After hearing from key people within CBA this morning looks like we have an interesting ride ahead in Western Australia.
There is an expectation that the unemployment rate will get to 6.5% in 2015, as more workers become casualties in the iron ore war and gas workers move out of their construction and into their operational phase. But this increase in unemployment should largely be absorbed by the construction and retail sectors, as building approvals are trending substantially upwards. With an increase in construction activity, the retail sector will also help to ease the unemployment rate as homes are furnished and fitted out upon completion.
East coast workers appear to be leaving with interstate migration showing negative figures currently, but again this has been offset through immigration and natural growth, so there should be an increase in population of around 45,000 for WA in 2015, which should further aid the construction industry and help to support the rental market.
On interest rates, there is a strong view that there will be a further rate cut in March, with a possibility of further cuts in May/ June of this year. The low interest rate environment is expected to continue for the foreseeable future. Here is the ‘BUT’ though, with fixed rates at record lows, the chance to capitalise on this may be limited. There is an expectation as the US economy continues to recover and increases their domestic interest rates, the longer term money markets will become more expensive, and these record low rates will begin to evaporate mid-2015.
So what does this mean for you? There should be decent growth in the sub $800,000 housing market, as home owners are taking advantage of low rates to upgrade the family home. Money is cheap and the trends seem to suggest consumers aren’t afraid to invest that money into bricks and mortar currently. For the $800,000 plus market, growth will be flat for this area in the market, with limited activity and demand. But this gives rise to opportunities in picking these properties up at under market value, as motivated vendors looking to exit the market will need to discount, or accept a below market offer to move their property on.
If you choose to do nothing in terms of building, buying or renovating your current home, but still have a mortgage, be buoyed by the knowledge that with the aggressive pricing from 2nd and 3rd tier lenders, there has never been a better time to take a health check on your current borrowings, to make sure you are making the most of these extraordinary times we are in.
Contact us to find out more or discuss further.
The above is based upon opinion of economists, it should not be considered factual. Please undertake your own due diligence and consult the relevant professionals prior to making a decision on your finances and future plans