Australian Economy/Property Bubble

Hey ya, Im heading to Australia soon, NT then WA.
I follow business news etc and see there seems to be a massive property bubble in Australia. Whats is like on the ground down there?

The hostility to migrants on this website kinda spooked me a bit.....if there are loads of jobs why do people keep mentioning so many Ozzies on the dole?


http://www.perthnow.com.au/business/wa-company-news/state-looks-to-uk-ireland-for-workers/comments-e6frg2s3-1226089075767

The construction sector has had 5 months of negative growth and there are very few positions if any advertised in these areas.I say focus on kickstarting the economy before handing-out visas left/right and centre!.

Both the UK and Irish Housing market collapsed in style a few years ago. My friend has just managed to sell his Irish property for 160,000 euro he bought it for 480,000. Beaches and sunshine lifestyle doesn't last long when you struggle to live in such an expensive market. The people you do attract will not be the kind of people Perth needs!

How do you lure people here. Im sure manufacturing, tourism, retail and public service industries here dont pay mining industry rates... yet our cost of living expenses require a mining industry pay level to make life sustainable.

we dont need anymore incompetent irish idiots in perth messing the place up. - they're well known for their complete lack of building nous - particularly with scaffolding

why dont they start with training and getting australian people who are unemployed into jobs first!! there is plenty of people that want job and want better life but they can not get a chance, why not help out our own people first

The way the state is going,what with everything going up in price,migrants won't be able to afford to live here.

I have 2 daughters who are looking for jobs, why not train them and the many others who are unemployed before looking overseas? My daughters would love an apprenticeship or traineeship but have been brushed off by a company who supposedly fills these type of positions. They have been told to get more work experience or do a TAFE course before they will be looked at. Aren't apprentice/traineeships supposed to train people for jobs?

How about actually training AUSTRALIANS?. Or Import ONLY Trainers to Train AUSTRALIANS. See the Pattern?.. Too hard?.. Smart Country?.

How about these companies start paying people what they are worth, cost of living is so high yet some of the qualified trades (eg. chefs) only average 23 an hour and they wonder why they can't get workers. Also I'm over hearing about the mining sector needing people, my partner has 16 years truck driving and a clean track record yet can't get a job on the mines due to" inexperience" in heavy machinery. How are WA workers meant to get this experience if no one is willing to train them?

Wow what about all the unemployed Australians looking for work? Or the dole bludgers, train them to work for their money. This doesn't even make any cents let alone dollars.

Good luck. I am a proffessional in the mining industry and heading off back to the UK. Even on mining money Perth is just too expensive to make a bit of sunshine worth it. Off back to fifo to Africa for twice the money and half the living costs and i know plenty of others doing the same thing. Cant even afford to buy a house here but can afford a fantastic place in the UK for the same money. There were me and about 10 other geologists i know came over at the same time. There are 3 of us left and the other two are also making plans to get out of here. Will enjoy good food in good restaurants, decent service and a pint of beer i dont need a mortgage to pay for

now Barnett would rather pay millions to import foreigners than improve local skills for Australians. Shame on this government.

Get the young people off the dole and out there working!!! There are plently of WA workers,, On the dole!!!

Not the Irish, God anyone but them. Bloody useless I tell ya and ive worked with them. At least the beer consumption will increase and give a boost to the pubs.

etc etc

ellaq

You shouldn't believe everything you read in the media especially when you are getting contradictory articles on a regular basis. Especially PerthNow and their related mediasites.

Locals here are peeved that the media is constantly talking about the big skills shortage and the massive mining boom. The mining companies only want skilled people and that is often people skilled in a very specific area. You can imagine the frustration of people when they are being told there is so much money to be made in the mines but no-one is willling to train them for the jobs. Instead according to the media the mining companies are about to bring in hundreds of workers from overseas which puts pressure on housing and potentially increases prices. Any divide between miners and non-miners which is likely being caused by nonsense articles in the newspapers on a regular basis.

Now a lot of people that puts comments on Perthnow and other such sites do not in anyway represent the attitudes of the majority of Australians. People just like to put inflammatory comments here. It isn't reflected on the streets or in the workplace.

ellaq

The comment regarding the scaffolding is because Celtic Scaffolding recently had a death up North, the scaffolding collapsed taking a young Irish man with it into the sea. These comments are just stirring.

Thanks for the reply was naturally worried reading that stuff!
I know there is good and bad everywhere & Ive a very thick skin anyway

Just worried that unemployment will jump up when the bubble bursts as it did here

jank

Those comments are bull**** tbh. Waffle and pub talk amongst the ignorant. Stopped reading when I read that the UK was mostly Muslim.... yeah about 5% of the population is now a majority??
You cant take comments from sites like that seriously as most people wouldn't have the balls to tell you that stuff to your face because you can point some facts and tell them they are idiots to their face.

Trolling it seems has gone mainstream!

galait

Is there a Bubble ?

My sister who is Married with a Family has just bought an 80 yr old 2 Unit Duplex in Cremorne NSW , So it has 2 floors/units , Each floor has 2 bedrooms , One of the Bedrooms on each floor is a Box Room , The House is as I say is 80 yrs old and in it original condition , Windows don't close and doors/floors need to be replaced ,

The price tag is a whopping AU$ 1.35 Million ,

At the moment they are paying AU$3,000 per month rent.

They hope to rent out one floor for AU$2,800 per month to help pay the
AU$7,000 per month Mortgage.

In Summary I kid you not , They are a family of 5 moving into a 2 bed house with 1 box room , The place needs to totally renovated and a Mortgage of AU$7,000 to boot.

Are they crazy or is this typical ?

There has to be a bubble , Those figures are eye watering

BTW No Garden to speak of

Ozeire

I'm no property expert but prices are expensive here .

My wife and I were looking at buying say a house for $400,000 the Mortgage rates on some thing like that would have us paying back over $500,000 in interest over 30 years over $2000 a month . So at the end our house would coast up up on $900,000 and that was with both of us have jobs over $55,000 .

I see it ever day of the week here on TV advising people to get into property . To buy investment properties . I guess coming from Ireland and seeing what happened there make me a bit weary .

They say the interest rate on mortages may drop at the end of the year and nows a good time to buy but to be honest I think it's a sellers market .

Anywhere near a city or public transport your looking at over 450,000 for a 3 bed house and you'd be lucky to get one at that .

If your prepared to live out in the country yeah you'll most likely get a 3 or 4 bed house on a good size plot of land from 300,000 up . Only problem is that you'll have to travel longer to and from work and possible won't have the public transport near you .

Only difference here that I can see is that you have to have a % deposit saved of the house before the bank will lend you money for it . So no mad 100% or 100% Mortgages which can only be a good thing. Also they do tend to build infrastructure as well so no housing out in the middle of no where with no shops , school and the like near by .

When ever I bring it up here that Oz seems to be in a bit of property bubble they say " Well they are only building to demand " . I think i'll sit back for a while and see how things go.

mandrake04

galait wrote: »

Is there a Bubble ?

My sister who is Married with a Family has just bought an 80 yr old 2 Unit Duplex in Cremorne NSW , So it has 2 floors/units , Each floor has 2 bedrooms , One of the Bedrooms on each floor is a Box Room , The House is as I say is 80 yrs old and in it original condition , Windows don't close and doors/floors need to be replaced ,

The price tag is a whopping AU$ 1.35 Million ,

At the moment they are paying AU$3,000 per month rent.

They hope to rent out one floor for AU$2,800 per month to help pay the
AU$7,000 per month Mortgage.

In Summary I kid you not , They are a family of 5 moving into a 2 bed house with 1 box room , The place needs to totally renovated and a Mortgage of AU$7,000 to boot.

Are they crazy or is this typical ?

There has to be a bubble , Those figures are eye watering

BTW No Garden to speak of

Cremorne is definitely not your typical suburb.

A 20km NW drive out of the city and you could get a 4x2 on 1/4 acre block for $850K, another 10Km and it would be $650K.

I'm not saying there in'st a property bubble but I don't think its anything like the property bubble in Ireland, its easy for your armchair Analyst to draw similarities but the circumstances are different except in WA which is very very chancy imo.

I think Australians have watched what went on in Europe and have learnt from it, there is plenty of reports of lack in consumer confidence and they are not spending money and tightening their belt in case the brown stuff hits the fan.

In Sydney Properties in the high end are not shifting, its simple people don't want to risk it as the larger the price tag the greater the loss. I myself would like to a 4BR but haven't the balls to risk it and am happy enough where I am for the immediate future, like everyone else its wait and see.

mandrake04

Ozeire wrote: »

Only difference here that I can see is that you have to have a % deposit saved of the house before the bank will lend you money for it . So no mad 100% or 100% Mortgages which can only be a good thing. Also they do tend to build infrastructure as well so no housing out in the middle of no where with no shops , school and the like near by .

20% and about 3.2 times your combined income.

Think you can make do with 10% but you might need some sort of mortgage insurance.

jank

mandrake04 wrote: »

Cremorne is definitely not your typical suburb.

A 20km NW drive out of the city and you could get a 4x2 on 1/4 acre block for $850K, another 10Km and it would be $650K.
I'm not saying there in'st a property bubble but I don't think its anything like the property bubble in Ireland, its easy for your armchair Analyst to draw similarities but the circumstances are different except in WA which is very very chancy imo.

I think Australians have watched what went on in Europe and have learnt from it, there is plenty of reports of lack in consumer confidence and they are not spending money and tightening their belt in case the brown stuff hits the fan.

In Sydney Properties in the high end are not shifting, its simple people don't want to risk it as the larger the price tag the greater the loss. I myself would like to a 4BR but haven't the balls to risk it and am happy enough where I am for the immediate future, like everyone else its wait and see.

A 650k property 30km outside the city is very expensive. I think Australia has the highest property prices in terms of income in the world bar Hong Kong. People at the moment are just not willing to pay more for a house when they see what has happened in the US and Europe. Is it a bubble, yes. Will it burst...yes...by how much and when are the open questions.

mandrake04

jank wrote: »

A 650k property 30km outside the city is very expensive. I think Australia has the highest property prices in terms of income in the world bar Hong Kong. People at the moment are just not willing to pay more for a house when they see what has happened in the US and Europe. Is it a bubble, yes. Will it burst...yes...by how much and when are the open questions.

Well thats in the NW, you could buy something similar 30km in the SW and its $400K.

I just used that example because thats the price around my area.

ellaq

I just cannot see a big bust happening over here. I think prices may drop back another 5-10% at most and then just sit there for a long time. While there is negative gearing there will always be investors, always be new migrants and always be something to dig out of the ground.

I don't know if the mindset if different here but people take out a 30 year mortgage and clear it in less than half the time. Some do even better. Clearing the morgage before you kids start high school is an important goal for many people. Maybe they do also in Ireland but not in my family, they are happy to pay the minimum till the end.

Getting into the market here is hard as a first home buyer. You need a deposit, 5% minimum with another 5% for the purchase costs. You need to prove you have saved that money. You have to be prepared to pay the high interest rates.

I also think that $650k for a property 30km outside Sydney CBD is not bad value. Sydney is expensive for a reason, it is one of the most beautiful cities in the world.

universe777

I can see it happening in the next year. Prices shooting higher and higher for tiny ancient houses, I don't know how many actually sell though.
Rent keeps going up every year, that is not normal to charge a tenant extra every year. In my book that is called greed, one of the factors in Ireland's situation now.
Interest rates being cut soon, reminds me of home...
I have noticed a lot more empty commercial buildings for lease around Melbourne, offices, warehouses, workshops & retail units..

csm

Yeah I also can't see a big bust happening. More like a long-term correction where prices stagnate.

The next year will tell a lot. The Reserve Bank (RBA) are caught between a rock and a hard place on rates. Inflation is high and needs to be kept in check, so they've been talking about increasing rates for a while but have done nothing. On the other hand, any business not related to mining is struggling. Consumer confidence is down and exporters are being hurt by the strong dollar. So to combat this they should cut rates. They've been trying to massage market sentiment by talking without actually making a decision, but they'll have to go one way or the other in the next 12 months and that will do a lot to determine how the bubble goes.

Increase rates and it could put Aus into a recession (might be there already), decrease rates and the inflation rate could go through the roof.

jank

mandrake04 wrote: »

Well thats in the NW, you could buy something similar 30km in the SW and its $400K.

I just used that example because thats the price around my area.

And you dont think 400K is very expensive?

mandrake04

jank wrote: »

And you dont think 400K is very expensive?

Not really, 30km is not that far for a major city it only 18 miles.

Do you reckon you would be able to buy a 4x2 on a 1/4 acre block for £264K 18 miles outside London?

I sold a 3x1x1 detached house with single garage in Co. Armagh for £118K in 2004 yet my mate bought a 4x2x2 with Double garage on a block 3 times the size last year for $430K (£284K) in Mt Annan.

One was 25 miles outside of Belfast and the other is 27 miles outside Sydney.

I think 800K is expensive but then if I was making $50k per year I would find 400K is equally expensive, it all depends on the circumstances.

WalterMitty

My mate is a investment fund manager in sydney and says its clearly a bubble which will inevitably burst as yields are too low and if chinese or global demand for commodities falls in coming years(which always happens,very boom and bust sector) then housing in Australia will be hit bad. Luckily oz has its own currency which can help a lot in a recession.

jank

mandrake04 wrote: »

Not really, 30km is not that far for a major city it only 18 miles.

Do you reckon you would be able to buy a 4x2 on a 1/4 acre block for £264K 18 miles outside London?

I sold a 3x1x1 detached house with single garage in Co. Armagh for £118K in 2004 yet my mate bought a 4x2x2 with Double garage on a block 3 times the size last year for $430K (£284K) in Mt Annan.

One was 25 miles outside of Belfast and the other is 27 miles outside Sydney.

I think 800K is expensive but then if I was making $50k per year I would find 400K is equally expensive, it all depends on the circumstances.

Why do people always compare property to the most expensive places in the world. Sydney != London, nor is Melbourne, Perth, Brisbane etc..
400k is over 6 times the average income, international norms being 3-4... so yes it is still expensive whatever way you cut it.

My mate is a investment fund manager in sydney and says its clearly a bubble which will inevitably burst as yields are too low and if chinese or global demand for commodities falls in coming years(which always happens,very boom and bust sector) then housing in Australia will be hit bad. Luckily oz has its own currency which can help a lot in a recession.

Agreed, Yeilds are way under for the asking prices for houses and units and rent is not cheap at all in Sydney by any means.