Sunday, June 5, 2011

Perth Property Prices to Fall till 2013

West Australian News says Perth property prices will fall a further 8% & not recover till 2013.

{ BTW THAT'S LATE 2013 !!! }

So why would anyone buy now in a falling market ? 

Why would investors sit on property delivering negative returns with ZERO capital growth to offset losses? 

In fact these predictions says that prices will fall a further 8% before recovering !!

The article points out that prices fell 7.3% in the past 12 months & will fall a further 8 % over the next 18 months. 

Now when you also factor in CPI increases on average 3% PA  the average property investor can look forward to a capital loss in the vicinity of 21% plus. Then if you add the negative rental returns into the equation the losses mount to 30% in a 3 year period or 10% PA.

Spruikers will tell you that you cant go wrong investing in property, well that facts show that you certanily can.

Is it any wonder Perth listings are up 75% as investors beat a path to the exists. The smart professional investors have already exited Perth property markets when the Gov't GFC Stimulus FHOG boosted sales & lifted prices temporarily late 2009 / early 2010. MUM & DAD Retail investors will believe the hype about property prices & ride the market to the bottom.

The scary bit in this forecast is that they make a assumption that prices will recover with a resources / infrastructure  led recovery. This is solely dependent on demand from China. Talk about placing all your eggs in one basket. China has its own problems with inflation driving prices up their Gov't is putting the brakes on their economy reducing demand for our resources.

What interesting times we have ahead for speculators?

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