An economic boom is always a good go-ahead for real estate investment. The Western Australian economy is riding a wave of strong economic growth, with the city of Perth being one of the primary beneficiaries.
When the economy improves, it creates more jobs and new business opportunities, resulting in a higher demand for housing. The increased demand acts as a catalyst to push up property prices, making it an attractive investment option for those looking to get in on the action.
How Is Economic Growth Linked to the Real Estate Market?
According to Zaki Ameer of DDP Property buyers agents in Perth: “ There is a strong link between successful economic growth and the real estate market. When the economy is doing well, consumer confidence increases, leading to increased demand for housing.”
As demand for housing increases, the prices of homes and other real estate increase too. It encourages people to invest in real estate, creating a virtuous cycle whereby rising prices increase confidence and further encourage investment.
The trend also encourages new construction, as builders can sell more homes at higher prices. Consequently, the construction industry grows, and more jobs are created, further stimulating economic growth.
Economic growth spurts also encourage migration within the country. When people see better job opportunities or higher wages in another region, they may move there.
These people obviously need a place to live, which means they either buy or rent. With a high migratory concentration, there’s competition for the available housing, which helps to push prices up further.
In addition, economic growth creates a wealth effect, with people feeling more confident in their financial position, leading them to make bigger investments in real estate.
A Growth in the Western Australian Domestic Economy
From 2021 to 2022, the West Australian economy grew by 4.3%, trumping many other states. The economic growth of Western Australia was even higher than many other countries, including Ireland, Turkey, Russia, Sweden, and Luxembourg.
Most of this success can be attributed to the region’s swift action against the pandemic. WA’s quick and smart response to the virus resulted in the area having the lowest death rates and Covid-19 cases worldwide.
As a result, it kept the WA economy going when other areas suffered from the pandemic. The business confidence was still at large in WA, resulting in the economy being able to grow faster than in many other states.
From the pandemic till now, WA’s domestic economy has seen a 5.7% growth, which is not only one of the best in the country but also in the world. The growth is double the growth of the rest of Australia.
Interestingly, WA also had the highest household spending during the pandemic. The region’s exports were recorded at $223 billion in 2020-21 and contributed to over half of the national exports.
Rapid Recovery of the Job Market
Besides having one of the fastest-growing economies in the world, WA’s job market has also seen a rapid recovery. The McGowan government has created 107,000 jobs since entering office, attracting outsiders to move to WA in search of better opportunities.
The increased demand for housing during this period has resulted in a surge in property prices and investments in the western Australian real estate market. The region’s unemployment rate was a mere 4.6% in mid-2021, which is the lowest it has been in the past eight years.
The rate is expected to remain the same this year too.
Establishment of WA Jobs Taskforce
The Western Australia Jobs Taskforce is committed to helping restore and increase employment opportunities in Western Australia. Through the development and implementation of innovative services, programs, and initiatives, the Taskforce is dedicated to creating pathways for job seekers and employers in the region.
The Taskforce will work closely with employers, stakeholders, and government agencies to identify new opportunities, develop sound policies and procedures, and evaluate outcomes. With these government initiatives in action, more and more people are expected to move to Western Australia, especially Perth.
That would ultimately result in a tight rental market, increasing competition for housing, and spiking up rental prices. Investors can benefit from this by purchasing properties for rent, driving up the value of their assets.
Is Perth at the Same Economic Level As the Rest of WA?
Since most of the economic development taking place on the west coast is in Perth, the city is definitely a hotbed for business activity. The city has a long history of being an important economic hub in the region, with an economic output of $109.8 billion.
The main industries contributing to this economic growth are:
- Mining: $46.6 billion
- Insurance and Financial Services: $12.9 billion
- Professional, Technical, and Scientific Services: $10.6 billion
These industries have also created thousands of jobs, making Perth an attractive place of residence. The Public Administration and Safety sector has created 20,492 jobs, while the Professional, Scientific, and Technical Services sector has employed 26,528 people.
The City of Perth’s Economic Development Unit (EDU) plays a crucial role in helping businesses grow and providing the necessary resources to do so. The EDU works with local businesses and industries to provide support, advice, and resources to help them succeed.
Where to Invest in Perth?
If you’re planning to benefit from WA’s economic growth and invest in the capital, look at the following suburbs.
With a median price of $312,000 for houses and $272,500 for apartment units, Armadale is an attractive option for first-time investors. The area has much to offer with its picturesque parks, convenient commercial hubs, and excellent connections to the city.
If you’re on the hunt for low-risk property investment, Orelia is an excellent choice. The median house price in the area is $350,000, which is higher than in some other suburbs.
But you can find apartment units for $179,500. The area has an 8.8% rental yield for apartments and 6.2% for houses.
If a higher return on investment is your preference over budget, Wellard is a good option with a median housing price of $447,000. Most properties only stay on the market for a median period of 35 days before finding a potential buyer.
Whichever suburb you choose, one thing is sure. Perth will offer a positive return on investment for those looking to benefit from the WA economy. With its booming economy and excellent infrastructure, Perth is a great place to invest.