There are still some great buys to be made in WA’s slow moving market, and the mood among buyers is gradually turning from cautious to confident as predictions of a resource industry resurgence flood-in.
Anyone with half an interest in the economic health of Western Australia has no doubt have had an earful of predictions that the state is due for another massive resources boom. Coupled with RBA governor Glenn Stevens touting the impending boom as perhaps the biggest in modern history, hitherto cautious property investors may well start jumping into the WA market with renewed vigour.
Stevens says the mining sector investment has already risen from an average of 2% of GDP over the past 25 years to 4% – exceeding peaks reached in the booms of the 1960s and 1980s.
And he believes the insatiable demand for resources from India and China could see investment rise by a further 1–2% over the next couple of years.
"If it occurs, this will be by far the largest such expenditure of a capital nature in the resources sector in Australia’s modern history," he said at a recent conference on the resources boom.
Bearing these comments in mind, buyer’s agent and Property Wizard’s managing director Liz Sterzel believes property investors are becoming increasingly keen to board the resources gravy train before it picks up too much speed.
"There’s little doubt among investors that house prices will go up due to a growing WA workforce that will need homes to live in – and they want to get in before the masses do," she says.
"What’s driving the local market at present is investor knowledge that WA’s economy is forecast to grow (at 4.75% for 2011 to 2012, according to the Department of Treasury and Finance) and that the resources boom we’re now entering is of a magnitude never seen before."
Putting predictions for wider economic growth aside for the time being, Real Estate Institute of WA (REIWA) president Alan Bourke explains that the property market in Perth is still slow, thanks to a slower rate of population growth, an oversupply of property on the market, and cautious buyers who are concerned about incurring debt in the current economic climate.
"There’s also the expectation with many buyers that prices may drop a little further, so some are waiting and biding their time," he says.
But don’t wait too long, he warns, as the market seems to have bottomed out and this year could be the one that investors look back on and say "if only I’d bought in 2011."
"It’s a buyer’s market with plenty of stock, plenty of keen sellers and good room for negotiation on a bargain. The REIWA expects the overall economy and housing sector to pick up in 2012, so for wise investors now’s a great time to strike," says Bourke.
Sterzel, however, sees Perth as a bit of a mixed bag, with some areas representing a buyer’s market, others favouring sellers, and some struggling to find the market value.
"In some cases, we’re seeing a $50,000 to $60,000 difference in the price of similar properties," she explains.
"This is a fantastic situation for switched-on investors who can grab a bargain, but it’s a trap for uneducated buyers."
Overall, however, Sterzel likens the current buying situation to being a kid in a candy shop, with only a minority of players in the Perth property market having tasted the delicious opportunities it presents.
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