ABC does the WA economic/property bust

By Leith van Onselen

ABC’s 7.30 Report last night ran a depressing segment on the Western Australian economic/property crash.

The segment features a project engineer named Brad Wright, who has seen his income slashed and has lost a tonne of money in investment properties:

BRAD WRIGHT, PROJECT ENGINEER: People have had their income slashed to 10, 20 per cent of what they were normally being paid. And you know, they are having to meet enormous payments.

CLAIRE MOODIE: Up until two years ago, Brad Wright was working as an engineer on various major resource projects.

BRAD WRIGHT: My earning capacity would have been in the order of $250,000 a year, plus.

CLAIRE MOODIE: Now unable to find work in his profession, he’s doing night shift as a security guard, while trying to sort out a complex financial mess that started after he took out loans on two investment properties.

(To Brad Wright) How easy was to it get the money that you needed?

BRAD WRIGHT: Easy as buying an ice-cream. It was that simple. We were quite shocked, because once we needed close to $1 million. And it was just a low doc (low documentation) loan that pretty much was approved within 24 hours.

CLAIRE MOODIE: The apartments have since been sold at a loss and he’s now trying to save the family home in an up-market suburb of Perth.

BRAD WRIGHT: We have been left with up to $90,000 of bills. And we have no money to service all of our other creditors.

And on top of that, the stress of me trying to deal with the bank and try to get some sort of fair or reasonable solution from them has been – yeah, it’s almost pushed me to the point of suicide.

I’m not bullshitting. (Laughs) It’s been really tough…

BRAD WRIGHT: I really don’t know what we will do if this house is sold, because we would be basically kicked out on the street with just the clothes we are wearing – with substantial debts.

It also features a financial counselor named Jenny Cecil, who has reported a massive increase in Western Australians seeking help:

CLAIRE MOODIE: Lifeline is reporting increasing numbers of West Australians facing financial stress.

(Footage of Jenny Cecil in a meeting with a client)

JENNY CECIL, FINANCIAL COUNSELLOR: Are you renting or do you have a mortgage?

CLAIRE MOODIE: And there is a long waiting list for counselling from a new post-resources boom client base.

JENNY CECIL: A lot of clients, not necessarily here but in the general, will use credit cards to keep that – maintain their mortgage payments, their electricity, council rates and whatever.

So when we see them, the debt has risen more than if they had come in, in the first instance.

The property market is also on its knees:

GAVIN HEGNEY: Well, they say in the top end of Perth on a quiet day you could hear the property values falling.

And the property values in the top end of the market are probably off 30 per cent from where they were at the peak of the market in 2008.

(Frank Lawrence shows Claire Moodie a house for sale in Meadow Springs, Western Australia)

FRANK LAWRENCE, REAL ESTATE AGENT: So, Claire, we’re three minutes from the beach here, five minutes from a regional shopping centre.

CLAIRE MOODIE: Prices are also down on the urban fringe. There’s been an 18 per cent drop over the last decade at this suburb near Mandurah, south of Perth…

CLAIRE MOODIE: But with high unemployment, the area’s also tipped to have one of the worst rates of mortgage stress in the country. Daniel Johnston is close to losing his investment property.

DANIEL JOHNSTON, BORROWER: Yeah. We’re running out of time. (Laughs)

CLAIRE MOODIE: He bought it as a joint venture with relatives in 2007, but plans to develop the block fell through. Now they owe $500,000 on a house that’s only worth $350,000.

DANIEL JOHNSTON: Well, we’ve used part of the equity for interest repayments on this investment. And I mean, it’s certainly – we’re stretched. We’re at a stretch to pay for the home and living costs, let along this one, you know.

And the problem is that our home is actually listed as security on default for this loan. So that’s our main concern.

Sobering stuff.

Unconventional Economist
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Comments

  1. These (and their ilk in the east) are the fools that will send the country to the wall. Interesting to hear the SYDMEL situation described in the lead in as a bubble without any qualification. There’s been a real shift.

    Where there isn’t a shift yet is in attributing any responsibility for the coming crisis to the “mums and dads” who convinced themselves they deserved to become rich without any real contribution to make or sell. Of course it’s just one piece of the puzzle (hello regulators, RE industry spivs (including the MSM), the entire political class and professional parasites) but unless this gets called out there will be no learning.

  2. Even StevenMEMBER

    Sobering. Sad. But not undeserved.

    Anyone who believes money grows on trees has little sympathy. I presume they received some basic schooling.

    These sad tales are necessary to ensure reality and reason prevail… eventually.

    • Making 250K plus for many years and ending up in such a situation … Yup, not much sympathy from my side either.

      • Some people think the good times will last forever… I’m not quite earning that, but my mortgage calculations are based upon a 60k salary and 7.5% interest rate..Just in case…

      • Likewise here Gavin. Not on that sort of money but still a high income earner. Been putting more than double my principal repayments in my offset account for the last 2 and half years and I stress test my mortgage to at least 7% . One other major calculation that i kept in mind when i bought is the fact that the first few years , 75% of your P/I payment is interest to the bank. That figure drops drastically if you pay double or more of your principal in the first few years of your mortgage saving you thousands if not hundreds of thousands of dollars in interest to the bank. So instead of taking too much debt like the guy above, i chose to take a smaller debt where i would double my Principal payments in the first few years to achieve the interest savings. Not many understand how much of a difference this makes and most of my well educated friends/family even disregard that for the sake of a new leased car or a holiday.

      • I went through similar in the dotcom boom/bust, I can sympathize. When you’re young and haven’t experienced that extreme sort of cycle before (and many people never do) so easy to believe the good times are going to last forever.

      • Tiliqua scincoidesMEMBER

        I’m paying an extra $3k a fortnight on my mortgage. I got an email today saying my rate will go up from 1 May to 4.04% – it was 3.79 in February.

      • ErmingtonPlumbingMEMBER

        “Making 250K plus for many years and ending up in such a situation … Yup, not much sympathy”

        The guys paid well for being an Engineer, not an accountant​ or real estate guy.

  3. Volumes are the key. If volumes are still low, prices are still going to fall, so I suspect there is still away to go to the bottom.

  4. reusachtigeMEMBER

    Perth, it’s a special case and its ills, ie, not being good looking enough even after having work done, won’t affect the prettier cities like Sydney. Perth is just going through its negative sideways movement stage before the next boom kicks in. Normal market conditions although youse will use it to clutch at straw!

    • Dead right. Waiting for the next noom. The next booming sound you hear in the west will be the WA state government going bust. Would be ok if they can get more GST revenue, but that is not going to happen.
      The next phase of the WA property bust will play start within the next 12 months when all clinging to their properties without having means to pay the debt will be kicked out by the banks. Just a question of which bank will blink first. The banks are hoping the problem goes away by itself.
      I know of a number of people around us that have been out of work for months. If they did not save something during the boom times, then I’d have to guess they spend most of the boom time bounty.
      One is a guy with a reasonably new Land Rover Discovery.
      At some point he will have to give up the $90k car and probably also the house.
      Unfortunately there does not appear to be another minung boom coming. Unsure about what is going to save the Perth property market. If it does come it will have to be in the next 12 months. Else it may just be too late.

  5. thomickersMEMBER

    Two investment properties taking on $1 million investment loan + existing mortgage!!! I have never laughed so hard…

    • An investment must generate positive cash flows so that it will eventually pay for itself.

      Oh, sorry, I forgot. Australia is different of course!!!

      • Yep. Its because we are down under that investment properties are run upside-down (at a loss) to make a profit!

  6. Showed this to a colleague this morning who is planning on dropping $1M on a two bedroom dogbox apartment on the Northern Beaches of Sydney having just sold his one-bedder for $870K.

    His response – “Can’t happen in Sydney. We didn’t have a mining boom and bust here.”

    You dense motherf***er!

    • reusachtigeMEMBER

      LOLOLOLOL!!! You typify the arrogant superiority complex that commentators on here don’t even try and hide. Some knob like you said the same thing 5 years ago and his stupid dumb easily lead mate listened. Guess what, that idiot missed out on doubling his million to two million because of freaks like you who spouted their superiority complex while actually being just a loser. Your mate is right, Sydney isn’t a mining town… derrrr!!! /rant

      • Faaaark. That rant was epic enough to convince me. Off to the mortgage broker I go!

        Here’s to looking good all the time! *Cheers*

      • That ‘mug’ must have made a fortune selling that one bedder while you are sitting here calling him a mug …

      • He’s not a mug for making good money from his unit. He’s a mug to throw it all back in at the top of the bubble.

      • @paulF – “that mug made fortune.. ” – yes if he keeps that fortune and invest it into something else – diversify into few areas. But he is a mug and he is buying 2 bed dog box. They all (mugs) get caught this way and then hear them see them on 7:30 report..

      • If it’s his only place the profit made is null and void. His buying in the same market, which if a more premier suburb may have likely increased more in value than his one bedroom place.

        This is a false sense of wealth.

    • LOL. You can assure him when the time comes by saying; “Can’t happen here in Northern Beaches. The recent bust was a Southern Beaches thing.”

  7. I do have some sympathy for them, when its all on the up its hard to imagine that the whole country is high on bullshit. Surly its your own hard paying off and your entitled to all these good things, BMW, IP, Bali bit of ass on the side….

    I was 12 when the 91 recession hit, Family next door lost it all and was out on the street, my Aunty road the boom flew 1st class overseas was living on North rd by the beach, Then music stopped.

    I found it sobering how it all came and went so quick. This boom as been very long, and sadly the bust will too. I think the 1890 boom really started in the 1870s, but was mid 1890 when the weeping and gnashing of teeth started.

    Its scary how it could all play out. Democracy is fragile and our sort has not been around that long compared to other models.

    Personally I see the return of outright fascism on a global level with all the horror that will bring. Not sure how it will go down here..

    • The music had stopped by about 1890 but the worst was felt about 1893 when the banks in Victoria went under. The colony went so far as to announce an indefinite bank holiday to stop the bank runs. The liquid banks ignored the holiday and stayed afloat. The rest went under and restructured.

      • Locus of ControlMEMBER

        On a slightly (un) related note, I just received my copy of ‘The Land Boomers’ by Michael Cannon from Melbourne University Press after reading recommendations here a few weeks ago. As much as I love economics as a topic, I find it hard to get a real ‘page-turner’ economics book, but ‘The Land Boomers’ is an exception. I’m finding it absolutely fascinating and picking it up to read every time I have a spare 5 minutes. If you haven’t read it yet, I highly recommend it. History may not repeat, but it can rhyme. Sobering stuff if you imagine what happened in 1893 happening now.

    • ErmingtonPlumbingMEMBER

      No Fiat in the 1890s.
      A country like ours will be fine in the long run,…As we’ve got everything to “go it alone” if we have to.

      A return to real left wing parties, dealing in economic issues, is coming,….post bust.

      Come help join the good fight.

      https://membership.nswlabor.org.au/Join/form

  8. All those prices and numbers they’re quoting in the show assume there are buyers at those prices with approved finance. The reality is, in a depressed market like WA, lenders will ask for something like 40% deposits and immaculate credit histories, which in turn means buyer walks away and seller or mortgagee get even more impatient and desperate. They call it “a positive loop” I think.

    • Exactly what happened in 1930s depression.it was almost impossible to sell even high quality illiquid assets.

    • If anyone was watching – they would have seen Bankwest off loading risky clients to other banks starting 12 months ago. I commented at the time it was a smart move!!!

      Sometimes it pays to be a local bank…

      But even those non-risky clients such as this poor engineer, bad things happen!

  9. No sympathy for them. Funny how these ‘investors’ turn the blame towards banks who lent them the money…never understood that mindset. Surely as ‘investors’ they would have sat down, performed due diligence, looked at yields, trends, and understood that you can actually come out worse off when investing. Oh sorry… they weren’t investors but cashed up speculators.

    Still…Perth is currently way over priced and needs significant price falls across the board to be viable for buying.

  10. Perth house prices peaked in 2014. Perth house prices are down about 13% from the peak.

    • Who was that idiot who claimed during the GFC that property markets in coastal areas would be immune from a bust? Perth has many beautiful beaches.

      • I recently purchased one, right on the water as a FHB. I had over 200k in savings for a house only and over 30k for things like stamp duty and rah rah rah oh and also had pre paid my future expenses like a wedding by purchasing a patek nautilus as an investment.

  11. Why the #uck Perth is not trying to look beyond and start offering near shoring to East coast and also to economies like Singapore/HK which are close to it. How does it make sense to outsource jobs outside Aust at third the cost while you can hire them in Perth for half the cost while keeping the economic output within Australia.

    • “The median sale price for a vacant Perth residential block of land is $265,000.”
      That’s not anywhere near accurate — must be for a 320sq mtr block.
      Even most of those( 320sm) in a suburb you could live in would cost in excess of $500k. — still !
      Perth hopefully still has along way to fall. Yehaaaaa !

      • That’s a fair point because the “block” has been steadily shrinking over the years.

        What matters is the the plot of real price per square metre.

    • Harsh but good point, then the homeless can buy $12 light beers in a 200ml plastic cup so as to not hurt themselves !

  12. PlanetraderMEMBER

    The other interesting thing I was advised the other day is that valuers are having trouble getting PI cover for valuing properties in certain areas, meaning if you can’t get a valuation not sure how the bank will lend. The guy I spoke to said south of Beenleigh in QLD the valuers are having trouble getting PI cover.
    I spoke with the valuer who was doing a mid-construction valuation on a friends home last week who asked what sort of value he needed and when I asked why, the valuer wanted to know what sort of pressure he would be under to get the valuation my friend needed. The ultimate valuation came in very light relative to other recent home sales in the area. Northern inner suburbs Brisbane.

  13. Not much sympathy here. Lots of smugness on the way up about being savvy “investors”, and lots of “Waah…the banks made me do it” on the way down.

    And Daniel’s close to losing his investment property. How sad.

    • I’m torn between feeling sorry for them and saying “suck it up princess, speculation means risking a loss”. It’s possible to do both, but not easy.

      One thing’s for sure, I will NOT be feeling sorry for them if the government bails them out using my tax dollars, something that will surely happen if this spreads nation wide.

      What I find really crazy is that people can jump into such massive, life changing speculations without first having to train on smaller speculations. It’s like putting a person with no boating experience whatsoever in charge of piloting a supertanker. At least train on a dinghy first.

      • Interesting for some investments you must qualify as a ‘sophisticated investor’, yet for something where it can devastate individual finances for a lifetime you only need an income, and even that can be made up!

  14. These people had no foresight and no planning, hey wait, that’s just like the RBA, APRA, the entire financial and RE industry and every government treasurer.

  15. God. Negative sympathy. These are the types telling us we should bugger off to Tamworth or get on the ladder by paying 500k for a One bed in Merrylands. That amongst a myriad of disgusting behaviour as long as your arm. Absolutely unforgivable.

    This is good news.

    • +1 in aggregate they can eat shit, on an individual level I do have empathy however. Same types of people who are pricing young kids out of homes or making them stretch themselves thin for a dump 50 mins from the city.

      I hope the same happens in Melbourne and Sydney, but why no Chinese buying in Perth? Surely that will help fix it? 😀

  16. 4.25: So all this for $399,000?
    Yes, all this for $399,000.
    That’s pretty cheap

    People really still need to reset their understanding of what is normal. $399k is still way to expensive for cardboard and matchsticks.

    • Funny it’s affordable, but it’s also not something I’d want to buy. Even if it was in Sydney or Melbourne. At that price it has no appeal to me.

    • adelaide_economistMEMBER

      I keep having the same thoughts… it’s strange how we’re now conditioned to think money that would have bought something pretty awesome just ten or fifteen years ago is seen as absolute bottom feeder nowadays. It’s also no doubt due to the free money aspect for those riding the credit boom because anyone who has actually had to save for a deposit on current nosebleed prices out of after tax wages knows that even $20k isn’t actually chump change.

      • Adelaide is still OK’ish though. I brought something made more than 15 years ago (double brick, on the coast) for a pretty reasonable price by the countries standards. Sure, Adelaide is overpriced (globally) but not to the ridiculous degrees of some Ozzie cities. Of course, the jobs market is not great in SA and I do feel for the young that want to start a life here.

  17. Perth median house price
    Perth median house price peak
    Perth dwelling sales volumes
    Perth median residential land sale price
    In a 1000 word analsysis of the Perth house price “crash” not one of the above key Perth data points was mentioned
    But there is more than enough time to quote multiple unsubstantiated anecdotes from Real Estate Agents
    Sobering stuff

  18. innocent bystanderMEMBER

    These are just outlier stories. Mandurah is well south of Perth.
    I reckon there is still potential 25% downside for Perth..

    • A friend of a friend just bought a place in Mandurah. 50% down from the last sale price and she thinks she got a bargain. She needs the rent from her other investment property in Perth to pay for the loan on the new investment property in Mandurah. Guess whose tenant just moved out for a cheaper place?

      Catch the falling knife!

    • Mandurah is a drug.f..ked sh.thole these days. Can be a very, very scary place and the bikies pretty much own and run the town Rockingham and Kwinana both have a very bad reputation but I would go for both over Mandurah.
      And that comes from someone who lives further south in a place that knows the dramas of methheads only too well.

      • ErmingtonPlumbingMEMBER

        I spent 3 months living in South Lake in 2011, with a mate who’d brought there, whilst trying to land a mining gig (got one with FMG for 3.5 years) and I gotta say, it was an unpleasant place to live,…never been to a place with such a high rate of Pit Bull ownership.
        The bastards were everywhere!

        🙁

    • My personal favorite is “strong fundamentals”. It really means nothing… it’s a vacuous term but it’s passed around like wedding cake during every property boom. Would you like some more fundamentals with that investment?

  19. MaryleboneMEMBER

    ‘Sobering stuff’? It gave me a hard on…

    Made the Mrs sit through it too which hosed her house horniness down a little. Double turn on.

  20. Any guesses about when Canberra will decide to force the secession of WA to prevent contagion?

    • reusachtigeMEMBER

      LOLOLOLOL!!! You think this actually turned your wife on? I can tell you now, from experience both with people’s wives and random relations, nothing gets them turned on more than actually buying property!!

  21. http://www.news.com.au/finance/economy/australian-economy/why-wa-is-falling-behind-the-rest-of-australia/news-story/fd2a897e4305a5c5a6fe811cd013e3e7

    WESTERN AUSTRALIA was once a booming, rich, mining state. A place where FIFO workers earned big bucks, lived in mansions, drove luxury cars and rode jet skis on their weeks off.

    Now the heyday is over and the former mining and construction workers are struggling to find work.

    WA’s job market is bleak to say the least, according to the latest Australian Bureau of Statistics figures.

    • In my neck of the woods there used to be a lot of high-earning engineers. They’ve almost all gone now. Back to Texas, back to the east coast, etc. The eateries are empty, streets quiet, there’s even space in the local school.
      I wonder how much of the east coast property boom is attributable to repatriation?

      @ThePatrician: you’re usually on top of these stats, what’s the interstate migration like from WA -> east?

  22. The 7.30 report above was a statistic poor, B-grade analysis. No charts, graphs etc. Just picked out 2 people who unfortunately lost big on the Perth property boom. Not everyone lost out during this boom – there are people who did fabulously well. The people on the other side of the above transactions made money.
    Whether it is tulips, shares or houses – timing is everything. Get in early on a boom, with momentum on your side and timing your exit, you will make money. As Reusa keeps reminding us!

    • Damn straight. Any moron can enter a trade. The good traders are the ones who know how to EXIT, whether it be cutting a loss or locking in a profit. That’s why I have no time for people thinking they’re clever during a bull run (with their paper profits). Let’s see who’s still standing after a bear run before we start handing out the praise.

    • adelaide_economistMEMBER

      In fairness, the first thing everyone at media schooling learns is to stay light on statistics (regardless of topic) and have a narrative that people will relate to – meaning emotions.

      You could throw all the stats in the world at the bulk of people (outside of the MB reading demographic) and they will just glaze over. No matter how pretty the chart or imaginative the infographic. People just don’t relate to it and especially those who think they are investment geniuses because Albo down the pub told them about this thing called negative gearing where you get all your money back on an investment property.

      But yes – the smart money will already have made its moves. They don’t need an ABC current affairs show to tell them what’s coming.

  23. Would like to know where the hell all these collapsing house prices are.
    Every where im looking online the asking prices have dropped maybe 10k in the last year, but people are keeping asking prices high regardless or just withdrawing the houses from sale rather than listen to lower offers.

    I contacted an agent the other day for a listing that had “make an offer” listed as the price.
    She would not even discuss it unless i told her her how much money i had to spend, so i hung up.

    there is so much mis information being blown around right now its hard to know what is really going on.

    • Because they can still service their mortgages and they can still negative gear and this is why i believe the MB expected crash will never happen. They will latch on to their properties for as long as they can until things start getting better. Many will sell but no herd rushing to the exits.

    • innocent bystanderMEMBER

      Yep. Funny days.
      I’ve seen a lot of houses sell in under a week for top price. One new owner I met was totally clueless to area and values. Another had to rent it out after they realised the area didn’t suit them commute wise. So, still lots of people with lots of money. A lot are still employed on very good money.
      A lot have lost their jobs and left town, back to NZ, Ireland, east coast…
      Agents and banks very coy about which houses are forced sales.
      House rentals in good areas can still be stupid. Owners not interested in basic maintenance to attract/keep tenants.
      Hegney was on ABC tailback this morning. The callers are still property poon addicts. Amazing.

      But the underbelly is hurting. Job loss. Income cuts.
      Only time before everyone feels it.

      The second-hand market is really weird these days. Seeing things advertised for really high prices. Ads say ‘i know what it is worth’. Don’t sell of course.

      Strange days, when you’re a stranger.

    • “Every where im looking online the asking prices have dropped maybe 10k in the last year, but people are keeping asking prices high regardless or just withdrawing the houses from sale rather than listen to lower offers”

      In a lot of cases I suspect they can’t drop the price as they’re in negative equity. That’s a physical barrier to a sale. There’s also the mental barrier of making a loss when they factor in the stamp duty and fees they paid. People can’t accept that they’ll lose money. Even if they can pay out the negative equity in cash, they won’t have the stamp duty and deposit for a smaller place, or even the bond money for a rental.

    • There’s a lot of denial going on. I’ve seen many properties list, stay on the market without offers for ages, then de-list. I enquired into a couple of these (where I was able to via social channels) and found that the owners can’t afford to book a loss and they’re hanging out for a price recovery….because real estate always goes up in the end right? …..Right?

  24. I’d be scared even if I still had a job in Perth. I’d say the mining companies will try to shed the remaining $250k salary workers and rehire keener jobseekers for under $100k – that is if they even replace people at all, given they won’t be doing much capex investment for years, just normal operational work on existing mines. It takes time, but it will happen through redundancies, or not replacing people when they leave etc. In no time at all, iron ore is down 30% from the peak, and that news hasn’t percolated into the property market yet, property still seems to be getting some strength from the bounce we’ve seen over the last 18 months. When people notice that 30% fall, plus the future falls as more global iron supply comes on and China deleverages, odds on that there will be another big leg down in Perth property prices and an increase in unemployment. Tragedy.

    • I had a great chat with an HR person from BHP the other day. Her new role is to handle staff being laid off or re-tasked due to the automation that BHP is investing heavily in. The good times are well and truly over.

      • Your HR mate at BHP will be fucked when they decide to pre-record a “you’re done and we couldn’t give a rats if the door hits your arse on the way out” video for all the once high earning FIFO jet skiers

      • “I’d be scared even if I still had a job in Perth. I’d say the mining companies will try to shed the remaining $250k salary workers and rehire keener jobseekers for under $100k – that is if they even replace people at all, given they won’t be doing much capex investment for years, just normal operational work on existing mines. It takes time, but it will happen through redundancies, or not replacing people when they leave etc. In no time at all, iron ore is down 30% from the peak, and that news hasn’t percolated into the property market yet, property still seems to be getting some strength from the bounce we’ve seen over the last 18 months. When people notice that 30% fall, plus the future falls as more global iron supply comes on and China deleverages, odds on that there will be another big leg down in Perth property prices and an increase in unemployment. Tragedy.”

        The fact is people on 250k salaries have skills, the people who they intend to employ for less than 100k will not have the skills to do the job, its simple. I can only speak for a maintenance based role, at the end of the day the most valuable asset to a company is their people. – I read this in the brochure.

    • Spot on Gral. So many times I have sat around dinner tables, smoko tables, restaurants, bars etc listening to how iron ore will ride in on its white horse to save the day.

      Sadly this leg down for the commodity will open more eyes to WA and Perth’s future, we still are building a lot of houses here on the fringe and apartments are still going up while people are leaving. ABS data is 6 months behind and it is natural increase that is keeping us positive at the moment and babies don’t need houses (although I do know someone who bought 3 houses for his kids 3 years ago)
      Landgate sales are reasonably strong at the moment but when the negative feedback loop kicks into high gear, I believe local construction will fall over and more people begin to flood out just as Wheatstone is winding up and the stadium has just finished.
      Employers are also enjoying sinking the boot into a workforce that has been demanding up to this point and this will continue until their workforce is the subservient one they are looking for.

      We ain’t seen nothin yet.

      • “it is natural increase that is keeping us positive at the moment and babies don’t need houses ”
        WA NOM is +13,315 yoy

      • To Sept 30 2016-
        Change over previous year is +25242
        NOM is +13315
        Interstate migration is -9198
        Natural increase is +21125
        Landgate freehold and strata lot creation +25680 (April 16 to March 17)

        Population growth is still falling away, the stats are 6 months behind and newborns don’t need a house on the fringe just yet.

  25. “And the problem is that our home is actually listed as security on default for this loan. So that’s our main concern.”

    So basically in the same way that the people who lost money in the storm financial collapse got thier money back from the banks because they where unsophisticated investors, this is the same thing in play here.
    Queue R/C or other ASIC investigation where “unsophisticated” investors were bamboozled and will end up with the banks taking the financial hit.
    Its the aussie way. Throw your money into a pit then expect the govt to get it back for you when it goes to shit.
    Why the hell not. The wealthy and corporations socialize their losses. Average mug should be able to as well.

    • On the bright side, if the banks are forced to foot the bill for people’s lack of financial responsibility, the banks will become even more reluctant to lend in future, and that will ensure the bubble is not just popped but annihilated.

  26. “People have had their income slashed to 10, 20 per cent of what they were normally being paid. And you know, they are having to meet enormous payments”

    I will shed the same amount of tears for these self-entitled pricks as they did for the tenants in their ‘investment properties’ . How someone is paid circa 4x median wage and somehow thinks that’s normal is beyond me. If they hadn’t pissed it away on bogan utes, Harleys and jetskis then maybe they would be in a better position when the inevitable bust followed the boom. But no, obviously thought the good times would never end and is much easier to blame anyone other than themselves for their poor financial decisions.

    So tough tits and welcome to the real world. This is what the majority of us have had to deal with for the last few years whilst you were living way beyond your means.

  27. surflessMEMBER

    So glad that Melbourne and Sydney are different! Nothing like what is happening in Perth is going to affect the east coast.

  28. Reminds me a bit of the US when I was there (GFC). People are in denial, thinking the bottom is in and they’re now going to wait until things get better. What will make them get better? Where will the jobs and income come from to put the fire back into prices? Seems to me they’ve got plenty of downside to come.

    Where I lived in 2009, people (me included) thought it was the bottom and all sellers tried to hold out thinking prices would at least claw back 10% or so. Prices then declined another 10-15% and have not come back since. They’re currently around 2003 levels, having peaked in mid-2005. And that’s in a place which has largely recovered from the GFC.

    An interesting behaviour that was witnessed a lot there was sellers deciding or being advised to just list at the pre-crash price, or some other optimistic number, in the hope they’d catch an uninformed buyer. Never happens. Over the long haul they’ll be flushed out.

      • Why aren’t the Chinese buying in Perth? Or time to open the floodgate to Chinese migrants willing to move to Perth only?

  29. SoMPLSBoyMEMBER

    it’s just terrible what has occurred across the land and this fellow is just one of 1,000’s or 100’s of 1000’s. Aussie property and the path to riches via neg gearing will prove to be one of the nation’s most colossal confidence games where otherwise smart, intelligent people got caught up in a manufactured ‘rip’ only to be torn to pieces by the sharks who own the game.

    The lenders won’t be hurt here- far from it. What’s the risk in uncapping the Mont Blanc fountain and creating a $ 1.0mil deposit into Mr’s account? If things are jake and he pays it off on schedule, the interest is spectacularly good for the ink ventured. If Mr ‘flames’, well the lender has a property to resell for cash. These ‘arrangements’, duly countenanced by contract law and years of prior standing, have to be the most asymmetrical business deal ever proposed and the enormity of the loan tickets on offer of late only magnify the asymmetry.

    As an engineer who likely is trained in shear strength and load limits due to the potential of real people sustaining real injuries if errors and malfeasance are not kept in check, immersing oneself in the ‘property’ industry surely must have caused some real stress before nightmare began. He must find it peculiar indeed that the property industry (FIRE) can operate with such a cavalier and nonchalant attitude when their metaphoric bridges, buildings and structures are collapsing all around and folks are being trapped in the rubble.

    There really is no equivalent ‘engineering’ compliance standard or supervisory body in FIRE; it’s astonishing that normal people even dare to shake their hands let alone ‘ink’ a deal. And I don’t think we’re anywhere near the bottom on either coast; what’s happening out west is not a function of wage loss alone. Prices will be driven down deliberately to suit the acquisition ‘requirement’s of the PE gangs like Blackstone in the US. When the PE teams arrive en masse, and begin buying neighbourhoods,that will be the signal.

  30. No surprise at all. Chinese only pile into markets they think are or will be rising. Wait for east coast of Straya to start falling – they’ll be deserting a sinking ship in friggin’ droves!

    • Yes, the Chinese are the exhibit A of greater fools – they buy “because it is rising” and they sell “because it is falling”.

    • China is a redux of the Japanese boom of the late 1980’s – and we all know how that ended.

  31. So this fellow may lose his investment properties? Possibly even the family home in an ‘upmarket’ suburb?
    How about you sell the family home, clear your debts and move to a middling suburb. Sounds like the sensible thing to do?
    But no.
    Only the young and renters are told to tighten their belts and live on bread and water.
    It’s selfish and entitled to want a family home close to amenities and work apparently.
    Move to Tamworth! Forgo avocado!
    Not so for this guy and his ilk. To suggest he may need to make some lifestyle changes and live within his means is akin to some sort of tragedy. And the hand is out for sympathy and a bail out.

  32. The sad thing about this is that its going to repeated in million homes across Australia. Literally a million mum and dad investors are going to be in this situation.

    And while the wicked evil side of me rejoices in it, the majority of me is miserable because all these people wanted to do was get ahead. They got huge pressure from their families, they went to a bunch of property seminars and talked to all their friends at bbq’s.

    They wanted part of the great Aussie dream and now for WA, that dream is turning into something dark and fierce that wakes them up at 2am sweating in their pj’s.

    Its going to be a colossal disaster for 99% of the population and only the 1% will be happy about it.