Thursday, 10th of December 2020
Last week provided great news for the Australian economy, as we received the latest economic data showing that Australia is officially out of its recession. This welcomed news was perfectly timed in the lead up to the festive season, giving Australians renewed optimism, positivity and hope at the end of a tough year.
Australia has been recognised as a world leader in the way we successfully managed the ongoing challenges of the COVID-19 pandemic this year, with Western Australia sitting firmly at the summit as the nation’s fastest growing state economy.
A strong WA economy is also great news for Perth property investors and homeowners alike!
A West Australian Market Recovery
Over the last year, Western Australia has been the only Australian state to experience growth, with year to date figures showing our economy has actually grown by 0.3%, as opposed to the national economy which has in fact contracted by 2.2%. Both New South Wales and Victoria over the same time period have recorded contractions of 2.9% and 4.2% respectively.
Looking at more recent figures it can also be revealed that WA’s economy grew 4.9% during the September quarter, a notable recovery when compared with the June quarter’s contraction of 6.4%.
"The Western Australian economy continues to perform strongly and lead the nation across many indicators. This is a dramatic turnaround from the 6.4 per cent contraction experienced in the June quarter and highlights the importance of the McGowan Government's safe and strong management of COVID-19.” - Treasurer Ben Wyatt
Record Household Spending
Thanks to the fast easing of the lock-down measures put in place in April, and consumer confidence beginning to return to pre-COVID levels, WA’s household spending has grown by a massive 11.7%.
Whilst renovations have gone through the roof due to more homeowners spending more time at home, the easing of lockdown restrictions taking effect in the September quarter has resulted in improved economic activity across many sectors, including:
- Hotel, restaurant and café dining - up 45.7%
- Clothing and footwear spending - up 47.4%
- Health service expenditure - up 40.7%
- Motor vehicle purchases - up 19.5%
- Household savings - up 19%
Record Iron Ore Exports Operating At Full Capacity
Buoyant iron ore prices combined with recent international supply disruptions, have led to WA’s mining sector operating at great profit margins. Not only has this created economic stability in the state, it has also contributed huge royalty revenue windfalls to the nation’s coffers, with The West Australian reporting that Australia owes its economic rebound to WA.
Last week, PerthNow reported a 5-day trading high for Australian mining and energy stocks as prices soured to new heights after Brazilian iron ore producer, Vale, reporting reduced production levels. This came despite demand from China up 15% in October, with year to date import figures totalling a whopping 975 mega tonnes from China alone.
What Does This Mean For Property Prices?
The start of the month heralded signs of positivity for homeowners and investors with the CoreLogic Home Value Index reporting increases in all Australian capital cities. Since the initial outbreak of the Coronavirus, housing values are up 0.8% nation-wide.
Further to this, West Australians will be even more thrilled to learn that The Housing Boom and Bust Report 2021 has forecasted that housing values across the West are tipped to increase by between 8 and 12% next year. A very encouraging sign despite current WA housing prices sitting at values comparable to those seen in 2008.
The optics certainly look positive for home owners when you consider the RBA’s cash rate of just 0.1%, historic low interest rates and Perth’s record low vacancy rate.. The market appears primed for increased investor returns and heightened investor activity as outlined in our previous article, How to Take Advantage of Perth’s Rental Crisis.
PPM – Your Investment Partner
The road ahead is looking bright for property investors looking to capitalise on the Perth property market, and despite our economy still needing time to return to normal levels, it is clear we are on a positive trajectory.
Given the uncertainty of unemployment, fluctuating market conditions and the ever-present risk of a second wave, if you’re a property investor, now is the perfect time to partner with an experienced property management agency to help you navigate your ongoing investment strategies. If you’re not getting the service you need, this year more than ever, it might be time to change your property management agency.
Here at Perth Property Management (PPM), we’ve been recognised as WA’s leading property management agency with an award-winning team and the state’s best Property Manager at the REIWA Excellence Awards – you can read more about our awards here.
If you’re looking to capitalise on an opportunistic property market, and want to align yourself with a leading agency who has the time and experience to maximise your returns, we welcome you to contact us today for an initial discussion.