Property bust not here yet … worse to come

Hi all

Very interesting forum.

Now for my 2 cents worth.

Something is happening in Perth re slow down.

I purchased 2 apartments 5 min from the city 4 months ago, both I brought at the 1st home open and they had lots of interest (not needing finance helps out bid others), most properties in this area were sold b4 being listed.
This Monday I made a cash offer on an apartment in the same suburb at 220000.00 ,13500.00 under the buyer from price of 234000.00 (a bit cheeky but my gut told me there is a change in the air) They said no.

2 days later the REA rings me they have dropped the buyers from price to 228000.00 and told me they would reduce it to 225000.00
if I still wanted to buy. I said I would re crunch my numbers and get back to them.

I am on a stricked budget,as I have only just started buying/reno/selling (may 06 quit work and now do this full time) . I have made enough profit on my 1st project for the business to self fund its self (I thought this would take me a year) ie pay the loans, fund the renos and pay me a wage etc.as long as I stick to my budget.

So, I rang him the next day and said 220000.00 is it and is on the table until I find something else. I found something else the next day, for 209000.00 (which is better I now have 15000.00 buffer on my budget) These people had in 3 weeks dropped the price twice and then again for me. definitly slowing.

I look for properties that I can turn around in 3-4 months and make min 10000.00 my 1st property I turned around in 3 months and made 35000.00 my second one which had a 4 month settlement (this one still surprises me, that in Perth boom when some properties had 11 offers during the 1st home open, some one would accept a long settlement ? she was chinese and the day she was present with the offer was the 7th apparently luck for them????? I do not know about them, it is for me the value has gone up a least 30000.00 in the settlement period.[biggrin][biggrin]

I also spoke to my real estate agent who told me the same story for a property worth 700000.00.

So a change is afoot NOW!!!

I WILL HAVE TO BE MORE DILIGENT WITH MY PURCHASES NOW.

Celeste

There’s a difference between dropping a very bullish asking price by 10-15K to adjust for a slowing in the market, and having the median settled sales value of a suburb drop by 15-20%

I see as yet no-one has replied to my ideas a few pages back regarding the differences between Perth’s situation and that of Sydney…..

If my ideas don’t hold water, tell me why. [baaa]

PS: Greed is spelt with 2 E’s.

Cabo Wabo

Yep – have to agree with the “I want” mentality. I see it every day at work.

My GF & I have a theory that today’s parents are possibly better off than their own parents and they can afford some of life’s luxuries. The children grow up in that environment, assuming its natural to ‘have’ and not ‘need’ or ‘work for’, and so when it comes time for them to branch out into the big bad world on their own, they “need” the plasma TV, ipod, new car, 4*2 with theatre room etc.

There doesn’t seem to be any of this “I’ll buy what I can afford and work towards what I want”.

I’m not so sure on the “Taken up too much land” though – that really depends on your own choice of living – me – I could never live on today’s 250sqm cottage block(though we have one rented out), or a flat, even under 1000 sqm is not feasable!!

There are those that enjoy living in a shoe box and there are those that enjoy space. For some it is a “time of life” thing, ie; young and want to be near the nightclubs and cafe strip etc, as apposed to have kids and need room for them to run outside rather than sit and play the PS2 all day.

Land (acreage) south of Perth which was previously ignored due to access is now very popular with those sick of the rat race (even if in Perth that means we move at 1/3 the speed of Sydney LOL). and what you couldn’t give away is now prime real estate thanks to the Freeway.

Me, I am a country boy at heart and love the birds that hang around my house, and my shed housing my toys, a place to play cricket, and when my friend’s visit they don’t have to worry about the shire taxing them for parking on a street designed to have two Mini’s having to give way to each other.

Its all a matter of preference – and though I haven’t been involved in developing units/flats apartments I see plenty of them go up all over Perth. I can understand them being apposed (if they are – and generally if you have enough money you can convince the shire to do anything [biggrin]) where they are going to obstruct people’s views or impact on the lifestyle of the surrounding neighbourhood.

Did Bond, Hancock, Gallop really work smart (notice I didn’t say hard) just so they could be kept awake at night by police sirens and have to step over derelict cars and stolen shopping trollies. That’s not saying that all apartments become slums, but, you have to consider the impact of placing an extra 100 people next door where there was 2.5.

It’s a bit like all the people who bought into Claremont decades after the Speedway was there and complained about the noise one night a week for about 4 months of the year. Money talks – how long till they can’t stand the people parking in their street and those smelly farm yard animals at the Royal Show once a year and so that gets “Moved to a more suitable location”.

Ahhh, Life, ya gotta laugh……[chill]

Demand for rents is hot with most people securing at least 1 year contracts. Also most palces are leased within 1 day.

HI W4L
I can’t profess to know all teh reason why people are buying in Perth. Initially ‘those in the know’ proclaimed it to be due to our housing was so cheap so rental return was too bad.
Then, the next ‘words of the wise’ filled the media with stories about people in teh eastern states coming here to live as it was cheaper housing – that was eons ago, even before teh resources boom. Now they claim it’s partly due to the resouirces boom.
Who knows why? No-one really I’d expect. How do they do their analysis? Where does the data come from?

I guess though, we can thank the media for constantly announcing things like “land shortage” and “easterns states flooding in so buy now before you miss out” and the like as it has driven our (property owners in general) net wealth up.

I have the DFHA (is that right acronym?) list sent to me regularly and the one thing that it does highlight at the moment is that return for investment you don’t want to buy in WA as the rents are not quite 1/2 that in the e/s? And now our properties are a similar price.

One comment that always makes me chuckle on R/E shows is the one like “So lucky Flo has sold her property for $350k, and it only cost her $12k back in 1952 – what a tidy profit she has made!”. Ummm, has she? So Flo has moved out of her home to go into a new home or aged care which may cost her just as much, maybe even more, but possibly less ???

So when is profit actually profit?

FOr me, with my share trading I consider it to be profit IF I take it out and spend it, ie; it has made a difference to my life. Otherwise its just re-invested capital.

Cheers

Hi all

My comment re: Perth being different to Sydney .

I failed to explain properly, recently I read on this site where some one in Perth (sorry forgot who and which forum, I think it was this one) has purchased at the lower end of the market thinking when the bubble bursts he will be safe.

Other contibutors explained that when Sydney’s bubble burst it started with the bottom end because investors pulled out.

I think Perths bubble will slow or burst for different reasons than sydney and that the bottom end will be safe. Affordability and the increase in the FHOG (I found out it is true about and increase to $14000) will keep the bottom end boyant.

There will always be a market for a good quality property.

Speaking of good quality props, I will post some photos in the next couple of weeks of the prop I just purchased.

The owner had purchases it as an IP to reno & sell. He did and put it on the market, the reno is so bad that he dropped the price 3 times.

I brought it friday – 30day settlement, $20000.00 under market price for one in original condition. I will fix his job (parts of it anyway) and start from scratch in the Kitchen, and I will put it back on the market at least $15000.00 above his original asking price.
I know I can get that price because my last one sold at this price and it is in the building next door.

Almost identical apartments except this one has views from the Hills to the City, the internal walls of the apartment have been plastered (usually you have to deal with face brick – very dating) the complex has a pool/tennis court and full time caretaker and it also has the same Strata Management as the 1st and their about to start a major upgrade of the building and best of all it will be paid for from the lease payments from the phone towers on the roof.

Oh by the way I found this on the RE.com whilst playing spider/watching the midday movie and drinking coffee. I only went out to inspect it.(Sorry, I had already done due dilligance on the area and had checked the building out previously, when l was shopping earlier, so I already knew all about it)

sorry a bout the grammar and spelling is bad, my 5 yr old wants to do an experiment she saw on ABC Kids this morning and keeps bugging me. Can’t think properly with her in the back ground

See yah[biggrin]

Celeste

Are you working on the theory that the human race stopped spawning at some point?

Haven’t heard any news about the FHOG – I didn’t get it first time around (came out after I struggled and strained to get my first home – grrrr).

I think I saw figures something like only 30-40% of people own/purchasing their home – so there’s still a lot of room for new people to enter the market – don’t forget FHOG is not just for teh young people getting started.

My folks bought their first house in their late 50’s!! And guess what – it was a VF arrangement (the only way they coudl get a loan at that age) long before it become the cool thing to do – about 30 years ago.

Thanks Foundation. It’s good to see some figures behind things.

Where do you get your numbers from?

If I’m reading it right then ‘nothings really changed’ ?? But then its only a 5 year difference so not sure if it is reflective of anything?

Cheers
S

Thanks again for the figures. I guess as with any stats (not saying they are incorrect or skewed in any way) its all in how you interpret things.

I’d hope that the ABS don’t do like I used to when I worked for the Gov’t and my boss would walk in and say he needs some figures to answer a parlimentary inquiry and blah blash blah, and my reply was always “what do you need it to say” LOL. [blink]

Anyway – off track a bit there. Can you tell its a boring day at work today ??

I guess if we considered that there were no additions to population through immigration/birth/etc then an increase in owners (line graph) over a 5 year period could be naturaly expected?

In the second line chart do you think it highlights the increase in owners in the 30+ “baby producing I’d better settle down” years?

Could it also be showing that since the ‘boom’ more people have done the “I’d better buy now before its too late” routine? Coupled with the boom comes all the R/E gurus and companies spruking how good it is to own R/E and makes lots of money so people buy?

(I see the same effect in the share market through cycles – people flood in to the market as its runnning up seeking education from us and others and then run away as it goes down (those that try to go it alone and punt) – not knowing they can actually make more money as it goes down, but don’t tell them all or it might cut my profits – LOL

I’m assuming the line graph is not representing the “whole portion” of people and only those with a mortgage as an owner as the line drops radically in the older age groups, ie, at about the time when their mortgage is paid off?

Theres also more renters than in 99 so is this representative of older people going into more age car facilities that they ‘rent’ or does it mean we are immigrating more 50+ people?

QUOTE “The lower version shows ….the demand for purchase would always be met by supply of sales.”

Does it? Where does the number of houses under construction show up in the stats? Doesn’t it just show that as people get older more move from “want to buy” to “bought” to “own”?

QUOTE: “The top version of the second chart shows that short of a massive increase in immigration and/or a doubling of the birth-rate, this situation will soon be very unbalanced.”

I guess it is all in how you read things. We keep hearing that we are all going to be in trouble as all the Baby boomers get pensioned out and then begin to ‘expire’, (not enough pension money to go round, too many houses/shares on the market etc etc)and yet, does this graph tend to show that they can be absorbed by the pre-boomers in numbers, many of whom are breeding later in life so there will be more “workers” joining the stats in years to come.

In general “people” seem to be (my impression) starting earlier due to there being more money/education around than ever (ie; when I was in my 20’s no-one thought about buying assetts – that was a far to ‘old person’ thing to do). How many times currently do we here now about millionares in their 20’s, and earlier!!

I guess the old 3% rule will be around for a long time, rich get richer and all that, but on the whole my general impression of every day life, not stats or media, is that younger people are richer. And yes, that’s what my father said too and probably his father, and I would agree with him, I have more now than he ever had, and yet I have less than many younger than me. As each generation gets richer they give their children a better head start?

The times are a changing

Be wise, use risk management, so it doesn’t matter what happens, so long as you have a fall back position.

And then I may be way off mark……………