Arnold
CibbuanoBe Cautious With Market Booms
July 31st 2006 00:37
Western Australia has exhibited a boom in the property market in recent years. Property investors have flocked to the western capital as a means of escaping the inflated eastern city prices. This has caused a knee jerk reaction in the eastern cities of Melbourne and Sydney where property prices fell as investors lost interest in the local market. Currently prices in Sydney are still on the decline and prices in Melbourne have flattened to stable value. There is certainly a temptation to move to the greener pastures of the Perth property market where values have netted great returns for early investors. However, it must be remembered that a boom can’t survive forever. Typically the more radical the growth, the more disastrous the decline. This is not to say that the Perth property market is set for a catastrophic implosion anytime soon, but east coast investors should be cautious before jumping into the Western Australian market.
The factors that have driven the property boom in Western Australia have been a steep rise in the local commodities market. When the commodity market run starts to run dry, it can be expected that property prices will begin to lose value. The other stimuli for reduced prices could be the same reason why market prices in Sydney and Melbourne have suffered a correction in recent years. If property prices increase beyond the scope of affordability, a threshold is reached and property values are forced to reduce inline with a value that the average punter can afford.
For anyone that was savvy enough to snatch up a Perth property early in the property surge deserves a big congratulations. Purchasing Perth property now with the desire for investment value is somewhat late. There have already been signs that the market value is starting to slow. Prices probably won’t drop for some time, but the high rates of increase are nearing an end. If you are looking for investment return it is time to look elsewhere.
It takes a lot of guts and research but the best policy when it comes to investment is to not follow the crowd. The key to a maximizing investment profits is to stay one step ahead of the market. With the recent deadening of the east coast property market and all eyes averted to Western Australia, now may be an opportune time to seize on the Sydney or Melbourne market.
The factors that have driven the property boom in Western Australia have been a steep rise in the local commodities market. When the commodity market run starts to run dry, it can be expected that property prices will begin to lose value. The other stimuli for reduced prices could be the same reason why market prices in Sydney and Melbourne have suffered a correction in recent years. If property prices increase beyond the scope of affordability, a threshold is reached and property values are forced to reduce inline with a value that the average punter can afford.
For anyone that was savvy enough to snatch up a Perth property early in the property surge deserves a big congratulations. Purchasing Perth property now with the desire for investment value is somewhat late. There have already been signs that the market value is starting to slow. Prices probably won’t drop for some time, but the high rates of increase are nearing an end. If you are looking for investment return it is time to look elsewhere.
It takes a lot of guts and research but the best policy when it comes to investment is to not follow the crowd. The key to a maximizing investment profits is to stay one step ahead of the market. With the recent deadening of the east coast property market and all eyes averted to Western Australia, now may be an opportune time to seize on the Sydney or Melbourne market.
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