Barnett fiddles as WA busts

From NineMSN:

The Western Australian government has called for calm as the state’s mining boom slows, leaving thousands without jobs and slashing revenue.

The minerals industry has created billions of dollars for the region but with the price of iron ore plummeting, towns like Port Hedland in the Pilbara are facing unprecedented challenges.

…Locals are feeling the pinch, with many mining companies putting a freeze on hiring.

“The way things are going, this town is going to turn into a ghost town,” local mechanic Camillo Blanco told 9NEWS.

…Premier Colin Barnett admitted the rapid spurt in jobs had slowed down markedly.

“It’s lumpy, it’s up and down. We’re certainly seeing some job losses,” he said.

“It’s down but it’s not catastrophic.”

…“The iron ore industry will double this decade and the LNG industry will treble,” he said.

“That is investment that Australia has never ever seen.

“There’s a pause at the moment but that won’t be permanent.”

No, not permanent, but screwed for a generation. Iron ore double and LNG triple? I’m not sure on what metric.

Iron ore volumes aren’t going anywhere near that and it sure won’t be prices so he must be referring to his West Pilbara illusion, which is finished before it started, as Aurizon confessed yesterday

On LNG, yes volumes will triple, as well as shrinking 95% of the current jobs with no new investment as far as the eye can see. Try reading your own government’s assessment, Colin:

unnamed (2)

Sorry, Colin, you’re a two-trick pony and they’re both lying dead in the dirt so far as contributing to state growth is concerned. In fact, WA is on the verge of an historic bust. Unemployment is rocketing:

unnamed (1)

And that’s before the capex cliff even gets going:


But housing is booming, you say:

unnamed (3)

Sure, just as immigration goes into sharp reverse leaving you with oversupply.

Is it any wonder that public austerity is the next hammer to fall as delusional budget forecasts fall apart?

Colin, you’re state is standing in front of the barreling mining truck of history that has the pedal to the metal in its haste to depart. You’re about to be run down, mate.


  1. A state with one right wing newspaper and a small target ALP who are seeking to do a Bradbury.

    We are doomed

  2. Isn’t there a Robbie Williams song: “All we’ve got to dooooooo is take this lie and make it troooooo” … ?

  3. IO doubles this decade
    I spose if you start from the beginning of 2010 to the beginning 2020…. yeah possibly.

    But right now in 2015, with the major works mostly done, so fukn what Colin?

  4. Seriously, can we get some people with half brains into positions of power. Global demographics dictates that the growth in hard commodities will be weak at best and most likely negative for the foreseeable future.

    With the exception of Africa and South America, populations will be growing old and declining. Guess which continents have plenty of natural resources?

    Morons, one and all! Assumed the China gravy train would outlive their usefulness …

  5. Call me a crashnik if you want. When I look around and see all the ‘for lease’ and ‘for sale’ signs I think ‘good’.
    This property bubble has to burst and it really looks like it might happen here.

      • GunnamattaMEMBER

        You mean the chorus of puckering RE cloacas I hear around me in Geelong are merely backing vocals yet again?

    • Yep, noticed this too. Two years ago when I moved to Perth you would not see a for lease sign anywhere because they got rented as soon as listed, people even fought over them by bidding up the rent.

      Now even fibro dumps have a nice big glossy sign out the front and sit vacant for months. Only to be replaced by a for sale sign.

      The Market has definitely changed in Perth, and crashniks like myself and Dave will swoop in.

      • I won’t swoop unless it crashes properly.
        Problem with this boom, many of us left and know how far money goes outside of the country. Perth has a long way to drop before it can compete with many prettier places.

      • Not entirely accurate guys — but I guess it’s always dangerous to paint a state’s real estate market with a broad brush.

        There have been suburbs with really strong growth. Amazes me but they’re still firing in the face of terrible data. The grave danger of low interest rates??

        Check out time on market and sales numbers in coastal areas of Scarborough, Karrinyup, Trigg, Cottesloe, North Beach, Hillarys for instance. Going gangbusters.

        Notable suburb defying the trend is City Beach, which suddenly looks like relatively good value for what it offers (stately homes on 900sqm blocks selling at land value). Read into that what you will — a desire to be close to shops, cafes, activity and infrastructure perhaps?

        As an aside, Realmark were doing a lot of auctions, Xpress sales and set date sales in this area in lead-up to Chrissy and last two months.

        I wondered what they knew and then found this …

        Hats off to them for the honest analysis and the service they’re doing for their vendors.

      • And how long have you worked for Realmark VS?

        “Perth’s slow population growth, weak consumer outlook and the flood of new properties, means 2015 could look a lot like the market of a few years ago.

        Rewind to 2008 and you may recall similarly low economic sentiment and high volumes of new property in WA.

        We made it through 2008, and we will adapt to new market conditions in 2015”

        Honest analysis my balls. Its more spruik and you know it.

        “The market is fucked, but its cyclical!”

        Punchline –

        “Lastly, stay active. Big gains have been made by investors who take action in tough market conditions. But this ties back to point 3 – get advice from a real estate professional or an investment expert first.”

        ie. “Keep buying suckers, no matter what… oh, and let up clip our tickets too”

      • >> And how long have you worked for Realmark VS?

        Hahah! Fair call Dave — I’ve had some insults thrown at me over the years but that’s … harsh.

        Didn’t mean to spruik an agency, Lord forbid. Just thought it interesting that an RE agent would be basically supporting the views in article above. That’s when you know the cliff edge is approaching.

        Perth real estate was a leveraged expression of the surge in salaries that accompanied the commodities/capex boom (with added nitro from NG). As you guys well know, this filtered through to anyone who could wield a hammer (“I could be earning $150k on a mine, mate, so that’ll be $20,000 to build your pergola”). When the wages curve reverses, as it is, property will be affected accordingly.

        Perhaps we’ll see this play out first in coffee shops, restaurants and pubs across the state, as discretionary spending dries up amid fixed mortgage obligations?

        As for leading indicators … rent prices plummeting, while house prices remain relatively stable. Hmmm …

      • @Ventura Spleen

        “Just thought it interesting that an RE agent would be basically supporting the views in article above. That’s when you know the cliff edge is approaching.”

        The numbers are too big to hide now, WA RE spruikers are in damage control mode across the board.

        “Perth’s equilibrium for listings in a balanced market is around 12,000 and indications are that we will clearly surpass this in 2015 which will add to selling days and put downwards pressure on price.”

        David Airey, President of REIWA
        (Listings already over 13,000)

        Its no mystery what’s going on. Rents plummeting listings are surging so the RBA has cut rates again.
        Bloomberg drew a direct line from WA RE to the 2.25% cash rate.

        “There’s a couple of reasons for that — one is panic,” said Creagh Ferdinands, an associate at Harcourts real estate agents in the Perth suburb of Joondalup, who’s seeing more properties than usual flooding the local market. “People are thinking it’s going to be a massive slowdown.”

        “house prices remain relatively stable”
        Prices are actually still falling despite the RBA throwing the kitchen sink at them. Historically low rates aren’t low enough if you’re unemployed.

      • @Ventura Spleen

        From the Realmark article: “The South West and Mandurah markets may just escape the heat felt in Perth and other regional areas of WA in 2015”

        Not sure about Mandurah. But two markets I have been watching for an opportunity to buy a small acreage are around Augusta in the South West and the Eastern Hills of Perth. In the South West every property we looked at 14 months ago is either still for sale or off the market. Sellers are not yet reducing the advertised price much though – if at all.

        In the Eastern Hills there are FIFO lifestyle properties coming onto the market everywhere and I see few people at home opens. They do not seem to be selling and I am starting to see some advertised price reductions. (there are very few auctions in Perth – properties mostly sell by offer and acceptance so I can’t tell you about auction clearances.)

      • @ John

        Mandurah story in the comments of this spruik site –

        “We bought a property off the plan in Mandurah on the canals in the Ocean Marina South, with a business plan to rent it for $1,200 per week. Sub penthouse, on the canals, 320 degree views, 2 balconies, 3 bedrooms, quality appliances, all on one level, almost all of the 4th floor, private lift entrance. We are getting $400 per week, and trying to sell, looks like we will have to drop the price to $600,000. It cost us over $1.3 million in 2006, but it took 4 years to build. The developer avoided the 3 year grandfather clause by registering the strata plan before it was finished, and it was not the strata plan that we signed off on. So this is not the Pilbara, and an isolated case. There are many as bad as this, and with an annual loss of nearly $50,0000 per year, we are not going to see 30% of our money back. We have sold other positively geared properties at zero capital gain on the promise of help from the banks in selling this one, and the banks have reneged. We have lost all of our 28 years of Super savings, and I will have to work at least another 4 years till I am 72 to get out of this. So don’t tell me the market hasn’t dropped 70% in many cases.”

        – Timothy Koehler

      • @ John

        Good luck with Augusta. I’m guessing you have been there? There’s lucky to 1000 people there and most of them leave for the winter. Tell me you are looking around margaret river or busselton and I’ll know you are serious about heading south. The properties around Augusta you are looking at are all held by retired tree change seekers (not fifo workers) who didn’t check the weather.

      • @bill, @velocity

        This is off topic but I have family near Augusta and visit often. I think of my next real estate purchase as something I do for my extended family as an heirloom purchase. Its to outlast my lifetime. Its for my loved ones who have no idea whats coming in terms of the economy and the environment. If you have seen csiro projections of the effects of climate change on southern Australian farmland over the next 50 years then you realise only the extreme south coast or Tasmania is the place to be. Augusta has river, karri trees, hills, ocean and water. and yes… serenity. The perth hills will be drier but at least closer to business opportunities of a large population centre.

        That’s my real estate philosophy in a nutshell. Thanks to MB I am convinced that I should be patient and wait a couple of years or so for prices in these areas to be more affordable.

  6. Diogenes the CynicMEMBER

    West Perth mate..a forest of For Lease! and For Sale! signs. And yet..the cranes are still building more new office space, the bust is going to be epic here.

  7. The graph of capex vs SFD says it all. From around 6% to 30% in short order. The return journey will be even faster. No economy can go up 25% and then back to trend without heartache.

    Factoring in the businesses that shuttered or relocated East due to price / availability of labour, an epic overshoot could see trend look aspirational!

    When the money dries up, the greedy grasping hordes will depart. Once again we’ll have near the cheapest RE in Australia.

    • Perth might be a good place to move to in 5 years (from Melbourne), wouldnt mind a change of scenery.

      • I live in Perth minutes from the city, property would have to be much much.. cheaper before I would ever consider buying here.

  8. Just catch the Red CAT bus on the western loop, last week I counted over 40 For Lease signs on the ride between Hay St and the disembark outside Raine square. Once PMH moves it’s going to be a very dead end of town.

    My landlord this week just offered a 12 month lease at current rent – even though we have over 4 months left on the current deal!

    Facebook is littered with friends being offered either a move interstate/overseas for work or redundancy, some with very lucky escapes on offers on houses. I’m lucky I have a very understanding and trusting wife who saw the light with me years ago!

    Patience is paying off, though the IR cuts are leaving me sore as I don’t have time to seek improved returns through trading etc, only a quick read of MB.

  9. Yes well ok it’s buggered in WA! Whoopee! Now that it’s obvious what is “one” to do about it? You see on this blog(?) I’m getting the “I told you so for all the Torynuffs haters & lablibs specialists & the I know better than everyone elsers” etc etc etc yadayadada, but I’ve just started to get the vibe that nobody has a real good clue as to what to do. Not in actual real achievable political, acceptable to the joe public terms! Yes we’ve had the abbottolpyse & before that the ruddgillardopits & we all know we hate negative gearing & the boomer rapists etc & super stealers blah blah blah! But if you guys were the elected politicians at local, state or federal level what would you actually do? Not your high hobby horse I know better than you do, but the actual this is what I can do & you the voter can understand I can do! Just saying. I know there will those who can respond but what are or can they really do that is actually any better than the existing governments etc?

    • @sool

      There are a multitude of really serious realities including peak debt, resource depletion, climate change, population growth etc, etc. Politicians are powerless to manage effective solutions because they involve telling voters they have to take a hit to their standard of living. Then they will get voted out.

    • Actually if you have been reading over the years Sool plenty of doable policies have been detailed here on MB over the years.

      Appealing to Joe Public is nonsense because they clearly have no f**king clue – if they did we wouldn’t be mortgaged to the hilt with a shit-house taxation system!

  10. This gem from the Premier’s statement to Parliament yesterday:

    “…it is the Government’s intention to work hard to return to a strong surplus in two years, if not sooner. This remains a difficult proposition while we are encumbered with the current unfair, unstable and farcical GST distribution system, which remains the State’s biggest fiscal challenge.”