It especially mentions Perth. I'm in Sydney but there seems to be a lot of Perth property bulls and bears on here, so I thought I'd put it out there for discussion.
Clearly a lot of the property price appreciation in Perth has come from the mining boom. I am pretty sure everyone will agree this is undisputed.
From the article:
"Perth has already been underperforming relative to Sydney, after out-performing dramatically through the commodity-boom phase."
I would think that this is only natural. Looking at ABS stats, Perth had outrageous growth in the early-mid 2000's and after 2003 Sydney did not.
It appears that in 2007 and 2009 Perth almost overtook Sydney in median house price.
In March 2002 the Sydney median price was $365k by Dec 2011 it had reached $533k. A rise of 45%.
Perth on the other hand was $190k in March 2002 and rose to $480k by Dec 2011 a rise of almost 250%.
With that in mind it was always going to slow down and more than likely correct.
So now that the construction stage of the boom is almost over what is going to keep the population in Perth. I imagine there is still a lot of work in the mining sector but will it be enough to keep the demand for property as high as it has been?
Are there also a lot of businesses that provide the mining industry with services that will continue and or grow?
Or will the population experience some negative growth putting pressure on house prices?
In my opinion, and those that have seen my posts know I am fairly bullish on property, I would be nervous investing in Perth at the moment. If I already owned quality property I don't think I would be selling either though.
This is all IMO and I have zero first hand knowledge on the Perth market other then the numbers above.
I am expecting Sydney to finish it's growth spurt this year with around 5% growth. It will then enter it's hibernation stage experience little or no growth. In around 5 years time when wages, savings and population growth catch up it will start it's next leg up.
The rate of growth will very much depend on the economy, interest rates and actual (not forecast) population growth.
I am pretty bullish on most of the above. The NSW economy is the best performer in Australia at the moment, this will push wages higher and in turn drive interstate and international migration. I think interest rates will be back to more average rates of around 7% which shouldn't be too much of a deterrent to home buyers.
