Last week, I was again reminded that the ‘affordability crisis’ is not a nationwide issue when I spent time with agents in Perth.
Our Western Australian friends have faced a massive downturn in the market and there is no talk of frivolous breakfasts laden with avo and lattes with our comrades in the West.
In speaking with the agents over there I found myself reflecting a lot on the lessons that we learnt in Queensland in the post-GFC environment.
In the inner city Brisbane market, I saw a downturn in prices of 30% in houses off their prices at the peak. In some cases even more.
It’s always the decrease from the top that people remember.
They seem to forget the capital growth they have achieved over the years and only focus on the paper losses they might make in that moment.
Obviously, some owners are selling who purchased in the peak. But unless this was their first property they likely received the previous win falls due to an earlier rising market.
Again in many cases, it is the capital growth from those gains that sit inside the property they are now selling. I know that sounds obvious and even harsh, but if the market gives it then it stands to reason that it can take it away.
The market is an uncontrollable beast. It can be generous and it can be brutal. In Sydney, it’s Robin Hood on steroids.
It’s robbing from the rich and giving to the richer. It did this for many years in Western Australia and many parts of regional Queensland.
But now it is taking some back. Investing involves risk. It also follows the same rules as gravity, what goes up must come down and in many of our markets, the peaks have been very high.
Having been to Darwin, Perth and Townsville in the last month and surveyed large cross sections of agents I feel that Townsville is the toughest I’m seeing currently.
Perth is hurting, but there seem to still be buyers in the market and those buyers are obviously the lifeblood of the market.
While their offers may be down on three years ago they are still up, in many cases, on the 10-year trend line.
Anyone who understands real estate knows that creating wealth in property is about playing the long game and that means being able to ride the peaks and the troughs.