearance rate and be at the bottom of the market…… I would think that would be falling off to peak still?
Hi Da,
WA is not an austion state. so statistic would be based on a small proportion of sales. Any refernece to clearance rates would not be reflective of the what else is happening in the market place.
Temper your belief about property prices being high with the knowledge that WA has the second highest per capita income in Australia.
Supply on the market seems to have tightened recently and there has been a sudden reduction in properties available to rent. It has recently been reported that Perth vacancy rates are now below what they were pre-GFC. At that time it was not unusual to see rent bids being placed by prospective tenants and rental increases when tenants changed were significant, especially closer to the city.
Hey,
It's correct what Derek said, the Perth market isn't a big place for auctions. I wouldn't like to put numbers on it, but probably about 1 in 20 properties are auctioned the rest are sold by private treaty.
There are some current economic conditions which make Perth a great place to invest right now:
– Tight rental market pushing up rental yields.
– Tight labour market pushing up wages (we are currently the second highest paid state).
– 4 years of flat line property prices has made this place one of the most affordable capital cities.
– Limited new construction causing a short to medium term housing supply shortage.
– Migration population growth has just been revised up by the Planning Department.
– More major mining projects earmarked for construction in Perth once we reduce this labour supply bottleneck.
– Geographic supply constraints similar to Sydney.But like any city there will be better performing areas and not so good performing areas. So it's important to make the correct selections.
Personally I would not be looking at Perth. Not to say that it isn't a great place. There has been many great stories of growth, but it is a VERY long way from the rest of Australia. This does tend to mean price fluctuations, when they happen, can be extreme.
A forgotten city that would be better to consider would be Adelaide. VERY good value for money buying and VERY low price points. The medium value is very low compared to the rest of Australia and there is plenty going on in and around Adelaide to really push prices up.Thank you for your view – that makes sense of the differing auction clearance results in Perth.
but, I still have some concerns maybe you can also voice your opinion onThe issue of affordability – the average wage x 6 = the median house price
Having a look at these couple of graphs also…
http://reiwa.com.au/Research/Pages/Perth-quarterly-market-charts.aspx
http://reiwa.com.au/Research/Pages/Perth-house-price-chart.aspx
Both indicate to me, that the median should be down around 400 , and because it is not, you can see that the volume of sales is continually declining…. since it ran up in 2006????????????This gives me the impression that a lot of people have bumped their price up in the 2006 – 2009 period especially, way, way above where they should have been, but have been able to hold the properties and appear to have no need to sell off by lowering the price to market demand??, so as you said, more people are renting and aren’t able or interested in purchasing?
I would have thought looking at the graph, that if the prices hold steady, it will take until 2014 – 2015 for the market to catch up and be able to afford those types of houses….. or people will slowly reduce their prices as they had started doing in the more $$$ suburbs.
I just don’t think I can see the growth starting up at 10% in Perth next year, which to me, would say it’s not a good time to buy. The rent ratio is also terrible.
some snippets I have read
“Mr Lenzo and Australian Property Monitors senior economist Andrew Wilson both believe there is potential for the market to climb out of the stalemate from mid-next year but were cautious to predict bullish growth by 2014.
“Given the fact that the Perth property market has really been in decline for the last three to four years we predict an upside but our figures show that the Perth property market is still very flat and there’s no definitive signs of recovery or stabilisation,” Dr Wilson saRead more: http://www.watoday.com.au/wa-news/wa-property-experts-slam-19-increase-forecast-20110627-1gmzx.html#ixzz1n5wgxKH8 “
PISTORE wrote:Personally I would not be looking at Perth. Not to say that it isn't a great place. There has been many great stories of growth, but it is a VERY long way from the rest of Australia. This does tend to mean price fluctuations, when they happen, can be extreme.
A forgotten city that would be better to consider would be Adelaide. VERY good value for money buying and VERY low price points. The medium value is very low compared to the rest of Australia and there is plenty going on in and around Adelaide to really push prices up.No Mr PISTORE, the rest of Australia is a VERY long way from Peth and WA, which is holding up the rest of Australia.
Paullie wrote:PISTORE wrote:Personally I would not be looking at Perth. Not to say that it isn't a great place. There has been many great stories of growth, but it is a VERY long way from the rest of Australia. This does tend to mean price fluctuations, when they happen, can be extreme.
A forgotten city that would be better to consider would be Adelaide. VERY good value for money buying and VERY low price points. The medium value is very low compared to the rest of Australia and there is plenty going on in and around Adelaide to really push prices up.No Mr PISTORE, the rest of Australia is a VERY long way from Peth and WA, which is holding up the rest of Australia.
That may have been the case, but with what is happening in SA and QLD, Perth will struggle to lure workers over there. Eastcoasters will do what they can to stay over here. They have just never had that opportunity before, now they do and that will be reflected as more and more of the Eastcoast projects open up.
Theres still plenty of work here in WA. Although it would be great if other states could contribute more, it might mean we get our fair share of the GST haha ,yer right.
Hello Da
Im in Perth myself (cannington) and in the process of buying my first IP around 500K mark.
I personally believe prices in Perth are 10-15% higher than what they should be. But in saying that, i dont think the prices are coming down, houses take a little bit longer to sell thats all. Stock in the market has definately gone down as i can see very few properties in canning area as oppose to 3 months ago. Mind you im only looking at stock of 4 x 2 houses. So other types of properties may have gone up or down i dont know.
House prices in perth i think will stay flat or increase at a very low rate till at least 2015. So whether you buy now or 3 yrs later, wont make much difference. Im only buying because its kind of forced saving for me and if i dont i will end up buying a flash car and regret it.Rental market has definately gone up. I was told for a 4 X 2 X carport you can expect at least $450-$500 in cannin area for a average house. 3 X 2 villa can fetch between $375 – $400 depending on the parking, condition of the house, etc. 6 months ago 4 x 2 were between $400-$425 & 3 X 2 were between $340-$375.
Cheers
SaurabhThe problem with opinion is that everyone has one and only hindsight will prove correct.
I'll sight my sources:
– Tight rental market pushing up rental yields.
Median Rent: $400/wk Vacancy Rate: 2.5% http://reiwa.com.au/Pages/Home.aspx– Tight labour market pushing up wages (we are currently the second highest paid state).
http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/DBE855896D8CA36DCA2578FB0018533C/$File/65230_2009-10.pdf– 4 years of flat line property prices has made this place one of the most affordable capital cities.
http://economics.hia.com.au/media/House%20price%20to%20income%20ratio%20-%20FINAL.pdf
* this is a little old, but I would say even more in favour of Perth as incomes have remained the same or increased and property prices have been stagnant (decreased).– Limited new construction causing a short to medium term housing supply shortage.
http://www.perthnow.com.au/business/building-approvals-fall-in-wa-nationwide/story-e6frg2ru-1226031519653– Migration population growth has just been revised up by the Planning Department.
http://www.mediastatements.wa.gov.au/Pages/Results.aspx?ItemID=148086– More major mining projects earmarked for construction in Perth once we reduce this labour supply bottleneck.
http://www.theresourcechannel.com.au/blog/other-wa-mining-projects-watch– Geographic supply constraints similar to Sydney.
http://www.planning.wa.gov.au/dop_pub_pdf/mrs100_2007-Nov-29.pdf
* look at the hills to the east.I don't know where you're getting your data for sales continuously declining, but last month January 2012 recorded 14.2% more land sale lodgements than January 2011 – this is a very large volume increase (year on year).
http://www.landgate.wa.gov.au/docvault.nsf/web/AU_BP/$FILE/BAP-JAN-2012.pdfI don't know if you're missing what I'm saying but the rental vacancy rate state wide is 2.3% which means that you are going to have cost push inflation on rents. Wouldn't it be better to buy now and see rents rise, rather than wait for rents to rise (and then consequently be competing against investors coming into the market.)
Hope that clears up and makes sense of my claims. I do agree Perth doesn't reflect the rest of Australia, so I guess it's hard to pass judgement unless you're buying in this market.
Kent Cliffe wrote:Geographic supply constraints similar to Sydney.
http://www.planning.wa.gov.au/dop_pub_pdf/mrs100_2007-Nov-29.pdf
* look at the hills to the east.Hi Kent- Interesting post but one thing I do not agree with you on is the geographical constraints of Perth. While Perth has hills to the east, I dont think the constraints are anywhere near as much as Sydney.
Perth has hills to the east which constrains urban sprawl, but there are still large tracts of undeveloped land to the north-west (Waneroo and Midland direction) and also the south and south-west (Cockburn to Armadale).
In contrast, Sydney is constrained by Botany Bay and the Royal National Park to the south, Holsworthy Military Reserve and National Park to the south-west, and the Hawksbery River and numerous National Parks to the north and north-west. The only areas of developable land where new housing estates are being released are in western Sydney south-western of Sydney and north-west Sydney, between Campbelltown/Camden and St Marys and then north towards Rouse Hill and beyond. If you have ever been to Sydney and driven around, you will know how far away from the CBD this is- a minimum 40 minutes drive (assuming no traffic which is rare!!) or 1 to 1.5 hours on public transport.
I believe that this is the reason why Sydneys property market is so resiliant at the moment- there is not enough land available in close-ish proximity to the CBD (within an hours drive) so values in inner and middle ring suburbs are holding up well. Compare this to Perth, where you can buy a 400-500m2 block of land in Wattle Grove for $260k which is a 25 minute drive to the city (with no traffic- Perth has little congestion compared to Sydney) and you can see the geographic constraints in Perth are much less significant than in Sydney. Other areas of newly developed land that are available (e.g. Atwell to the south or Beachbro to the north east) are all within 25 minutes drive of the CBD- I dont really see much geographical constraint on development in Perth at the moment.
Cheers,
LukePaul Braddick (ANZ Bank) mounts an argument that simply multiplying house prices by median incomes is a flawed process in a couple of papers released in 2010. Once again a little old – but the principles of the argument still apply.
Part 1 of argument – April 2010
In a later report Braddick argues the housing supply in Perth has diminished by 21% since early 2010 and as Dec 2010 stood at 26,000 properties undersupplying the market. This is expected to grow to a shortage of 35,000 in July of this year and then grow to 47,000 by middle of 2013.
SQM have just reported vacancy rates in Perth of 0.6% (thanks for the heads up Andrew)
Hi Luke,
Yeah I agree our supply constraint isn't as bad as Sydney, but at the same time we aren't yet the size. If we keep our population projections we will be the size that Sydney is today in 30 years+/-.
The Metropolitan Regions Scheme is to grow Perth along the coast, down towards Mandurah and up to Two Rocks. There is green-field land available in the councils of Joondalup, Cockburn and Armadale, but also it is held back by water catchment areas and cost of swampland reclamation etc..
Under Directions 2031 (WA govt plan) about 40% of new housing avaliability is earmarked for urban infill (as Perth is very low density compared to other Capital Cities). This basically means boosting rezoning density of inner city councils.
The opportunities I'm seeking for a clients is development sites or draft future development sites close into the CBD. Would it to be great to own 3 or 4 duplex/triplex sites within 5ks of Sydney's CBD? You would be a very happy camper!
Lucky its not unachievable for most WA people at the moment, but as we see with Melb/Syd, this doesn't last.
Good to get some ideas out there,
sbhjain wrote:Hello Da
Im in Perth myself (cannington) and in the process of buying my first IP around 500K mark.
I personally believe prices in Perth are 10-15% higher than what they should be. But in saying that, i dont think the prices are coming down, houses take a little bit longer to sell .Cheers
SaurabhThat is my point…. It looks as if guys bought too high, the market is still too high, but the sellers won’t sell at market price, but they can afford not to sell….. I can’t see how that, would give growth.
I just payed 330 for a 1 bed unit that gives 450 a week rent in NSW.
450-500 a week for a house in perth, i would guess 500+ cost price, which is a bad ratio in my books
If you take a look at a suburb, like Karawara, which is nothing special….. house prices have gone up 340 % within 10 years. Can you tell me anyone who you know who has had wages go up 340% in 10 years?
hi want a good area to buy in Adelaide outer suburbs around goolwa – victor harbor house prices fantastic safe areas to live low crime growing fast about 1 hour from city lots of NSW and VIC people now call these areas home or have holiday homes or investments i have lived in Perth and Sydney and Queensland out of all of them Adelaide i love the most and will be very sad when i have to leave ADELAIDE has a raw beauty i have watched wild seals play from my back yard these are areas that investors should buy into you can buy a house anywhere in any state and make money so why not buy in an area that will not only make you money but will give you a lifestyle that people will be envious in years to come
dachopper wrote:Good to get some ideas out there,sbhjain wrote:Hello Da
Im in Perth myself (cannington) and in the process of buying my first IP around 500K mark.
I personally believe prices in Perth are 10-15% higher than what they should be. But in saying that, i dont think the prices are coming down, houses take a little bit longer to sell .Cheers
SaurabhThat is my point…. It looks as if guys bought too high, the market is still too high, but the sellers won't sell at market price, but they can afford not to sell….. I can't see how that, would give growth. I just payed 330 for a 1 bed unit that gives 450 a week rent in NSW. 450-500 a week for a house in perth, i would guess 500+ cost price, which is a bad ratio in my books If you take a look at a suburb, like Karawara, which is nothing special….. house prices have gone up 340 % within 10 years. Can you tell me anyone who you know who has had wages go up 340% in 10 years?
me, 6x actually. Theres plenty of people who have had good wages increases, I know plenty.
dachopper wrote:Good to get some ideas out there,sbhjain wrote:Hello Da
Im in Perth myself (cannington) and in the process of buying my first IP around 500K mark.
I personally believe prices in Perth are 10-15% higher than what they should be. But in saying that, i dont think the prices are coming down, houses take a little bit longer to sell .Cheers
SaurabhThat is my point…. It looks as if guys bought too high, the market is still too high, but the sellers won't sell at market price, but they can afford not to sell….. I can't see how that, would give growth. I just payed 330 for a 1 bed unit that gives 450 a week rent in NSW. 450-500 a week for a house in perth, i would guess 500+ cost price, which is a bad ratio in my books If you take a look at a suburb, like Karawara, which is nothing special….. house prices have gone up 340 % within 10 years. Can you tell me anyone who you know who has had wages go up 340% in 10 years?
You may have bought well short term, but in 30 years, Id rather have the full block with house bought for 500k. In a unit there is very little to add value you can do, strata to deal with which is a pain in the ass Ill never buy strata again. On a nice full block, you could potentially subdivide etc. further increasing your gains.
Paullie wrote:dachopper wrote:That is my point…. It looks as if guys bought too high, the market is still too high, but the sellers won't sell at market price, but they can afford not to sell….. I can't see how that, would give growth. I just payed 330 for a 1 bed unit that gives 450 a week rent in NSW. 450-500 a week for a house in perth, i would guess 500+ cost price, which is a bad ratio in my books If you take a look at a suburb, like Karawara, which is nothing special….. house prices have gone up 340 % within 10 years. Can you tell me anyone who you know who has had wages go up 340% in 10 years?me, 6x actually. Theres plenty of people who have had good wages increases, I know plenty.
This depends a bit on the profession or the industry for which an individual works. Mine has a hair short of doubled (from a low base) after 3.5 years but am struggling to get any form of raise currently, after working at this new place for over a year. And certainly don't see my salary going up 6X after working for 10 years. But the point here I guess is that there are indeed a lot of well-to-do and well-paid individuals out there who will no doubt seek out the most desirable of housing. This naturally exerts an effect on the price of housing in the 'best spots' in each of our capital cities.
Exactly, there are people out there, that was my point.
Thanks for the comments
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