Is it a good time to buy a house in Perth?

[Xenon4017]

Syd and Mel are being driven by overseas investors.

 

Do you have any hard facts to back this up? If you're a foreign investor, why sink your money into an asset which is at best "fully valued" and unlikely to yield a fantastic dividend? I've got no axe to grind; I'm just interested if you've got any research that sheds light onto this claim. From what I see, it's mainly REA spruik.

[newjez]

Do you have any hard facts to back this up? If you're a foreign investor, why sink your money into an asset which is at best "fully valued" and unlikely to yield a fantastic dividend? I've got no axe to grind; I'm just interested if you've got any research that sheds light onto this claim. From what I see, it's mainly REA spruik.

 

 

The figures are there for new builds - there has been much news coverage on this http://www.smh.com.au/business/the-economy/foreign-buyers-snap-up-residential-property-20131010-2va7c.html is one of many.

 

They are not allowed to buy existing, so any purchase of existing will happen by the back door, and there are no figures. But you would be silly to assume it is not happening to some degree through relatives living in Oz, and there is no reason to not assume that this practice is increasing in line with the legal practice of buying new builds. Why would it not?

 

There are many reason why foreign investors would buy in Oz and other countries. Stability is one. Insurance against possible regime change would be a big influence. They would not be that interested in returns in this case, more interested in hiding money. They also may think their own markets hold no value. Shares aren't exactly a safe haven. Do they trust their banks? Do we trust ours?

 

And why is Sydney fully valued? Why will it not continue?

[Bibbs]

My short term worry with Perth is how tapering in the US will affect the market. Syd and Mel are being driven by overseas investors. Bris and Ad will pick up some overspill from Syd and Mel. But Perth has been in idle mode for several months now. Personally if I was going to buy in Perth, I'd spend the next six months doing a lot of research, find out where the value is and then see how the market has performed over that time. If it hasn't dropped in that time - then it probably won't drop. If it is dropping, you may want to wait and see or come in with a low ball offer. If we can get through the US tapering without the world ending, then Perth could be a good buy. But I would watch how things pan out over the next 6 months.

 

We looked for 18 months.

 

But we bought where we wanted to be, not where the best *investment* was.

 

No point buying and living in a place that's a good investment, if you don't like the area and it's no where near your work.

[nicolac34]

We looked for 18 months.

 

But we bought where we wanted to be, not where the best *investment* was.

 

No point buying and living in a place that's a good investment, if you don't like the area and it's no where near your work.

 

Here here! Wish we'd looked for 18 months rather than 1 week - good 'investment' area but now we have to move again because it's actually a ball ache to get to work and a boring place to live!

 

Research, research, research!

[Xenon4017]

The figures are there for new builds - there has been much news coverage on this http://www.smh.com.au/business/the-economy/foreign-buyers-snap-up-residential-property-20131010-2va7c.html is one of many.

 

 

 

Thanks for the link. The problem is, although the %age of foreign bought builds is going up, it doesn't say anything about the number of new builds in total, which I think is going down. This means that the total number of foreign bought houses is also going down.

 

Let's look at the article in detail:

 

>>NAB group chief economist Alan Oster said the level of foreign buying of new property ‘‘has gone up a lot in recent years’’.

 

So, the chief economist won't commit himself to a figure??! Just some nebulous "gone up a lot". Maybe he's in the wrong game.

 

 

 

>>However, with a real estate market in Australia worth about $4 trillion, foreign buyers are unlikely to be influencing median house prices, Mr Oster said.

 

 

Or maybe not.

 

>>The foreign buyer data is contained in NAB’s Quarterly Australian Residential Property Survey for the three months to the end of September. It is not based on official data, but on the opinions of a panel of more than 300 real estate experts.

 

Who have been calling the bottom in all markets forever. Any yet, they never produce any hard evidence.

 

 

 

there is no reason to not assume that this practice is increasing in line with the legal practice of buying new builds. Why would it not?

 

I'd agree with that, but look at the transaction volumes. In some parts they're at their lowest for 15 years.

 

 

 

There are many reason why foreign investors would buy in Oz and other countries. Stability is one. Insurance against possible regime change would be a big influence. They would not be that interested in returns in this case, more interested in hiding money.

 

 

But it's no good buying a house in Oz without a visa to live here. And moving 500K+ across borders isn't the best way to hide your cash.

 

And why is Sydney fully valued? Why will it not continue?

 

Well, simply because no asset price can outstrip inflation forever.

[flag of convenience]

Do you have any hard facts to back this up? If you're a foreign investor, why sink your money into an asset which is at best "fully valued" and unlikely to yield a fantastic dividend? I've got no axe to grind; I'm just interested if you've got any research that sheds light onto this claim. From what I see, it's mainly REA spruik.

 

Hard facts are everywhere. Chinese investors are the main purchases of inner city apartments. Nothing new there just the number has massively increased. Hardly confined to Australia either. Canada, USA and London stand out.

Nothing to do with yields. Chinese thinking is way long term. Some are not bothered to leave empty. As such they are in many cases willing to pay over the odds to gain a foothold. Often bought with extended family back up or even by a syndicate.

I do not believe REA see it as in their interests stating the degree of overseas involvement happening. It would be far more beneficial to let the public think it was local buyers flooding the market.

 

I do agree on the general sentiments expressed about REA though.

[flag of convenience]

Thanks for the link. The problem is, although the %age of foreign bought builds is going up, it doesn't say anything about the number of new builds in total, which I think is going down. This means that the total number of foreign bought houses is also going down.

 

Let's look at the article in detail:

 

>>NAB group chief economist Alan Oster said the level of foreign buying of new property ‘‘has gone up a lot in recent years’’.

 

So, the chief economist won't commit himself to a figure??! Just some nebulous "gone up a lot". Maybe he's in the wrong game.

 

 

 

>>However, with a real estate market in Australia worth about $4 trillion, foreign buyers are unlikely to be influencing median house prices, Mr Oster said.

 

 

Or maybe not.

 

>>The foreign buyer data is contained in NAB’s Quarterly Australian Residential Property Survey for the three months to the end of September. It is not based on official data, but on the opinions of a panel of more than 300 real estate experts.

 

Who have been calling the bottom in all markets forever. Any yet, they never produce any hard evidence.

 

 

 

 

 

I'd agree with that, but look at the transaction volumes. In some parts they're at their lowest for 15 years.

 

 

 

 

But it's no good buying a house in Oz without a visa to live here. And moving 500K+ across borders isn't the best way to hide your cash.

 

 

 

Well, simply because no asset price can outstrip inflation forever.

 

With regards to buying a house in OZ and not living here it doesn't matter a great extent. It could be family putting it in the names of those settled here and as such able to access established housing or syndicates or even from within the same clan group. A long tern safe bet is what is sought no matter short term losses. Chinese are great gamblers but also an eye for the very long term. Who knows how the money was obtained. Who knows have much government involvement (Chinese) is involved. Chinese folk have much in common with Jewish folk, citizens of the world.

[Xenon4017]

Hard facts are everywhere..

 

Well would you mind listing a couple?

 

 

Chinese are great gamblers but also an eye for the very long term. Who knows how the money was obtained. Who knows have much government involvement (Chinese) is involved. Chinese folk have much in common with Jewish folk, citizens of the world.

 

OK, so your hard facts are basicly racial stereotypes.

 

If you want some real numbers, pick a postcode, any postcode you like*. Then we can dig out some real data and have a sensible conversation.

 

(*Obviously not circular quay)

[flag of convenience]

Well would you mind listing a couple?

 

 

 

 

OK, so your hard facts are basicly racial stereotypes.

 

If you want some real numbers, pick a postcode, any postcode you like*. Then we can dig out some real data and have a sensible conversation.

 

(*Obviously not circular quay)

 

Well my Bank Manager for one, A Chinese himself, who mentioned many months ago to me the aggressive nature of Chinese buyers in not so popular Perth. Are you saying you can find no evidence with regards to Chinese purchasing a lot of the new builds in apartments in inner cities of Sydney and Melbourne? Increasingly so in Brisbane? Have you attempted a search as information is everywhere and no need for me to dig anything out.

Racial stereotypes? What? They are Chinese buyers in the main, not necessary from PRC, but also Singapore, Malaysia and Honkers. Do a little self research and converse perhaps?

[Xenon4017]

Well my Bank Manager for one, A Chinese himself, who mentioned many months ago to me the aggressive nature of Chinese buyers in not so popular Perth.

 

One swallow, a summer does not make. And besides, why would aggressive buyers be unpopular? I assume that by aggressive he means that they increase their offer until they get the property they want, thus squeezing out the local poorer people. As a vendor, they'd be welcome with open arms.

 

 

Are you saying you can find no evidence with regards to Chinese purchasing a lot of the new builds in apartments in inner cities of Sydney and Melbourne? Increasingly so in Brisbane? Have you attempted a search as information is everywhere

 

Yes, yes, yes. That's exactly what I'm saying. This idea of "cashed up foreign buyers sending real estate prices through the roof" is absolute hogwash, invented to try and stimulate local demand before they "get left behind and miss out". It's kindergarten marketing, but it seems to find traction with some people. It gets oft repeated, so people assume it must be true. But there's never any verifiable evidence to back it up. Even the link posted earlier on was far from conclusive.

 

At best, it's some lame spruik from unimaginative REAs. At worst, it panders to the xenophobic rantings of those Australians who are convinced that Asians are somehow guilty of simultaneously

a) arriving illegally, and throwing themselves on the mercy of Centrelink

b) Stealing their jobs, whilst being offshore

c) Pushing the price of real estate out of reach of the common Joe.

[Expatmummy]

My OH has just been made redundant, along with approx. 150 of his HO colleges over the last 6 months by an allegedly successful construction company, after they spent quite a bit bringing us over and then getting us work sponsored PR (he's been with them for several years and gained work for them)... not a mention of this in any of the local press. Several friends OH have gone through the redundancy cycle or, as they are self employed in O&G, not had any work for 6 months. Other friends in a variety of suburbs mainly north of the river have had to sell their houses at a loss. Advice we had from folk when we were thinking of buying (fortunately we didn't) was to go in at least 10-15% under asking.... we know 4 people who did this and were successful in the western 'burbs.

 

Just my penny worth, but things aren't looking as rosy as the papers and pols would have us believe!

[Gilllian]

Wow that's a lot of replies to my original post! :jiggy:Lots of food for thought.

I think I'll just stick to the basics - rent, then look around, research, research, research. This is a home to live in for a long time (hopefully) so not looking for a quick turn around. At the moment though, it is all looking very expensive. Having just been in the UK where I personally experienced the house prices crashes I'm more wary than I have been in the past about the timing of buying. Previously I just thought it would all pan out in the longer term. This time I need to buy smart. Thanks everyone for your posts. Interesting reading!

[Gilllian]

My OH has just been made redundant, along with approx. 150 of his HO colleges over the last 6 months by an allegedly successful construction company, after they spent quite a bit bringing us over and then getting us work sponsored PR (he's been with them for several years and gained work for them)... not a mention of this in any of the local press. Several friends OH have gone through the redundancy cycle or, as they are self employed in O&G, not had any work for 6 months. Other friends in a variety of suburbs mainly north of the river have had to sell their houses at a loss. Advice we had from folk when we were thinking of buying (fortunately we didn't) was to go in at least 10-15% under asking.... we know 4 people who did this and were successful in the western 'burbs.

 

Just my penny worth, but things aren't looking as rosy as the papers and pols would have us believe!

 

Thanks expatmummy - that is very useful info.

[nicolac34]

. Other friends in a variety of suburbs mainly north of the river have had to sell their houses at a loss. Advice we had from folk when we were thinking of buying (fortunately we didn't) was to go in at least 10-15% under asking.... we know 4 people who did this and were successful in the western 'burbs.

 

Just my penny worth, but things aren't looking as rosy as the papers and pols would have us believe!

 

An interesting anecdote, from my experience houses were going for 10-15% over the asking price, certainly not under. But this was NOR - Heathridge, Padbury, Beldon, Craigie. Which is why we pushed south to get something at the asking price (not under).

 

Guess it stands to reason though in the Western 'burbs, those prices are sky high, they can stand to lose 10% and not feel it.

[HappyHeart]

We paid 15% below asking price in Perth Northern suburbs 3 years ago. Similar homes are now selling for around 15% above same asking price and are marketed at about 30% higher than 3 years ago, thats my anecdotal experience for what its worth

[newjez]

We paid 15% below asking price in Perth Northern suburbs 3 years ago. Similar homes are now selling for around 15% above same asking price and are marketed at about 30% higher than 3 years ago, thats my anecdotal experience for what its worth

 

If you bought 2009 that would fit.

[flag of convenience]

My OH has just been made redundant, along with approx. 150 of his HO colleges over the last 6 months by an allegedly successful construction company, after they spent quite a bit bringing us over and then getting us work sponsored PR (he's been with them for several years and gained work for them)... not a mention of this in any of the local press. Several friends OH have gone through the redundancy cycle or, as they are self employed in O&G, not had any work for 6 months. Other friends in a variety of suburbs mainly north of the river have had to sell their houses at a loss. Advice we had from folk when we were thinking of buying (fortunately we didn't) was to go in at least 10-15% under asking.... we know 4 people who did this and were successful in the western 'burbs.

 

Just my penny worth, but things aren't looking as rosy as the papers and pols would have us believe!

 

Papers and Pollies have vested interests in talking up the market as does the REWA. Saying that though a lot of property is very snapped up with a degree of haste around me in the city though. Outer areas will be the ones to be the most impacted come the downturn, but all with decline just a question of degree and overseas buying desirability.

Refreshing post though away from the usual over positive spin on an over valued real estate market.

[HappyHeart]

If you bought 2009 that would fit.

 

We bought October 2010

[Guest]

Problem with Perth is that it is just over priced for what it is. Sydney and Melbourne are proper cities where as Perth is just a mining town which has grown into a big town. it doesnt have any industry there so it will suffer in a couple of years. Just wait and rent, save your money and when you have a few hundred thousand to put down and the morgage will be very easy, that is the time to buy if you think perth is stable enough at that time.

thats what i will do and like you say in the mean time rents have come down to enable you to save lots as well as holiday etc.... enjoy it. why pressure yourself with debts and mundane stuff. You came her eto enjoy so go and buy a kayak, motorbike, boat and 4X4

[Bibbs]

Problem with Perth is that it is just over priced for what it is. Sydney and Melbourne are proper cities where as Perth is just a mining town which has grown into a big town. it doesnt have any industry there so it will suffer in a couple of years. Just wait and rent, save your money and when you have a few hundred thousand to put down and the morgage will be very easy, that is the time to buy if you think perth is stable enough at that time.

thats what i will do and like you say in the mean time rents have come down to enable you to save lots as well as holiday etc.... enjoy it. why pressure yourself with debts and mundane stuff. You came her eto enjoy so go and buy a kayak, motorbike, boat and 4X4

 

But what if you already have a deposit (and a 4x4 and a V8) and if your repayments would be less than renting?

[newjez]

We bought October 2010

 

Looks like you did well then. Was it a distressed sale?

[flag of convenience]

A house is of little value outside of not paying rent and the shelter it provides. What it may or may not be worth is purely academic until the point of sale which will reveal its true value. It can go up and down in the mean time besides sucking in economic resources.

[HappyHeart]

Looks like you did well then. Was it a distressed sale?

Not sure what that means??

[HappyHeart]

Actually agree with you there flag...for once

[newjez]

Not sure what that means??

 

Usually divorce, redundancy , means they were in a hurry to sell. It was a quiet market, although prices didn't drop as such. It was a good time for a cheeky low offer.