WA’s position as the centre of investment growth is stoking optimism that its residential property markets are about to take off.
For many property investors, the wait has been painstakingly long, but as the economy returns to solid growth, there are now growing expectations that another property boom is just around the corner.
“I think there’s no doubt that the WA property market is going to be very strong in 2010,” says Terry Ryder, director with hotspotting.com.au. “It peaked around 2007 and had a couple of very lean years when values, generally speaking, had fallen quite a lot. We saw it consolidating last year and now showing signs of recovery. I think we’re now really going to move into strong upward cycle again on the back of revitalisation of the resources boom, infrastructure development and solid population growth. I think it’s realistic to believe that WA is moving to another boom phase.”
Matthew Bell, economist with Australian Property Monitor supports the view that Perth and WA as a whole will outperform in terms of the property market over the next few years.
“I do think that as resources come back online and employment improves, it will flow through property prices. In the middle of a very tough year, Perth properties rose by 8-9%, in a strong year when the resources gear up, growth will top 10%. I think we won’t be getting 5-10% growth a quarter. This won’t be sustainable. But what we’ll get is still relatively strong.”
Local agent, Mark Sinclair, CEO of Raine and Horne Western Australia believes property prices will not hit previous boom levels this year but like the others, he’s counting on a solid growth, particularly for the latter part of 2010.
“I would suggest quite confidently that robust growth will transpire, in fact it’s starting now, so we will see strong growth this year and all through 2011. We won’t have double digit growth because the WA markets had dropped more than 20% in many parts, though it had since rebounded from that bottom since mid 2009. I would suggest that growth will be close to about 8% in 2010 and somewhere between 8-10% in 2011.”
Regional properties surge to new record
According to Residex, median house price in country WA surged by 6.29% to $390,500 during the three months ending December. This is the fastest growth recorded across all country locations in Australia during that period.
The figures released by the Real Estate Institute of Western Australia, showed similar upbeat results with Geraldton-Greenough hitting a new median price of $375,000, up on its previous high of $370,000 achieved in March 2008.
Kalgoorlie-Boulder also recorded a new median price of $350,000, up from its previous record of $345,000, also from the March quarter of 2008. Median price in Port Hedland jumped $70,000 to a new median of $615,000 while Karratha added a solid $52,000 to a record-breaking median of $822,000 in December, according to REIWA.
Perth has also performed strongly with the new median now at $480,000. This was $5,000 higher than the previous level reached in December 2007 when the property boom was at its peak.
“Perth has more than recovered all of its 12% per cent loss in median price experienced in 2008, with 14.3% growth in the median house price for 2009,” says REIWA President Alan Bourke Bourke. “However, the 14.3% growth in median price for Perth doesn’t mean that everyone’s house jumped 14.3% in value. What it means is that upgrade buyers have tended to purchase more expensive property while at the same time the number of first home buyers seeking more affordable homes has diminished. This has resulted in the median house price being pulled up to reflect the buying patterns of those people in the market during this period.”
The average number of days it takes to sell a house has also dropped by 20 days to 54.
Centre of investment growth
According to the latest report from Access Economics- Arup Investment Monitor, WA has more than double the value of definite projects underway of its nearest rival (Queensland) and it continues to extend that margin.
“The lift in investment activity in WA over the past few years has been stunning. Even following the recent downturn, the Investment Monitor contains some 125 definite projects, worth more than $120 billion- easily the highest level of investment across all states. The mining boom is back with the only question over how high mining investment will now leap in the West,” the report noted.
Business spending in WA-already high- will head notably north in coming years, the report says.
The Access Economics-Arup Investment Monitor report also notes that while the work currently underway is dominated by the huge $43 billion Gorgon LNG project- the largest engineering construction project ever undertaken in Australia and is expected to be under construction until 2014, there are also other non mining projects in progress.
“While not as spectacular as the mining developments, these projects are just as significant,” it says.
“These projects include the new Fiona Stanley hospital being built by the government at Murdoch in Perth at a cost of $1.8 billion. Other health-related projects include the first stage of the new Central Tertiary teaching hospital and an upgrade of the Joondaloop hospital and health campus. The $740 million Perth Arena ( a 14,000 seat indoor entertainment and sport complex) is underway, as is a new $230 million prison. Stage 2 of the Bishops See office redevelopment on St Georges Terraces in Perth will be completed in early 2012.”
In the short term, Access Economics says WA remains one of the strongest performing Australian states over the next two years with output growth of 2.2% and 4.5% forecast for 2009-2010 and 2010-2011 respectively. That growth compares to the forecast of 1.6% and 3.2% for the Australian economy, and “will therefore help the state to continue to account for an increasing share of the Australian economy over time.”
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