DOMAIN BREAKFAST TODAY

This morning we had a breakfast with the Domain Group who had Dr Andrew Wilson (senior Economist) give us a talk on the state of WA economy.

http://www.domaininsights.com.au/en/events/event-presentations

THE LONG AND THE SHORT OF IT ALL IT'S JUST NOT ALL THAT BAD !!!!!!!!!!

The media keep feeding everyone the stories about mining, how many jobs are lost, what that will do to real estate etc. etc. - the doomer & gloomers as I call them, the panic merchants that have nothing better to do than to scare the normal people out of making their moves when they should be.

The investors have been buying up in Sydney (which is the only place that has been going up and the rentals stable) the investors have been keeping that situation up.

We are in a transition phase in Perth or if you like we are in the hangover time - as Andrew quoted which I thought was a fantastic quote.

Mining in the 70's activated our economy but before that it was other exports like sheep, wool, agriculture that was floating us very well.

2007 we all know that record prices were achieved for our properties at ridiculous high prices, people were actually flooding into WA as that is where the work was and as we all know the mining industry was paying workers an obscene amount of money to clean, wash dishes even.  (might be slight exaggeration but you know what I mean), we found it hard then to fulfil all the jobs here in Perth so the salaries we had to pay to get people to stay also went up at a ridiculous rate.
2008 - well what happened - yep you got it we went into a dip (the hangover) we had an extremely flat year with properties adjusting big time on their prices.  That's where it stayed for a while.  2011 came another correction and the affordability falls, we had higher interest rates & plus the economy was down.
Recovery in 2012, prices rise a little, affordability improves as the rates were falling, the economy was reviving itself.
2013 - expansion - price records emerge and consolidate as the affordability peaks.  Historically low rates still with a solid economy with confidence restored. Premium rents as a shortage of rentals was experienced, due to the fact there was just too many for us that we couldn't house, now we are purely adjusting and getting back to reality rentals.
(all backed up by figures supplied by Andrew see his web site at marketview)
2014 Price growth moderate as the general economy and low interest rate impact waned.
Sydney broke clear of the pack, other capitals were flat or still flattening.  Confidence was started to be tested.

Interesting that 60% of the market sales are investors in Sydney and they are getting about a 4% yield.  Smart investors are always there for the longer journey.

The first home buyers in WA make up about 19% of the sales as most of the other States have pulled the grant.

WA buyer types market share - higher changer over  (Feb) 18.6% are first home buyers 39.5% are investors, 41.4% are the changeover buyers.

Interest rates remaining at a 60 year low

-  downward bias until jobless falls below 6% - less stimulus capacity from record low rates - deflation risk
-  Mortgage costs falling as banks compete for market share-bust still at 2009 rates

Stockmarket rising with lower dollar but hostage to global forces

-  Imports more expensive, living standards fall, spending and investment decline
- Wages and profits subdued in low inflation economy-places lid on house price growth despite rate cuts

Government spending constrained by high deficit - horror budgets?
Retail sales, building, profits, sentiment and exports mixed - but not good enough yet

Expansion consolidated but now moderating

-  All capital city house prices at or near record levels
-  Brisbane, Adelaide & Hobart still on the move with moderate growth
-  Perth prices growth remains modest, but better signs for Canberra-Darwin down
-  Solid finish to 2014 - all markets on the up - except Darwin
-  Peak price growth rates however moderated though 2014
-  Sydney still booming

CONTEXT

-   Mixed-speed economies - AND housing market
-  Markets and market segments patchy
-  Forward indicators and market drivers increasingly mixed and local
-  Lower rates to impact markets - affordability, confidence offset by local economy drag

Look it's basically what I have been saying all along we are not that bad, stop listening to those that know jack about the markets, journo's have to write about something to sensationalise things don't they or it doesn't sell newspapers.

Seriously Perth was invaded by thousands of workers in 2012 there was 56,753 people flooding into Perth hence why the rents moved up so dramatically.  We were growing faster than China.
There was no way we could have kept up, be ready for the hangover period as it was coming but true to the good old western Australians who feel they can keep going no matter what by 2014 we were down to 32,190, then 2013 we went back up to 47,010.

The real interesting thing though is that we have gone through a bit of a job surge we created and filled 40,888 new jobs up until Feb 2015, there are 1,089,639 employed as in opposed to 1,048,751 in 2014 a rise of 40,000+ jobs.  Now tell me that the mining who has been putting off men & women left right and centre obviously have been absorbed in other areas.  March there was 7,315 new jobs.  5.7 to 5.5 jobless (fell in March)
NSW retails spending up by 5.2% & in WA 2.7% hence our problem - stop holding back you WA people it will all be okay we don't rely just on the mining for our income !!

Sorry for the long one but I could have written a heap more and I encourage you to go and look at the website marketview for all his graphs it's not all that BAD !!

MAKE YOUR OWN DECISION AND GIVE IT A REAL GO !!

(stop listening to people that don't own real estate - they don't have any ideas)