The past couple of years have been nothing short of eventful in the Perth property market. Over the past five years, I had been forecasting the kind of market conditions we are seeing today—conditions that are undeniably Red Hot. After a prolonged period of stagnation spanning nearly a decade, the market had some catching up to do, and we see that currently occurring at a rapid rate! However, the current state of affairs has me now erring on the side of caution, particularly as I observe frantic buying activity and some buyers stretching beyond their means.
What I’m witnessing repeatedly is a growing trend of buyers making risky moves with cash and unconditional offers and over stretching their financial means, driven by the FOMO. While local factors such as interest rates and inflationary pressures are often hot trigger points, my concerns extend beyond these; I believe the real future threats may lie on a global scale.
We are seeing potential flashpoints around the globe: the possibility of China invading Taiwan, the fragile state of the Chinese economy (full of smoke and mirrors), and significant political tensions, including the possible return of Donald Trump to the U.S. presidency. If Trump were to be re-elected, it could lead to the return of Chinese blockades, which would have ripple effects here in Australia. If Trump doesn’t get in, we might see civil unrest in the U.S. Other geopolitical concerns include ongoing conflicts in Israel and Ukraine, set to bust open at any moment and the potential impact of over 40 global elections that have or are taking place this year. These international events could have far-reaching implications on our local market, especially here in insular Perth.
Given these uncertainties, I urge investors to tread carefully. While I am not suggesting that a market correction is imminent, the warning signs are certainly there, and caution should be exercised. We have observed a current trend of people shifting their investments towards gold, traditionally a safe haven when stock markets are volatile. Meanwhile, the appeal of investing in property remains strong, given its perceived safety and stability.
Locally, there are several positive factors bolstering our market. Major projects such as the Scarborough gas development off the Norwest shelf and the AUKUS submarine deal, which is set to inject $300 billion into Western Australia, are just a couple of examples of the robust economic activity in our region. These developments suggest that the Perth property boom could continue for some time yet, despite other global impacts.
However, despite these positives, I see potential storm clouds gathering on the global horizon. As always, Caveat Emptor—buyer beware!! We often see a bust following a boom period, as history has a habit of repeating itself, and while I’m not predicting a downturn yet, it’s important to be vigilant and mindful of the broader geopolitical landscape.
For those keen on discussing these issues or other real estate matters or seeking more information, feel free to reach out. Otherwise, happy investing and take care with prudent and informed property decisions.
Thanks, everyone, and remember—stay informed.