Why Invest in Western Australia?
Western Australia economy may have slowed down due to the transition in mining from construction to production phase, but that doesn’t mean the State is all doom and gloom for investors. Perth is definitely a viable option for any investor wanting to diversify their portfolio for long term growth.
WA has a population of over two million people, and whist there is a slowing down, Perth still remains to be one of the fastest-growing capital cities in Australia. Phil Browning, from the ABS, said this is significant, given that just 30 years ago Perth’s population lagged behind Adelaide. Since then Perth’s population has doubled and is second only to Victoria in terms of annual growth.
Western Australia’s economy is still going strong. CommSec’s October 2015 State of the States report shows that WA is ranked second of all the states in the areas of economic growth, retail spending and construction work done.
Deloitte Access Economics agrees that WA’s economy has weakened, but it sees three things that are working for the West:
- Most notably, hundreds of billions of dollars in investment might be moving out of the construction phase, but the production phase is underwriting good growth in export volumes.
- At the same time, low interest rates have been a boon for the state’s retailers and housing construction markets.
- And the Australian dollar’s fall has reduced what would otherwise have been even greater pressures on miners and farmers.
“That’s why the outlook are still pretty positive. Growth slows sharply until 2016, but this still mostly looks like a passing storm rather than troubles that will stick around for too long,” Deloitte Access Economics noted in its recent report.
The $112bn worth of projects underway in WA is more than double the total value of engineering work in NSW, Victoria, SA and Tasmania combined.
The housing bubble has definitely burst in Western Australia, with the mining towns receiving the greatest hit in the falling house prices. As Perth and the South West prices stabilise, there will be fluctuations within the Western Australian property cycle, allowing for investors to take advantage of a buyers’ market for long term growth.
Western Australia still have a strong housing building industry, with CommsSec’s October 2015 Report states; that dwelling starts have increased by 19.4% above its decade average. The housing construction boom during 2005-2008 set Perth up to have an ongoing strong building industry. A savvy investor can take advantage of this industry by being able to build a quality product in a quality location within a reasonable time frame.