Unemployment is generally accepted as a key benchmark figure to measure the overall health of an economy – but is that the case in this capital city?
Blogger: Daniel McQuillan, executive director, Investwise
Predictions of a boom/bust in the Western Australian economy, which was supposed to follow the slowdown in the resources sector, are not being mirrored by employment data.
The latest ABS labour force figures for March 2016 shows that WA’s unemployment rate actually fell to 5.5 per cent (seasonally adjusted) and is now below the national unemployment rate of 5.7 per cent.
WA’s unemployment rate is now lower than Victoria’s (5.7 per cent), Queensland’s (6.1 per cent), South Australia’s (7.2 per cent) and Tasmania’s (6.8 per cent), and is only marginally higher than NSW’s (5.3 per cent), according to the ABS.
Unemployment is generally accepted as a key benchmark figure to measure the overall health of an economy. With an unemployment rate lower than the national average, WA is far from being a basket-case economy.
The state’s economy remains resilient due to high levels of infrastructure investment, strong activity in the residential construction and agricultural sectors, as well as natural population growth.
The relative strength of the WA economy helps to explain why property prices in Perth have not imploded as predicted by some property experts a year ago.
Instead, the overall Perth property market has experienced a ‘soft landing’, with prices falling moderately.
In some respects, this market correction was necessary and the end result is that Perth properties are now very affordable, especially compared with Sydney and Melbourne.
Buying property in Perth, however, should be viewed as a long-term investment strategy.
The current unemployment figures for WA show that even with a downturn in the resources sector, the overall economy is still strong enough to put a floor under Perth’s house values.
Looking to the future, the prospects of the Perth property market look very bright, due to rising demand for housing as the population expands.
Overall, Perth’s population is expected to rise by 70 per cent to 3.5 million people within 34 years. A well-located property in Perth at the current affordable prices can be expected to achieve strong capital growth over the coming decades.
Now is a great time to buy investment properties in key lifestyle locations in Perth, as they generally outperform the market over the long term.
Properties are now very affordable in these locations and with less competition among buyers, astute investors can negotiate a great deal.
The reality is that buyers can now purchase a new apartment close to the city centre in Perth, near a lifestyle attraction such as the Swan River, for a fraction of the cost of buying a similarly located property in Sydney.
Over the last few months, Investwise has assisted a growing number of Sydney investors to purchase such properties in Perth, because we understand that these properties represent excellent investment opportunities not to be missed.