The West Australian Market continues to be a significant beneficiary of the Resources price boom. On every measure the state is booming.
Having recently attended the BIS Shrapnel Economic Outlook conference, it is clear that in Western Australia we are set to continue with sustained growth over the next two and a half years.
The key reasons for this are as follows:
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Investments in the mineral sector already committed to going ahead will continue to stimulate the economy irrespective of future commodity prices.
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No real prospect of significant interest rate increases in 2006.
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Net migration into WA wildly understated (due to ABS updating figures according to Medicare records……when last did you update your Medicare record?).
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New supply of housing being absorbed quicker than it can be created.
WA continues to outperform the East Coast as can be seen by the graph below.
Source: Australian Bureau of Statistics
According to REIWA figures from the 2005 September quarter, the vacancy rate for rental properties in metropolitan Perth plummeted to a low of 1.6%. December quarter figures show there has been no change. To put this in perspective, the lowest vacancy rate recorded over the last decade was 1.6% back in March 1996. The vacancy rate figures over a ten year period mostly hover around 3% to 4%.
When REIWA reported on this in November last year, it raised a few eyebrows from people who felt the figure was doubtful and things couldn’t be that dire. But the growing body of anecdotal evidence from members suggests things really are that tight and getting tighter.
Armed with the information above we believe that the market will continue to perform strongly with further significant increases in capital growth and rental returns.
