Is the current boom in Perth about to end?

[Guest pommybob]

Just wondering, does anyone in our Perth Community feel like the current boom in Perth has any signs of slowing down?

Call me a sceptic, but I've seen similar patterns of house prices, house rental prices and large gearing lending levels by the banks in the past, only to see it all go pear shaped.

Any thoughts?

[elfie]

am not up on the economics of the country but i suppose at some time it will go bang when though who knows seems everything here is built on borrowing same as every where else so watch the space so to speak

[portlaunay]

Australia is currently celebrating 21 years of growth. 21 years!

The economy has sailed through the GFC relatively unscathed and whilst it may be argued it is dependent upon China continuing their frenzied purchasing of our resources that only reflects the current climate, it hasn't always been so. Besides, Brazil and other S. American countries also have massive reserves of what is making Australia rich yet they are not, why is this so?

It may have something to do with a conservative reserve bank. Whilst Europe pushed interest rates lower and lower, over inflating the economy and increasing vulnerability, Australia played safe, and is now reaping the rewards.

There are concerns about the strength of the dollar harming exports but there is also a great deal of confidence in the Australian system, the quality of services and some assurance from the fact that Australian businesses are unlikely to go South taking your multi-million dollar contract with them.

 

Is there talk of projects being cancelled within the resources sector? I believe so but does this indicate an impending recession? I very much doubt it. Is there an (unhealthy) appetite for the building of individual property portfoilio's and large amounts of borrowing to satisfy this? Undoubtedly, but this is very different to the sub-prime market in America and there is massive demand for property here. If there is a slow down, it will most likely be just that, a slow down, not a crash. With the economy as it is there will still be opportunity for growth, it may need for a degree of diversification to maintain stability but there will be plenty of time for this.

 

My tuppence worth.

[Goat]

Australia is currently celebrating 21 years of growth. 21 years!

The economy has sailed through the GFC relatively unscathed and whilst it may be argued it is dependent upon China continuing their frenzied purchasing of our resources that only reflects the current climate, it hasn't always been so. Besides, Brazil and other S. American countries also have massive reserves of what is making Australia rich yet they are not, why is this so?

It may have something to do with a conservative reserve bank. Whilst Europe pushed interest rates lower and lower, over inflating the economy and increasing vulnerability, Australia played safe, and is now reaping the rewards.

There are concerns about the strength of the dollar harming exports but there is also a great deal of confidence in the Australian system, the quality of services and some assurance from the fact that Australian businesses are unlikely to go South taking your multi-million dollar contract with them.

 

Is there talk of projects being cancelled within the resources sector? I believe so but does this indicate an impending recession? I very much doubt it. Is there an (unhealthy) appetite for the building of individual property portfoilio's and large amounts of borrowing to satisfy this? Undoubtedly, but this is very different to the sub-prime market in America and there is massive demand for property here. If there is a slow down, it will most likely be just that, a slow down, not a crash. With the economy as it is there will still be opportunity for growth, it may need for a degree of diversification to maintain stability but there will be plenty of time for this.

 

My tuppence worth.[/quote

Fact , the Chinese president is on Africa , Tanzaniaill to get closer ties , there is shed loads of minerals under there and iron ore , I see very stormy is going there with work , as the iron ore price slides the big players will look at cutting costs , Africa will save them billions , the Chinese may even go into mining there. Lose mining and WA will implode , all the industry and manufacturing is geared to resources

[portlaunay]

Fact , the Chinese president is on Africa , Tanzaniaill to get closer ties , there is shed loads of minerals under there and iron ore , I see very stormy is going there with work , as the iron ore price slides the big players will look at cutting costs , Africa will save them billions , the Chinese may even go into mining there. Lose mining and WA will implode , all the industry and manufacturing is geared to resources

 

The question the OP asked was, "Is it about to end?"

I was making the point that I do not think it is.

I also think that using language such as "implode" is a little melodramatic. If the so called mining boom is a 24 hour clock then most agree we're in the latter part of the day but imploding? Seriously?

Like I say, there may be a slow down but Australia is more than just mining, I think it's easy to forget that when it is so ubiquitous in WA. Mining accounts for something like just 10% of GDP, don't forget oil and gas, meat, wool, cereals, alcohol. Mining has supported the post war economy here but, prior to the GFC and the subsequent cost of the AU dollar, manufacturing accounted for 30% of GDP. Are you suggesting that in the downturn and the reemergence of a competitive value of the dollar that Australia will not be able to return to manufacturing or develop new opportunities for economic growth?

 

We're all doomed!!

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Sorry, I just don't buy it.

[verystormy]

There is no doubt that the mining boom has ended and companies are seriously struggling. Not just the usual suspects either. I left my job on Monday to start my new role. Seems I was lucky as we made mass redundancies on Monday. That is Australia's largest gold company. It's no longer about the price of minerals but the costs of mining in Oz are now such that even with a healthy price it is still hard.

 

That is going to one of the issues in making the economy focus more on manufacturing. The cost of producing compared to our neighbors in Asia.