House prices to stagnate for 'years'

Bronte said:

We have lots of property in Perth
Do you think we should Sell ?

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If you do then you wont need to ask that question.

You post like xperts and question like novices.

If you live in Perth everyone knows the reason for the price rise. They have land all over the place. Its crazy. You drive down the road you see vacant land everywhere. Not like in Sydney. You cant get undeveloped land in Sydney as close as they have to the city like here in Perth. They just havn't developed the dirt yet. All a scam to rise the pricing. Pricing should stablize or even drop slightly with interest rate rises to come. The price will slow down because new starters just cant afford it. Then when more land developments come on board supply will once again outweigh demand. I believe it allready has started to stabalize.

I am NOT going to read this tech/a, (you are still on ignore).
Even on holiday I bet you have nothing nice to say to anyone.
I wonder if I am correct?

professor_frink said:

Realist,

I'm not harassing you for not buying in Perth. I'm harassing you because you said it was undervalued and you didn't buy any! You spend your time on here telling everyone you will only buy property when it's undervalued, and then you admit you saw an opportunity and didn't act. If you had of said you don't like investment properties in your original statement, I wouldn't have said anything.

Did I buy in Perth? No. But then again I wasn't in Perth 3 years ago with an opinion of their property market. That's kind of a childish question to finish up with Realist!

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All I am saying is obviously, I and everyone else should have bought as many properties in Perth as we could 3 years ago.

I had less money then so that would have meant one property.

It is easy to look back though. I knew at the time they were "cheap" but did not know they would boom.

And as I said I have no regrets, everyone has 20/20 hindsight, there's no point in worrying about what you missed.

The fact is people who bought in Perth 3 years ago have profited nicely. They may have made 100% in 3 years before tax and expenses. Fast forward 7 years and if they keep holding they may only make 100% before tax over the 10 years, pretty much less than what most investments make - Perth will flatten out making the investment I missed out on not as appealing. Hence I aint worried about it at all.

My first goal is to buy a home for me, not an investment property. I will buy in Sydney when I deem the time is right, and I believe that is fast approaching, maybe another 6 months maybe another 48 months- somewhere in between. I aint overly interested in buiying outside of Sydney for many reasons. So missing out on Perths boom is irrelevant to me.

chris1983 said:

If you live in Perth everyone knows the reason for the price rise. They have land all over the place. Its crazy. You drive down the road you see vacant land everywhere. Not like in Sydney. You cant get undeveloped land in Sydney as close as they have to the city like here in Perth. They just havn't developed the dirt yet. All a scam to rise the pricing. Pricing should stablize or even drop slightly with interest rate rises to come. The price will slow down because new starters just cant afford it. Then when more land developments come on board supply will once again outweigh demand. I believe it allready has started to stabalize.

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Correct. Land in WA is not at a premium.

Having highly expensive apartments in Perth is laughable really.

Sydney has houses out of the city like Perth does, but try driving to work in the Sydney city on a wet Monday morning from 60 kms out. Half your life would be wasted in traffic. Hence an apartment near the city aint that silly. It is in Perth though - they have no traffic there, just a few cars.

You guys in Perth are lucky really. :

Realist said:

All I am saying is obviously, I and everyone else should have bought as many properties in Perth as we could 3 years ago.

I had less money then so that would have meant one property.

It is easy to look back though. I knew at the time they were "cheap" but did not know they would boom.

And as I said I have no regrets, everyone has 20/20 hindsight, there's no point in worrying about what you missed.

The fact is people who bought in Perth 3 years ago have profited nicely. They may have made 100% in 3 years before tax and expenses. Fast forward 7 years and if they keep holding they may only make 100% before tax over the 10 years, pretty much less than what most investments make - Perth will flatten out making the investment I missed out on not as appealing. Hence I aint worried about it at all.

My first goal is to buy a home for me, not an investment property. I will buy in Sydney when I deem the time is right, and I believe that is fast approaching, maybe another 6 months maybe another 48 months- somewhere in between. I aint overly interested in buiying outside of Sydney for many reasons. So missing out on Perths boom is irrelevant to me.

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With oil @ $150 - $200 most Perth property will be worth zippo.

Phew this thread got lively all of a sudden today, I wonder what spark peoples interest today

Quote from "Edstar" from John Bedsons site.

Yes, in response to your 'stronger for longer' thought Perth property can continue to rise. It is now 87% of Sydney. It could exceed 120% of Sydney (say), even for only for a relatively brief period. Here are my thoughts / reasoning:

- WA wages growth is very high. People generally buy to the limit of their affordability. Spare capacity still exists (in aggregate - esp. for those who have benefited from the boom).
- New supply is low (in absolute terms and relative to demand). Bids up prices.

How will a boom be pricked?
- Unemployment will rise significantly - defaults - 'hard landing'
- Prices will become very high. At this price, the market will be very sensitive to monetary policy and, to a lesser extent, wages.

A reasonable forecast would seem to be:
- Sydney flat for (say) 3 years.
- Perth +10% pa for 3 years.

This assumes RBA has 2 more rate rises in Sep'06 and June'07, but the resources boom continues unabated.

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He could be right

Very interesting.
Thanks for posting that NettAssets
We hope he is right

Neil Jenman on tonights A Current Affair (looking the most relaxed I have ever seen him, no spuikier in the story i guess) said wait a couple of years and buy in for 50% of todays price.

Qld as well as WA is bounding ahead in some places. A month ago in the Courrier Mail was an article on a mining town west of Mackay (can't remember its name now) In 2001 a house was worth $33,000 in 2006 $333.000. Is this a bubble in the making?

This has a 70's look to it now
*US (& Oz) at war, till mid 70's Vietnam
*Oil quadruppling in price
*inflation in a bull run
*An ugly crash then and now.......................????

Bronte said:

Quote #223 from 6th October 2005 01.00PM
We recognize opportunity and boy do we take it

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ok bronte u are the best and a gun and a champion well done

Thank you nizar.
Now... how can we help you?

NettAssets said:

Quote from "Edstar" from John Bedsons site.


He could be right

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He could be wrong, and I think that is more likely.

To suggest Perth should be more expensive than Sydney is laughable.

I hope he is right, I'd love to see Sydney cheaper than Perth. It wont happen, and if by some flukey chance it does you'll be in for a rude awakening somewhere down the track.

Sydney has 4 or 5 times the population and most of the big companies and good jobs, all the money, as well as a more exciting life for young people. It is positioned better for business and Sydney prices have fallen for 3 years (fairly valued?), and Perths have grown for the 3 years (overvalued?). There's no way Perth should be more expensive.

When Perth has 5 million people and the banks, insurers, media companies, IT companies, pharamceutical companies and other large organisations, as well as talented young people, the top restaurants and night spots and celebrities leave Sydney for Perth then maybe he'd have a point. Most countries have empty gold rush towns with tumbleweed blowing down the main street, we all know what happens after resource booms end.

Realist said:

He could be wrong, and I think that is more likely.

To suggest Perth should be more expensive than Sydney is laughable.

I hope he is right, I'd love to see Sydney cheaper than Perth. It wont happen, and if by some flukey chance it does you'll be in for a rude awakening somewhere down the track.

Sydney has 4 or 5 times the population and most of the big companies and good jobs, all the money, as well as a more exciting life for young people. It is positioned better for business and Sydney prices have fallen for 3 years (fairly valued?), and Perths have grown for the 3 years (overvalued?). There's no way Perth should be more expensive.

When Perth has 5 million people and the banks, insurers, media companies, IT companies, pharamceutical companies and other large organisations, as well as talented young people, the top restaurants and night spots and celebrities leave Sydney for Perth then maybe he'd have a point. Most countries have empty gold rush towns with tumbleweed blowing down the main street, we all know what happens after resource booms end.

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Exactly Realist

Realist said:

He could be wrong, and I think that is more likely.

To suggest Perth should be more expensive than Sydney is laughable.

I hope he is right, I'd love to see Sydney cheaper than Perth. It wont happen, and if by some flukey chance it does you'll be in for a rude awakening somewhere down the track.

Sydney has 4 or 5 times the population and most of the big companies and good jobs, all the money, as well as a more exciting life for young people. It is positioned better for business and Sydney prices have fallen for 3 years (fairly valued?), and Perths have grown for the 3 years (overvalued?). There's no way Perth should be more expensive.

When Perth has 5 million people and the banks, insurers, media companies, IT companies, pharamceutical companies and other large organisations, as well as talented young people, the top restaurants and night spots and celebrities leave Sydney for Perth then maybe he'd have a point. Most countries have empty gold rush towns with tumbleweed blowing down the main street, we all know what happens after resource booms end.

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Absolutely agreed there.

I would go a bit further though and nominate Hobart as the most over valued of the state capital cities even though nominal prices are less than Perth, Brisbane etc.

The reason is simply that there is NO comparisson between Hobart and Sydney (unless you count both having harbours and bridges). For that matter, even Adelaide is a massive city compared to Hobart.

A few points about Hobart:

Average wage about $40 K (according to the data used in the Demographia report). Apart from Zinifex and Cadbury, there just aren't that many well paying jobs here. You'll be lucky to make $30 K in the state's biggest employer, tourism.

There is basically nothing that is not more expensive in Hobart than in the other state capitals. The overall cost of running a car is a possible exception due to shorter distances but everything else costs more (hence the common tendency of Tasmanians to stare at mainland supermarket prices in disbelief that things are that cheap). Power is cheap but then you'll still use $2000 worth a year due to the climate.

Nightlife? Suffice to say that a normal night in Adelaide has far more going on than New Year's Eve in Hobart. As for Sydney or Melbourne...

Land scarcity? You can walk to undeveloped bush and back quite easily from the GPO.

Major events - they're spread around the state so Hobart isn't a "centre" of such things. If you want to see an international act then, with the odd exception, you check with Virgin Blue or Jetstar and find a hotel in Melbourne before worrying about tickets...

And yet Hobart has the second highest average house value, relative to incomes, in the country. It's a nice place to live in many regards, but when it becomes so highly valued relative to income and nominal prices catch up to Adelaide then it's hard to see the justification. Even Melbourne doesn't really look that expensive compared to Hobart now in % terms (it's more expensive, but the gap isn't anywhere near as great as it used to be).

Same when Perth overtakes Melbourne and Brisbane. It just doesn't make sense in view of the fundamentals. Such things tend to revert to the mean eventually and IMO Perth will be hit hard in any future global downturn (it will happen, question is when) due to the link to commodity prices. Likewise at some point people will realise that land in Hobart just isn't scarce.

IMO now isn't the time to invest in real estate. But if I were going to then it would be in Sydney, Brisbane or Melbourne since land there actually does have some scarcity value over the long term.

Thanks guys

I happen to agree but when I saw an opinion like that I thought it would do no harm to add it to the discussion.

nizar said:

ok bronte u are the best and a gun and a champion well done

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I am really sorry nizar...I just needed to quote you

Realist said:

He could be wrong, and I think that is more likely.

To suggest Perth should be more expensive than Sydney is laughable.

I hope he is right, I'd love to see Sydney cheaper than Perth. It wont happen, and if by some flukey chance it does you'll be in for a rude awakening somewhere down the track.

Sydney has 4 or 5 times the population and most of the big companies and good jobs, all the money, as well as a more exciting life for young people. It is positioned better for business and Sydney prices have fallen for 3 years (fairly valued?), and Perths have grown for the 3 years (overvalued?). There's no way Perth should be more expensive.

When Perth has 5 million people and the banks, insurers, media companies, IT companies, pharamceutical companies and other large organisations, as well as talented young people, the top restaurants and night spots and celebrities leave Sydney for Perth then maybe he'd have a point. Most countries have empty gold rush towns with tumbleweed blowing down the main street, we all know what happens after resource booms end.

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Your best post so far

On the ball, realist

The Poms and the ECB has raised rates today, Oz yesterday.

The tide is rising folks and lots of numpties are already up to their nostrils in debt... in all the english speaking countries.

Look up "stagflation" just for a bit of fun.

Ye depression approacheth.

wayneL said:

The Poms and the ECB has raised rates today, Oz yesterday.

The tide is rising folks and lots of numpties are already up to their nostrils in debt... in all the english speaking countries.

Look up "stagflation" just for a bit of fun.

Ye depression approacheth.

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when do u think depression will come if it does come?

http://www.depression2007.com/

Still cant believe this guy may be right?

thx

MS