Perth is becoming a vibrant and attractive city to rival any modern city in the world. A bold statement, perhaps, while the media focuses on the end of the mining boom and the doldrums of the property market, but people continue to be drawn to this dynamic metropolis. What’s drawing people here, and why? And what does it mean for Perth’s property market in the next 10 years?
The media focus recently has been all about the end of the mining boom and the falling iron ore price. What this hasn’t reflected is the shift that has taken place from investment driven growth to export-led growth, a change that has always been forecast to lead to a drop in employment, but is also a system under which the big mining companies that continue to operate will provide steady employment openings in the long-term.
So it’s not all doom and gloom on the mining front. The production phase in Western Australia’s mining industry should stretch for the next 20+ years. And as the spotlight of super-focused growth shifts, new doors have opened for investors and the State Government to invest in other neglected industries in Perth, such as tourism.
Tourism has long played second fiddle to mining as a source of revenue in Western Australia. Hotel beds have been kept for FIFO workers, and investors have spent their money on the resources sector rather than recreation. To some, Perth has not had a reputation as a great place to visit. But this is changing.
More than $3billion is being spent on providing 4,000 new hotel rooms in Perth, including the Ritz-Carlton at Elizabeth Quay and a 5-star Westin Hotel at the old Perth Fire Station site. The big hoteliers behind this level of investment have done their homework, and will only invest in regions where they expect serious demand. They want those rooms filled, and they are looking in the right place. Tourism WA reports visitor numbers to Western Australia have been increasing without any signs of slowing, and that most of these visitors spend their time in Perth.
Tourists aren’t the only people coming to Perth. While the rate of migration to Western Australia has slowed, the state still shows the fastest rate of population growth in Australia. Perth already boasts the drawcard of being a relaxed and sunny place to live. And with a large number of infrastructure projects due for completion over the next five years, creating jobs and huge levels of both private and Government funded investment, Perth is being transformed.
|Fiona Stanley Hospital, the biggest Hospital in the Southern Hemisphere, now operational|
|Perth Children’s Hospital, due for completion in 2015 and expected to create 8,000 new jobs|
|Elizabeth Quay, the new waterfront project which is expected to attract more than $2billion in private investment and more than 4 million visitors per year, as well as being the workplace for more than 10,000 people|
|Perth City Link, reconnecting Perth CBD and Northbridge, providing 3,100 new jobs and incorporating two major hotels|
|Perth Stadium, creating 5,700 new jobs|
|The new Museum of Western Australia, with $423million in investment making the redevelopment one of the most significant in the world|
|Perth Airport Redevelopment, with $750million being spent in expectation of passenger numbers doubling|
|The Forrestfield-Airport Link, opening up new access between the city and the airport|
|MAX Light Rail, with the first services expected to run in 2022; and|
|Gateway WA, creating 165km of new roads and 7,000 new jobs|
This massive infrastructure spend is drawing people to Perth and growing the economy in new ways no longer tied to mining. Instead of a brain drain, Perth is undergoing a brain gain.
So where does that leave the property market in the next 10 years?Historically, there has never been a 10 year period in Perth without house price growth. For example, the median house price in 2005 was $300,000 compared to 2015’s median price of $549,000, and the GFC happened in that time period! Even prior to 2005, Perth’s house prices have always shown long term growth.
As for the future, it seems evident that investment, infrastructure and employment will continue to grow. People are continuing to come to Perth, for the jobs and the lifestyle, and those people need somewhere to live. Perth’s housing shortage is set to continue, as development can’t keep up with the increases in demand. The State Governments’ Directions 2031 says infill needs to increase as we strain to fit more homes within Perth’s existing footprint, but this is not happening fast enough. The shortage will continue to drive long-term capital growth.
As WA Treasurer Mike Nahan said, Western Australia has “one of the brightest futures in the developed world”. Perth is being upgraded, the quality of life lifted to become a vibrant, dynamic place to rival any other modern city in the world, and investors can have confidence in the Perth property market.There are only four steps you need to take to make the most of Perth’s property market. Plan your strategy, seek expert help and focus on the growth drivers and what is important to tenants to find the right investment property. And lastly, and most importantly, start now.
If you have an interest in building your wealth through property, then call us on (08) 9381-7450, or request a FREE Starter Pack.