OVERVIEW HIGHLIGHTS
• Prices are expected to continue to increase in 2023 thanks to a strong economy and affordable pricing
• Perth’s median house price rises 2.86% to $540,000 [up from $525,000 in 2021]
• Affordability allows most buyers and mortgage
holders to absorb interest rate rises.
• The rental market is set to tighten further
• WA population forecast to grow - adding 150,000 residents to WA by 2026
• Wages and salaries paid to West Australians surge 22%
• WA delivers record $6billion surplus
WA PROPERTY MARKET OVERVIEW
Western Australia’s strong property market conditions are expected to continue into 2023. REIWA’s (Real Estate Institute of Western Australia) outlook estimates that Perth house prices will show a moderate growth of 2 and 5 per cent in the next 12 months.
In 2022 Perth’s median house price rose 2.86% to
540,000 – up from $525,000 in 2021 – despite eight interest rate rises that saw east coast markets decline.
Sales activity remained strong, with the average weekly reported sales figure sitting at 895, up from 870 in 2021.
Towards the end of 2022, property listing levels dropped 10 per cent lower than the same time in 2021 and almost 34 per cent lower than three years ago.
Listings are expected to remain low, with any increase offset by population growth.
While Western Australian buyers have become more cautious and price-sensitive following interest rate increases. In 2022, the market has been able to weather this.
In addition, housing affordability has allowed buyers and mortgage holders to absorb interest rate rises.
2022 was another challenging year for tenants. Rental listings hit a 12-year low at the end of September, and while they improved in the last few months of 2022, they remained nearly 17 per cent lower than at the same time in 2021.
The vacancy rate lifted slightly during the year before dropping back to 0.7 per cent, and the median weekly rent was $500 at the end of November – $60 higher than a year ago. It’s anticipated that we will see similar conditions in 2023.
Positive net migration will maintain demand, with REIWA anticipating upward pressure on rental prices.
However, there are some signs of relief for tenants in 2023.
After seeing investors leaving the market in the past two years, we see increasing interest, particularly from eastern states investors. This is a positive indication concerning boosting rental stock levels, but it will take some time for the effect to flow through to tenants.
Rental listings will remain low in the medium term but are expected to improve over the next 12-18 months, as both building completions and investor activity increase.
Market conditions across regional WA are expected to remain strong in 2023 – in 2022, all regional centres saw median price growth, with Busselton as the top performer.
Lifestyle is expected to remain a driving factor of where people choose to live in 2023, especially if there are local employment opportunities in regional areas and flexible work-from-home arrangements.
Source: REIWA
MOST AFFORDABLE CAPITAL CITY IN THE COUNTRY
Given the recent rocketing property prices, it may seem unimaginable, but Perth is Australia's most affordable capital city.
Data compiled by CoreLogic has revealed that Perth has the most suburbs within 10km of its CBD, with a median price below $600,000.
There isn’t a single suburb within 10km of Sydney, Melbourne, Adelaide or Canberra’s city centres which can boast such affordability.
Perth has 13 suburbs below the $600,000 mark, while Brisbane has only one, Hobart five and Darwin 6. Perth has remained relatively affordable and will continue to attract migrants thanks to its strong economic conditions, tight labour markets and reasonably priced housing.
Source: The West Australian
POPULATION GROWTH
The Department of Treasury estimates population growth of 1.2 and 1.5% annually over four years to 2026, potentially adding 150,000 residents to WA.
Assuming 2.5 residents per household, this population growth will likely demand an extra 60,000 new homes to be constructed by 2026.
Today’s shortfall of 8000 homes is set to grow to a deficit of as much as 20,000 by 2026, when we allow for 60,000 new homes to accommodate population growth and take into account the 10,000 homes that are expected to be demolished over the next four years, according to Australian Bureau of Statistics data.
WA only completes around 14,000 homes annually, which is insufficient to meet demand.
Source: Australian Bureau of Statistics
WA’s STRONG ECONOMY
The 2022-23 State Budget confirms the WA economy powers the nation, with the Western Australia domestic economy growing by 7.2% over the two years of the pandemic, the strongest in the country, and among the best performing in the world.
HIGHLIGHTS:
• The McGowan Labor Government’s stable and responsible Budget management and safe handling of the pandemic has positioned Western Australia’s economy and finances to be among the strongest in the world.
• WA’s domestic economy has grown by 7.2% since the start of the pandemic, the strongest of all States and more than double the growth of the rest of the nation.
• WA is the only mainland State to record Gross State Product growth in 2019-20 and 2020-21 and contributed almost 40% of the change in the national economy over the two years.
• WA merchandise exports reached a record $240 billion in 2021, accounting for more than half of Australia’s exports.
• Western Australia’s domestic economy is forecast to grow by 5.25% in 2021-22 and a further 4% in 2022- 23, fueled by household spending, business and government investment, and housing construction.
• The WA Government State Budget 2022-23 forecasted Western Australia’s real GSP would rise 3.75% in 2021-22, 2.0% in 2022-23 and 1.0% in 2023-24.
• The continued strength of WA’s economy throughout the pandemic, including the uninterrupted operations of the resources sector have provided valuable support to the national economy, resulting billions in revenue flowing to the eastern States, including company tax collections and the GST.
• WA’s strong economic and financial management has reduced net debt in 2021-22 to a seven-year low.
• WA’s substantial surplus is being used to set up our State’s long-term future, including another record health and mental health investment, supporting Western Australians with the cost of living, climate action initiatives, record investment in infrastructure, and a range of measures to diversify our economy and boost capacity.
Source: Government of Western Australia
WA’s EMPLOYMENT
HIGHLIGHTS:
• Total wages and salaries paid to West Australians have surged 22 per cent since the start of the COVID pandemic - the best of any state and a result mainly built off the back of the tens of thousands of new jobs created since COVID spurred an unexpected economic boom.
• The total size of the West Australian workforce swelled by 129,000 between December 2019 and September 2022, an increase of 9.3 per cent.
• Over that same period, total compensation paid to West Australian wage and salary earners rose 22 per cent to hit $35.2 billion in the September quarter.
• That figure, calculated by the Australian Bureau of Statistics, captures the legion of additional employees in freshly created jobs – the primary contributor – and pay rises across the existing workforce.
Source: The West Australian
WA’s RECORD-BREAKING RESOURCES INDUSTRY CARRIES THE NATION
HIGHLIGHTS:
• WA’s powerhouse resources sector has delivered another record of $231 billion in 2021-2022 financial year, the fourth record annual revenue figure in a row.
• The sector also provided jobs for a record 157,700 workers in the 2021-22 financial year, representing a 6 per cent increase on the previous year’s figure.
• The WA figure represents 55 per cent of the national export earnings figure for resources and energy for the financial year 2021-22, highlighting the importance of the WA sector to the national economy.
• More than $24b was invested in WA’s mining and petroleum sector, the highest since 2016, and the State has around $57b of resources projects under development and a further $87b in medium and longer-term projects in the pipeline.
• WA’s exceptional results continue to deliver jobs and outstanding economic benefits to WA and its regional communities.
Source: The West Australian
WA DELIVERS RECORD $6B SURPLUS
HIGHLIGHTS:
• Western Australia’s budget surplus has reached a record $6 billion.
• Treasury figures released on 28th September 2022 revealed a $344 million boost to the State’s bottom line since the budget was delivered in May.
• Under these figures, the net operating surplus becomes the funding source of WA’s $7.2 billion infrastructure investment without adding debt.
• Civil servants can expect the improved wage offer delivered due to the more substantial surplus; the latest pay offer costs $3.3 billion over four years.
• Debt has dropped to $29.2 billion due to a reduction of $4.3 billion; the government claimed it’s the largest-ever decline within one financial year, with the lowest net debt since the 2014-15 financial year.
• The State’s domestic economy, which has grown the most out of any State during the pandemic, has underpinned continued strong financial performance in 2021-22.
Source: WA Today