Congratulations Malaga, the trend just keeps going your way as...

Congratulations Malaga, the trend just keeps going your way as was stated last week, you have about 18 months left of boom time before it falls off a cliff. My rant last week about Major CAPEX Driving the engine of the state economy, well NAB's CAPEX report out today agrees.

http://www.scribd.com/doc/129026790/2013-03-07-Mining-investment-pdf

This is the graph that every Perth Property Baron should be aware of!

The recent capex and exploration expectations data suggest that mining investment may be approaching a turning point. A decline is inevitable: the question is when and how fast.

On the basis of past engineering construction commencements, there are reasons to believe that there is a risk of a decline in 2014 big enough to take 2% points off GDP growth in that year unless another “mega” project starts soon. Lower levels of bulk commodity prices are also likely to be positive for the underlying trend in mining project commencements.

If mining investment retreats spectacularly in 2014, non-mining investment will need to fill the gap quickly if employment growth is to be maintained.



Like i said last week, no new mega projects have been announced, nothing is in the planning stages to be announced into the investment pipeline either, its all winding down.

Remember, you dont need a great depression to have a contraction in asset prices, all you need is a few percentage point jumps in unemployment, which this CAPEX contraction will cause, then sentiment turns and your correction begins.

Following on from this 2014-2016 mining slump, we will reach a tipping point around 2016-17 where baby boomers, who own those wonderful 700k-1.2m dollar houses in the inner suburbs retire and start to downsize either for convenience or by the simple fact that many still have a 2nd mortgage to close out of. This will further compound the issue as Gen X doesnt have the necessary capital or want to step up and buy these McMansions.

Oh throw in a financial crisis or two as well! The outlook on Perth Property? Sell now! Or at least give me some reason why it looks good past 2013?