Samantha Reece attended the Market Update hosted by Colliers International last week.
While some sectors may be feeling slightly nervous about WA’s economic future, the Colliers team showed data which demonstrated that we should still be feeling somewhat optimistic.
Yes, private investment did peak in 2013/14 with a 1 in 100 year event, but the forecast for ongoing private investment until 2025 is still $30 billion per annum and this is threefold what it was in the late 1990’s and early 2000’s.
And while these mining projects have propelled the investment engine, there is still another 12-18 months before they will come to their natural conclusion.
Population growth peaked at 90,000 a year, during the boom and this has come down to 30,000 a year. It is expected that this will rebound to 40,000 a year in the next 12 months, and this is still twice the population growth that WA was experiencing in the 1990’s.
The ABS predicts a population growth of another 800,000 residents over the next 14 years. Ultimately they will need to be housed.
Interestingly, regional WA’s contribution to national GDP has grown from 7% to24%, however all the focus for population growth is still centred on the Perth metropolitan area.
With the mining sector coming off the boil, we are seeing other sectors such as retail, accommodation, public administration, scientific/professional/technical services and the education sector all growing.
Overall mining only contributes to 6.84% of WA’s employment but it is the construction sector which really is part of our powerhouse at 11%.
With regards to the property sector, Colliers are still seeing positive signs in the medium to high density markets in comparison to outer ring residential homes.
And while the supply wave does look high in comparison to population growth, the reality is that not all these projects will proceed.
But despite all these market adjustments, property prices have still remained stable.
Current vacancy rates for residential properties is at 6% but with population growth declining as well as incomes, Colliers believes that we will now see an increase in renters which is ideal for the investor market.
And with three emerging groups within the property sector including baby boomers, young families and young singles, the next ten years will see a drive towards apartment living and typically in the CBD or on transport nodes.
Overall, Colliers believed that any oversupply would be absorbed over the next 18-24 months and at that point, buyers would begin to recognise that opportunities were limited and this would buoy the market once again.
As with all things cyclical, what goes down, ultimately will go back up and Colliers were confident that other eastern states property markets would also start to see adjustments in the next 12-18 months.
The key opportunities that the Colliers team identified were medium/high rise developments within 20kms of the city or located on transport nodes, which will also reflect a level of retail/mixed use and we are seeing this come to fruition with developments penned for Garden City, South Perth and Canning Bridge.
At the end of the day, the Perth market is stabilising and there are still opportunities to be realised. You just need to know where to look!