bugsyburrell Posted January 21, 2014 Report Share Posted January 21, 2014 Might be a doom and gloom question, but, what's your opinion, is the real estate going to keep on rising for the foreseeable future or will it be a case of 'welcome to australia, here's your negative equity'?? Quote Link to comment Share on other sites More sharing options...
elfie Posted January 21, 2014 Report Share Posted January 21, 2014 Economics was describe to me once - its like an elastic band keep stretching it and it will go pop when no one knows. It happened in the UK not that long ago. Some people make money some do not unfortunately. Kind of made sense to me. Quote Link to comment Share on other sites More sharing options...
portlaunay Posted January 21, 2014 Report Share Posted January 21, 2014 I'm no expert on matters of global economy but I find it curious how this seemingly fragile economy, perhaps something of a banana republic, so dependant upon mining and China's voracious appetite for resources, manages to stay afloat. It makes me feel a little vulnerable and perhaps that is one of the reasons I don't ever want to own my own home. If the economy takes a tumble and property prices slump we'll likely be better off and able to take advantage of cheaper rental rates. I've also never really understood the problem of negative equity. If you buy a house, are happy there and live comfortably in it, surely it's value is only an issue when you come to sell? I think it's all a lot of scaremongering by governments manipulating us to go out and buy more stuff, to keep the economy afloat when, to be honest, there are more important things to worry about, surely? Quote Link to comment Share on other sites More sharing options...
StraighttothePoint Posted January 21, 2014 Report Share Posted January 21, 2014 Who know's but with the expected population increases expected in the Perth area / WA in general then you would expect demand to out weigh supply. However...... Is it a maths question though? Let's say we are couple who are 40'ish. We have been paying our mortage for over 10 years already. If we were to say sell our house in the UK and end up with cash of a hundred thousand pounds that would be roughly $170000 in hand. If we needed to use some of that for start up money over here then it could easily drop to $120,000 in a matter of weeks if not months. House prices here are what they are, no point in thinking high or low, and so if we now want to buy in a reasonable suburb within reasonable travel time to the city then we may need to pay say $550,000 for a house. We are on one salary over in Perth a good one. Keep with me everyone... Ok so now what do I do. We think we can go for it and buy a house for around the $550,000 mark and stick down $100,000 leaving a mortgage of $450,000 but we cannot get the loan because we do not earn enough. Ok plan B we move much further out of the city and get a new house in the burbs that we can get for say $400,000 land and house and built to our specification or a smaller, second hand one even further out for $375,000. We now have a much further commute than we wanted and a $300,000 mortgage. But we need to take that out over 25 years to afford it. Do we take interest only and hope the house prices risea lot or do we take a repayment one to try and get the debt down asap? Ok just one of a thousand examples and the different senarios are endless with this but the question is are you going to be better off financially coming here? We can all argue till the cows come home that the move is a better lifestyle one but put that to one side. Are people, in general, making a good financial move? If the house prices keep going up and up then possibly it should come good for many but even then not all. Perhaps the secret is, I always keep saying, not to over extend yourself and create too much debt too soon. The more debt the higher the risk in the UK where we have seen how that can pan out. Keep the debt high on arrival here in a new country where people appear to leak cash then, to me anyway, that is a risk too far because I would want to enjoy my life here not have to come here and just worry about money all the time. Mind you I have always been a chicken Quote Link to comment Share on other sites More sharing options...
Bibbs Posted January 21, 2014 Report Share Posted January 21, 2014 The problem is that the amount of people arriving isn't really dropping, and they need somewhere to live. If you buy in a location that is desirable, you should be fine. If you buy where it isn't, you may have issues if the economy drops. Look at London vs the rest of the UK. Because there is always work available in London (generally) anywhere easily commutable didn't really lose value. The area I lived in didn't drop, it just plateaued for a year or three. Northern ex-mining towns (where there wasn't much work before the GFC) got hit hard, as there was no desirability in those locations. So for Perth, buy somewhere with as much of the following :- great views (beach, river, hills) good transport links (train lines, airport) good local services (shops, internet, restaurants and bars) proximity to the CBD (where the majority of work is) or big satelite town (like Mandurah). and you shouldn't do too bad if it all goes wrong. Quote Link to comment Share on other sites More sharing options...
portlaunay Posted January 21, 2014 Report Share Posted January 21, 2014 Keep with me everyone... Huh??? It's okay, I got you. So, all things being equal, in the situation you describe, having $120k in your pocket, what would you do now? If it was still in the UK and you didn't need it, would you transfer now or hope the Stirling continues its upward trend? I ask because you probably have a spreadsheet that you can punch some numbers into and it spits out advice Knowing what you know, what would you do with your $120k? Quote Link to comment Share on other sites More sharing options...
portlaunay Posted January 21, 2014 Report Share Posted January 21, 2014 The problem is that the amount of people arriving isn't really dropping, and they need somewhere to live. True but there are also a great many people leaving. Perth and Australia as a whole has always had lots of people arriving and I'll try to dig out the data but Perth also has the highest number of returning Poms. Quote Link to comment Share on other sites More sharing options...
StraighttothePoint Posted January 21, 2014 Report Share Posted January 21, 2014 (edited) Huh??? It's okay, I got you. So, all things being equal, in the situation you describe, having $120k in your pocket, what would you do now? If it was still in the UK and you didn't need it, would you transfer now or hope the Stirling continues its upward trend? I ask because you probably have a spreadsheet that you can punch some numbers into and it spits out advice Knowing what you know, what would you do with your $120k? I would at this point rent here. Get a job, use the salary to pay the rent and invest the 120k. I would gamble 30k on premium bonds in the UK and invest $70k now in Oz as a safety net. If it goes up a few cents in the future hey ho. You can only get about 0.00001% interest in the Uk at the moment so I would just shift it. But this is only me mind and not financial advice to the masses..... PS Still waiting for the spreadsheet to spit the real answer out.... Edited January 21, 2014 by StraighttothePoint Quote Link to comment Share on other sites More sharing options...
portlaunay Posted January 21, 2014 Report Share Posted January 21, 2014 PS Still waiting for the spreadsheet to spit the real answer out.... 42 I know people here on a similar income to us (when I was working), who have 10+ properties, all rented out, mortgaged up to the hilt, all saying the same thing, that it's their retirement fund. Having lived without recession their whole lives they simply don't understand the fragility of their position. It seems very common practice here to build a 'property portfolio' and they all go for the same thing; standard 3x2's in plain old suburbia. Having been a home owner (still), in the UK I really can't see any benefit in doing so. If I calculate the cost of the interest rates, maintenance, improvement, the number of lost weekends, my time doing the work and the hassle of the purchase and selling process against the cost of renting a similar property over the same period and investing the money saved I'm certain I could have come out of it with at least as much 'profit'. I think it's a common misnomer when referring to property as a sound investment, there are many others with similar ROI it's just that we're led to believe otherwise. Quote Link to comment Share on other sites More sharing options...
StraighttothePoint Posted January 21, 2014 Report Share Posted January 21, 2014 Is the issue, and actually again linked to the OP's question, that Gen Y / The Baby Boomers or whatever they are called, 9you and me probably Ports), have seen the massive property gains over several periods of time and therefore everyone coming along at the back of us think it will be the same for them? Like you my time is for playing, doing stuff I like and a bit of work here and there. Everything else just seems too hard to consider:wink: Aussie style though is investment properties and good luck to them and those that follow that route. For UK folk coming here I honestly believe the trick is to box clever, think outside the square, do not put all your eggs in one basket and keep the debt down, down as Status Quo would say!! Quote Link to comment Share on other sites More sharing options...
Rivera Posted January 21, 2014 Report Share Posted January 21, 2014 (edited) is the real estate going to keep on rising for the foreseeable future?? Short answer, Yes - barring a Black Swan event (which is very appropriate for WA !) Glenn Stevens, Governor of the RBA has stated publicly that he wants the Aussie dollar at 0.85c to the US dollar (currently 88c, was 90c when he pronounced). Normally he would reduce interest rates to bring about this devaluation, but he can't because that would increase house price inflation and a housing bubble is the last thing he wants right now. So he is trying to jawbone the Aussie down, together with a bit of RBA market intervention, though the RBA is a very small player in the international currency markets. The Aussie is underwritten largely by commodity prices and as these have softened of late, the lower commodity prices have been beneficial to manufacturing and service economies (USA) and therefore the Aussie/US currency pair has swung back in favour of the USD. Incoming migrants are a significant factor to the Perth market in a rising market but would not sustain prices in the event of an Australian property crash. Not intended as financial advice ! Edited January 21, 2014 by Rivera Forgot the disclaimer ! Quote Link to comment Share on other sites More sharing options...
Guest guest9824 Posted January 21, 2014 Report Share Posted January 21, 2014 I'm no expert on matters of global economy but I find it curious how this seemingly fragile economy, perhaps something of a banana republic, so dependant upon mining and China's voracious appetite for resources, manages to stay afloat. It makes me feel a little vulnerable and perhaps that is one of the reasons I don't ever want to own my own home. If the economy takes a tumble and property prices slump we'll likely be better off and able to take advantage of cheaper rental rates. I've also never really understood the problem of negative equity. If you buy a house, are happy there and live comfortably in it, surely it's value is only an issue when you come to sell? I think it's all a lot of scaremongering by governments manipulating us to go out and buy more stuff, to keep the economy afloat when, to be honest, there are more important things to worry about, surely? We have bought a house here, and work on the premise that if prices drop, our house price drops too, but so does the next house we buy here, that will be cheaper than it was, it only really matters if you are moving to a more expensive area or country or you want to tske what equity you had and leave for dear ole blighty or elsewhere to start up again...hope that makes sense! I agree there is a bit of scaremongering going on as usual, and all the time there is this huge influx of migrants, then the housing market will keep bubbling along nicely! I think I would start to look at buying a block big enough and with all the services available in order to be able to subdivide in the future, rezoning seems to be on the change even in semi rural areas like ours, as long as sewers are connected, so I think land value in certain places will still be a good investment. Quote Link to comment Share on other sites More sharing options...
bugsyburrell Posted January 21, 2014 Author Report Share Posted January 21, 2014 Interesting read on http://www.perthnow.com.au/news/western-australia/perth-at-five-million-people-endless-suburbia-or-australias-best-city/story-fnhocxo3-1226783153597 how the population should continue to flourish. Can the mining can sustain this population growth alone or will Perth will be the next Dubai?? Quote Link to comment Share on other sites More sharing options...
portlaunay Posted January 21, 2014 Report Share Posted January 21, 2014 Interesting read on http://www.perthnow.com.au/news/western-australia/perth-at-five-million-people-endless-suburbia-or-australias-best-city/story-fnhocxo3-1226783153597 how the population should continue to flourish. Can the mining can sustain this population growth alone or will Perth will be the next Dubai?? Where Dubai saw the beginning of the end when their oil began to run dry they turned to tourism as the next income stream and probably saw themselves as a simulacrum of the best bits of many other cities. Unfortunately the tax-free, bargain shopping centre it once was dried up, any heritage was torn down and many a turd was polished so that now it's really difficult to understand its identity, it has absolutely no soul. Economically I don't think Perth or WA will be the next Dubai because it also has the wheatbelt and other agriculture, wine export and quite a lot of specialist manufacturing (shipbuilding at Henderson for example) and then as well as ore there is LNG, all of this in contrast to Dubai which had…. well, after oil, what did Dubai have? Tourism in Dubai took a nosedive because of their (in comparison to Europe/US), draconian laws and corrupt legal system. It has pretty harsh penalties for anyone who is not an UAE national. Scratch the surface and you'll find it's a pretty sinister and unpleasant place to be but it relies on the fact that most people will pass through pretty quickly and happily pay US$100 for a chocolate brownie (yes I did, what a c*@k). Personally I'd like to see the AU$ fall to make our exports more competitive. I think there has to be an amazing skill base here that currently focusses its expertise on the domestic market because the economy is so strong. In my area of expertise, training, I can see demand for skill and knowledge transfer as a fantastic commodity for WA. As the resources sector feels the pinch more and more it would, in my opinion, be disastrous to lose that expertise overseas. Quote Link to comment Share on other sites More sharing options...
Guest guest9824 Posted January 21, 2014 Report Share Posted January 21, 2014 100 bucks for a brownie??....sweet baby jesus I'm in the wrong job ( well no job actually...but hey ho) ...choc brownie making it is...moving to dubai it's not, couldn't live without a glass or three of vino.... Very eloquently put though Mr P. pea Quote Link to comment Share on other sites More sharing options...
colinmacl Posted January 21, 2014 Report Share Posted January 21, 2014 In a nutshell yes it will but it is just a matter of when. Just look at the current statistics avg house price $500K. avg wage $70k 7 times avg wage. lowest ever amount of first home buyers on record. Lots of new homes sold are people buying investment properties on interest only mortgages. Sound familiar? Quote Link to comment Share on other sites More sharing options...
elfie Posted January 21, 2014 Report Share Posted January 21, 2014 Aye up me ducks - there's always money in bricks and mortar or sand and clay here. If you want to see a good return on property buy it cheap and keep it for 15 years plus then you will make money is not a quick buck its a long long term thing. Have to go with porty on this one would never buy a house here renting for us is the way to go. The interest only mortgage on rentals this is a gamble as if prices do not rise no money to be made but then you gain come tax time it has to be a very verylong long term investment thats where it goes wrong for people. Quote Link to comment Share on other sites More sharing options...
Lou8670 Posted January 26, 2014 Report Share Posted January 26, 2014 In a nutshell yes it will but it is just a matter of when. Just look at the current statistics avg house price $500K. avg wage $70k 7 times avg wage. lowest ever amount of first home buyers on record. Lots of new homes sold are people buying investment properties on interest only mortgages. Sound familiar? It happened where I live. House prices reached £775k for a 4 bed and £550k for a 3 bed; 22 and 16 times average earnings! Hence why so many people live in 2 bedroom flats but, even then, the average 2 bedroom flat is over 9 times average earnings! Now the market's not surprisingly contracting. Also the main industry, Finance, is suffering with hardly any other industries to turn to as agriculture has been struggling for years (average earnings in that sector have risen over 12% in the last year which is why they often bring over cheaper labour from other countries which has its own impact on the economy), and tourism went a ball of chalk years ago with most of the hotels having been turned into flats to deal with the shortage of housing. Let's just hope we sell our house whilst we are still in the money! So Perth could still have a way to go yet. Also there's lots of space to keep building homes for the steady influx of immigrants so there's a chance to let some air out of the bubble before it gets too big and pops! I'm no economist but my rule of thumb is to look at the average house price graph over the long term and draw a straight line through the result to get the long term trend. You'll then be able to see if they are already overpriced or not. Lou Quote Link to comment Share on other sites More sharing options...
Stephen Nicholls Posted February 5, 2014 Report Share Posted February 5, 2014 As a real estate agent Perth property rose last year by approx 7%, even though mining, retail, and other sectors have slowed. In my opinion it will stay like this for another 12 months, its not something that we have not seen before, but it will be more protracted than before. Property prices will continue to rise this year, maybe another 7% as there are very low levels of properties for sale, with them being snapped up very quickly, with a lot of interest. Hope this helps Steve. Quote Link to comment Share on other sites More sharing options...
Julie Posted February 7, 2014 Report Share Posted February 7, 2014 I'm with you on this one bugsyburrell, Perth is heavily dependent on China and only produces what it can dig out of the ground. China is also heavily investing in Africa, which has a lot of raw materials, I wonder how much an African worker will work for in comparison to WA, not to mention having no big unions to contend with. I get the feeling the mining boom here will be more or less over in the next few years. Quote Link to comment Share on other sites More sharing options...
Milly Posted February 7, 2014 Report Share Posted February 7, 2014 Hi All, Property prices in WA have hit the bottom for "this cycle" I believe ( supported by sales data ). Some suburbs, like the western suburbs of Perth like Cottesloe and suburbs like Applecross and Mount Pleasant have already "bolted" in the last 6-12 months so beware!. Search the readily available sales data for all suburbs and look at the suburbs that have been stable or had a loss in value but stable for some time - 1-2 years.…yet to bolt. Look at those suburbs and filter for those that are close to public transport, beach and other features e.g. great schools. Heading to a new country, I would rent and work for at least 6 months and use the time to explore and get to know the various areas of Perth…. south to Mandurah and North to Butler. Easy to explore one area each weekend either by car or train. Then invest in property if a longer term investment is within your 10 year plan……….property investment has been good for us….. just need to have patience…… Quote Link to comment Share on other sites More sharing options...
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