WA Excerpt from the 2013 March Market report


Investors out of favour

After climbing steadily for the last 12 months, rents are starting to ease along the western fringe, while investors are competing with first homebuyers for the best deals on the market


As the biggest beneficiary of the mining boom, WA boasts the lowest unemployment rate of any state or territory at just 4.3% – well below the national average, which hovers around 5.5%.


Six months ago, however, WA had an unemployment rate of 3.5%. Paul Braddick, ANZ ‘s Head of Property Research, says that while the western state’s employment rate was strong throughout 2012, growth “moderated towards the end of the year, as the iron ore price fell sharply and the global outlook became more uncertain.” He adds, “Strong population growth has meant that the unemployment rate has increased a little in WA, as a rising share of jobseekers have not found work.”


Moving forward, any caution about the health of the state’s economy and specifically the resources sector, seem to have had little impact on the industry’s faith in the market. The Property Council of Australia-ANZ Property Industry Confidence Survey, which seeks feedback from thousands of people who work in construction and property, has delivered WA a score of 131, up 11 points for the March 2013 quarter.


A score of 100 is considered neutral, so with a score of 131, confidence in WA’s real estate market is very high. The state is also ranked well above the total score for Australia, at 107.


This demonstrates that WA possesses strong economic fundamentals, despite intermediate concern over the longevity of resources investment, Braddick explains. “Despite a softer outlook for WA mining infrastructure spending in recent months, the economic benefits of committed infrastructure spending and tight market fundamentals should drive solid growth in building construction in 2013,” Braddick says.


Expectations for house price growth have also increased amongst those in WA’s property and construction industry, with the Property Council scoring confidence in capital appreciation at 129 in the March 2013 quarter, up from 118 in December. WA was only one of four states with positive expectations for house price growth.


First homebuyers are back


With relatively subdued rental yields – houses throughout Perth and regional WA are averaging 4.6% to 4.7% – so investors chasing cash flow aren’t exactly flocking to the market.


But activity is high with first homebuyers, with new figures showing that the amount of people who took advantage of the First Homeowner Grant (FHOG) jumped by more than 28% in 2012, compared to first homebuyer activity in 2011.


WA’s Treasurer, Troy Buswell says a total of 17,171 first homeowner grants were handed out, totalling $120 million worth of government grants – the highest amount of standard applications approved in a decade.

Buswell says the surge in new home ownership, which translates to 3,750 more grants being given in 2012 than the year before, demonstrates that the property market is improving.


This is clear evidence that WA’s property market is gaining strength and will have flow-on benefits to other parts of the economy,” he says. “Strong population growth, including high rates of migration to the State, demonstrates confidence in current conditions and future prospects for WA.”


Tight rental market easing


Perhaps part of the catalyst behind the rash of renters flocking to home ownership has been Perth’s historically tight rental market, which is finally showing signs of easing after a prolonged period of landlords having the upper hand.


Figures just released by the Real Estate Institute of Western Australia (REIWA) show that the vacancy rate has lifted just slightly, from 1.8% to 1.9%, while the median rental price for units and apartments has dropped by $10 per week.


Although the vacancy rate remains tighter than normal, REIWA President David Airey says the overall median rent had remained stable at $450 per week, ending a steady climb in rents over the last 12 months.

Our data shows that while the median rent for a house lifted by $10 to $460 per week, the median rent for strata dwellings such as units, apartments, villas and town houses fell by $10, to $420,” he says.


Despite the modest drop in price for units and apartments in the final three months of last year, we need to keep in mind that the March quarter is always the strongest period in the year for rental activity, so this drop may only be a temporary reprieve for tenants,”cautions Airey.


The median rent may pick up again as the year progresses, but as always, this will depend on demand,” he says.





Loated 424km north of Perth, Geraldton is one of WA’s most popular tourist destinations – and thanks to strong long-term capital growth rates, it’s quickly becoming a favourite amongst investors, too.


The city of Greater Geraldton is situated on Champion Bay, on the Batavia Coast, and offers up pristine beaches sandwiched in between the Moresby ranges to the east, and the Greenough River to the south.


The town as a whole, has just under 27,000 people and is home to the Geraldton University Centre - an independent not-for-profit incorporated body, supporting and delivering university courses in Geraldton on behalf of a range of universities.


While rental yields are fairly run of the mill at an average of $320 per week, it’s the opportunity to add value through renovations and development that should appeal to investors.


For instance, Mel Tovey from Active West Real Estate is marketing a four-bedroom home in central Snowden Street, which is in “...a great location, and is zoned R60 city centre residential/commercial”, she says.


You can walk to the central business district, you’re close to beaches, parks, schools and the bus station,

and you have a great opportunity to build new offices or townhouses,” she adds. For those who are seeking a long-term investment with development opportunities, this type of property could be the perfect fit.

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

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