Updated: Feb 5
If you’re on the fence about buying a property This is a must-read research document that highlights some current data that may help you get a fresh perspective because as it stands right now the property market is at its best buying point in more than 20 years based on affordability alone (affordability in property Is the proportion of the average income required to service the median mortgage payment on the median-priced Perth property).
In isolation this is nothing to crow about because what any property buyer will be wanting to know is that the property they are buying will increase in value and make them wealthy. It’s been an awfully long time coming but it looks like everything is in place to create a possible perfect storm for Perth property.
Here’s what happening
Perth Rental Vacancy Rates Declining Rapidly
According to REIWA (Real Estate Institute of WA) the Perth rental vacancy rate for December ¼ has again reduced to 2.4%
Days on market for a vacant property has dropped to 39 days, the fastest since March 2015
Available property advertised is down 18% on the same period last year
The median rent across Perth has remained steady at $350 per week but some isolated suburbs are showing small increases on same period last year.
Summary Less houses are available to rent and getting rented quicker than any time in the last 5 years, so prognosis is that the vacancy rate will continue to tighten and rents will begin to move up in value.
New Dwellings Approvals in long term decline ABS Dwelling Approvals data for Western Australia shows a consistent year on year reduction in the number of new dwellings being approved for construction in WA since 2013.
The following table is extracted directly from the ABS site
Summary Year on year there are less new dwelling being made available for people to take up occupancy and this is a market with a rapidly contracting vacancy rate for available rental properties. The prognosis is that while new building will be stimulated eventually by an increasing rental yield there will be a significant lag before it pick up and then there is a further delay in the delivery putting pressure on available supply of land, increasing rents pushing people into owner occupation, competing with investors for available land. Added to this is also the competition that will be created with higher building manpower from competition from the resources section (refer below to WA Labour Shortage at critical levels).
WA’s Population set for significant growth The state Governments official population report to 2031, the WA Tomorrow Population Report #11, has WA’s current population as at end of 2019 at 2,604,000 and expected to grow by at least 30,000 and as much as 118,000 in 2020. That’s the sort of population growth figures experienced in the Resources Construction Boom.
WA Labour Shortage at Critical Levels Employment grew in 2019 by a little over 10,000 jobs and unemployment sits at 5.7% as at October 2019. Some economic sectors are doing significantly better than other with retail dragging down the averages while resources and mining are absorbing more labour than is able to be readily supplied. According to a well respected radio marketing source recruitment has become the most active industry for marketing with Perth companies with advertising for Perth mining jobs extending into QLD, NSW, VIC & even NZ.
Summary The construction boom of the early 2010’s was all about increasing capacity for the largest mining & resources companies and the establishment of a new range of middle tier ones for an anticipated increase in demand for raw materials and energy worldwide. This demand is now upon us and these companies are now requiring skilled mining employees on longer term, stable and well paid employment agreements to meet this demand. An example of the level of the increase is reflected in the total tonnage through Port Hedland port. At August 31 2019 total tonnage exceeded the highest ever amount in recorded history, in only 8 months!
Thinking of property investment Forget negative gearing as a concept , that just means that your losing money and hoping to get some capital growth to offset the loss in your cashflow position. What about an affordable, brand new, well located house that returns a positive $16,000 per annum tax free before you even look at claiming any tax deductions, which will only improve the cashflow position even further. The security of bricks & mortar property, a $16,000 tax free improvement in your income and a reduction in your tax bill, sounds like a great starting point for a FIFO worker to set you up a secure financial future for that time after FIFO…. isn’t that what motivated you into this FIFO world in the 1st place. So, here you are after 13 years if stagnation you’re at the start of a new positive property growth phase and the opportunity to get into the game, create some real wealth and give yourself a $16,000 tax free payrise. This is not a joke, for a limited time the Federal Government is making available tax free cash incentives to stimulate the property market and add housing into the system. Once the incentive is issued it will remain in force until the end of the 2026 tax year but the catch is there is only a limited number of the grants being issued and its 1st in 1st served. FIFO Consultants can show you how to access these grants and reap the rewards and set up your financial future for the time after FIFO. Every market and commodity has its day, has its run and creates its wealthy set, this, here & now, is the time of property, just as it was in the early 2000’s in WA. Don’t miss it this time because it will probably be another 20 years before the next wave comes around.
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