Economic Update WA - Loans My Way

Economic Update WA

September 10th, 2015


We were recently lucky to catch up with Andrew Rankin of CBRE and the West Australian Treasurer, the honourable Dr Mike Nahan MLA, and have them run through the state of WA’s economy both now and what is forecast for the next 5 years. It was refreshing to hear that things aren’t as bleak as many commentators are suggesting. Here is a summary of that discussion;

Population Growth;

WA peaked on migration in 2011 at a little over 80,000 new arrivals, we have enjoyed a 30% increase in population over the course of the mining boom, giving the state a current population of just over 2,000,000. In 2015 population growth is a little over 50,000 per year, with the bulk of that number made up from immigration on skilled migrant visas. There is no interstate migration to note at the moment, but that is expected to change into 2018 with the overall annual population increase figures expected to be just under 60,000 to 2019. This should give a little confidence in the local property markets ability to grow, plus create many construction and property investment opportunities.

Economic Growth;

The national average has been around 2.5% for the past three years, with this expected to trend upwards through 2016 & 2017 to level out to 3.5% in 2018. In Western Australia we are sitting currently a little over 3%, but this is a massive drop from around 5.5% in 2014. Unfortunately this downward trend is predicted to continue into 2016 bottoming out at 2%, but predicted to sharply rise back to 3.5% in 2017, from there it is set to moderate to just under 3% into 2018 & 2019.

Business Investment;

From its peak of $76 billion in 2013, this will slow in its decline from just over $60 billion in 2015, easing to a predicted $46 billion to 2019. Exports of iron ore are set to continue to increase, it is heartening to note there has not been a reduction in iron ore exports since the early 2000’s. Other exports are set to hold relatively steady, but the big mover will be LNG as we are set to become the largest global exporter in this market, with exports set to nearly triple to $60 billion over the next 4 years. It is no wonder that Woodside and Chevron and all of the major mining players have positioned themselves in Western Australia, they get it right more often than not and see Western Australia as a business hub for many years to come.


Unemployment is set to peak in 2016 at a little over 6%, this is predicted to steadily decline back to just over 5% to 2019. Fortunately there has been an overall acceptance of lower wages post mining boom, which has allowed a lot of the returning workforce to be absorbed by the construction and retail industries and has fortunately led to unemployment rates remaining 2% under the forecasted rate, with a little luck this will continue to beat the predicted rate.


From the last peak in 2013, property currently is taking an additional 30 days to sell on average, current selling stock is up by around 6,000 properties, to around 14,000 properties on market. The median price is sitting around $420,000 currently, contracting from 2014, affordability is returning to the market. New houses are being built in record numbers, but new building starts are expected to drop closer to 20,000 per annum, slowing demand could limit property growth in the state.

Apartments continue to be massively over represented in the local market, it should be expected that prices will continue to soften in this sector, with the inner city suffering the most. So it could be a good time to negotiate hard on apartments if these fit your investment profile.

Prestige property ($1m plus) continues to drop from the 2007 peak and there have been some absolute horror stories in this end of the market, with some properties netting less than 50% their peak price in subsequent sales. The safest area of this market has proven to be the sub $1.3m brackets.

Rentals continue to ease with vacancies at near 5%, while rental yields are continuing to trend downwards, this is also something that is expected to continue for the foreseeable future.

The general consensus seems to be that we are near the bottom of the current property cycle in WA, with 51% of Australians wealth tied up in property, it will be most welcome when the local market returns to growth.


While we are nowhere near the highs we have previously enjoyed in WA, there is still $24bn committed to infrastructure over the current state budget period and many business sectors are expected to grow, such as; construction, agribusiness, education, administration, wholesale, accommodation, healthcare, food, arts and recreation along with professional, technical and scientific services. It still paints a pretty good picture for the state moving forward.

Michael McKenzie

Director/ Licensee

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