Thinking of Australia as your future country of residence? Specifically Perth? Good news perhaps. As per CoreLogic RP Data, the Perth property index eased 0.4 percent in June and annually has dipped nearly 1 percent. This is despite the fact that more established property markets like Melbourne and Sydney continue to rise up by 2.8 percent. This brought Sydney’s numbers to be up by 16.2 percent annually while that of Melbourne has reached double digit. Perth is not the only city to show a decrease. Darwin too showed a continuous drop. The east coast capitals continue to boom while mining-dependent cities showed the effects from a slowing world economy.
My personal thoughts about Perth? Read here: Perth – city with parks or actually parks with a city As per CoreLogic RP Data’s senior research analyst Cameron Kusher about these less favourable markets currently, “We’re seeing rental rates fall, we’re seeing the time it takes to sell a property increase, we’re seeing sales trending lower and we’re seeing a lot more stock on the market than at the same time last year.” What she is saying may meant opportunities has started to appear for Perth when compared to the major cities. Investors should still think on a longer term because the probability that the prices would fall further is definitely there. This is in view of the continuous lagging growth even in China and European countries. Just the issue of Greece alone would be weighing on Asia or Australia even if it is not directly related.
Another point to note was that of Australia’s Treasury secretary John Fraser. Last month, he said that there was “unequivocally” a property bubble in Sydney and parts of Melbourne. The word “unequivocally” here means “definitely”. Another comment from Reserve Bank governor Glenn Stevens may show an even significant worry. Sydney property market was described as “crazy”. Of course one major reason was also because the Sydney market has not stopped growing in prices for more than three years.
My personal worry for any continuous property price growth would be the rental rates. When we buy, are we still able to ensure a healthy rental rate? Even if it’s a low number, are we still seeing the rental above the mortgage? If the answer is no, it’s time to be really cautious. There are many other options and it may not make sense to keep jumping into a market that everyone is too bullish about. Recently, Australian banks have been asked to tighten their lending standards. I think this is to ensure the growth is more orderly. As for whether bubble exists or not, do note the following: Be reminded, median price is AUD690,000 today Take calculated risks, after all, it’s supposed to be long-term investment and not one time wonder.
written on 8 July 2015
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