How will Perth stand up if the commodities boom fizzles?

[Bushman]

Without a doubt, Perth property has experienced a significant kick along via the commodities boom. This has been driven by strong state immigration and a population boom out west.

Question for you sand gropers is are you optimistic or pessimistic about residential and commericial property prices now that the WA economy might take a breather due to plunging commodities prices? Or do you subscribe to the commodities super cycle?

The Perth property market, in my opinion, is massively under supplied. Office rents in West Perth is 0% at the moment and the city is land locked. To me, the credit crunch will be but a blip in WA's economic repositioning as supplier of choice of Chinese bulk commodities. However the crunch will delay a lot of proposed WA property development and thus I think WA will show the strongest yields and capital growth over the second leg of the commodities 'super cycle'.

Quite odd posting on a new forum by the way.

[2BAD4U]

Don't believe everything you hear about the 'BOOM' in WA, it's not all that it's made out to be particularly on the east coast. Many people have packed up to come over here to make mega bucks only to find out that they would have been better off staying home and if they do stay many people are ending up in divorce court.

I think that we have experienced unsustainable growth over here and at last it has come back to a more realistic level. I estimate that I have dropped about 15 -20% on my properties over the last year, however, IMO things will start moving again now all be it at a much slower pace.

My feeling is that as things slow down in the mining and people start to lose jobs, the first ones to go will be those who moved to WA from interstate and I would suspect most of them would move home to family thereby putting no pressure on the housing market (possibly creating supply as they start to sell up and move home).

So to answer your question, I'm optimistic.

[Passive]

Don't believe everything you hear about the 'BOOM' in WA, it's not all that it's made out to be particularly on the east coast. Many people have packed up to come over here to make mega bucks only to find out that they would have been better off staying home and if they do stay many people are ending up in divorce court.

I think that we have experienced unsustainable growth over here and at last it has come back to a more realistic level. I estimate that I have dropped about 15 -20% on my properties over the last year, however, IMO things will start moving again now all be it at a much slower pace.

My feeling is that as things slow down in the mining and people start to lose jobs, the first ones to go will be those who moved to WA from interstate and I would suspect most of them would move home to family thereby putting no pressure on the housing market (possibly creating supply as they start to sell up and move home).

So to answer your question, I'm optimistic.

Would agree with your sentiment - the regional areas will take a pounding as folk move back to Perth . Its a fallacy to believe Perth only has resources - the beneficiaries were there no doubt, but what it means is that many will not have the huge incomes they had before but there are many mines still going well, lot of activity going on and prices of medium range real estate and well located stuff holding its own. With all the stimulus world wide eventually taking effect watch Perth fire up when it all starts to happen again. China might be slowing, India as well but they are by no stretch of the imagination developed nations and will need our resources for decades to come - in the meantime we will need to ride out the storm and seize the opportunities as they arise. Just a serious blip in the system before we hit the refresh button

[2BAD4U]

It's starting to happen, story in today's Sunday Times how all the Cashed Up Bogan toys are being reposesed and/or sales falling. Things such as V8 utes, jet skis, etc.

[Passive]

It's starting to happen, story in today's Sunday Times how all the Cashed Up Bogan toys are being reposesed and/or sales falling. Things such as V8 utes, jet skis, etc.

They were always going to get into strife and doubt, hopefully, they won't effect the market too much!

[Passive]

One thing is certain, that whatever building/construction is taking place in Perth will not be wasted in the next 5 years. Maybe we are in a trough but what do you expect after such a surge. Who in their right mind believes the demand for our resources is finished - it is just on hold!

China, India, Phillipines, Korea, Indonesia et al are not mature countries but are still developing and until such time we will ride the wave. Graph cannot go up in a straight line -has its ups and downs but up WA will go again and how easy it is becoming to hold real estate until it does.

As you can gather I am bullish in the medium term.

[kincella]

I too would be optimistic....once a sleepy town or city is reinvigorated for whatever reason....it should then move on to become stable....the fly by nighters who move in and out..may rethink future stategies....some will always move around....others may settle down and wait it out....no point flying back to the east if nothing is happening over here either....and Perth certainly seems to attract those looking for a quickifortune or quick bucks anyway.....
Perth and WA have received massive exposure past few years....a period of stagnation may occur for awhile....while people regroup, rethink and plan future strategies....WA has too many resources to lie idle for too long....and am sure there are plenty out there waiting to pounce on any bargains they believe will turn up...
The Chinese will be in a better position to negotiate deals....and some payback due to the high prices they have been paying .....that country is not going to stop and give up its future plans.....they will be taking stakes in companies and doing deals for the future.....

In the meantime the community should be planning for other industry to take up the slack...tourism for example.....and financial hubs.....etc

BTW if WA is anything like Syd and Melb....lots of activity by smaller operators looking for office space at the best addresses in town, snapping up those offices being vacated by the bigger players....but for smaller areas....
so if you see similar activity and in a position...you may consider strata title ....turn a big office into two smaller offices etc....in this environment it can make a lot of sense....and saves the problem with sub leasing etc...

[Passive]

Speaking to an agent today who has operated in areas like York, Beverley etc to the East of Perth and still foreigners buying farms with huge price tags for cash, hobby farms still being bought for cash. Has quietened down admittedly but still a lot of money around. Anecdotal admittedly.

Many of the mines have scaled back but many are still functioning and don't believe this place is a ghost town.

Commercial will offer some opportunities you are right.

[bluelabel]

Just found this article and was going to start a new thread on the subject but then found this thread and thought it more appropriate here.

The article talks about how the Perth property market will be the worst perfoming this year mainly due to the slow down in the Chineses economy and hence the flow on effect to the Australian commodoties market, which of course leads us to W.A. and the fizzle...

Source: http://www.news.com.au/perthnow/story/0,21598,25108619-5013244,00.html

:bier:

blue

[kincella]

amazing story 10 suburbs up some whopping percentages... and probably the cheaper suburbs down....fhb ??? interesting....I watch 2 suburbs weekly...
one ...the fhb were there all year...until there was no stock left in Nov 08...now the more expensive homes are selling...the average home is not on the market yet....
the Dec rate cut changed everything....30 homes a month sell...nothings changed for a year with the number of sales
similar with the other burb...cheap props there for a while...one for 450 in Dec sold for 660...
maybe WA fhb have been busy..hence the drops in prices...I dont know enough about that market...what is the average no. of sales pm etc..
but WA went higher and for longer than the other states...so it might need longer to slow down....
increases above 30% for a year is stunning
cheers