Western Australia’s economy has lagged behind the country in recent years as the hangover of the mining investment boom lingers, but data from two regions is cautiously pointing to a potential resources-led recovery.

While house prices in Perth continue to slowly slip lower, the Pilbara Development Commission recently reported a 12.2 per cent increase in median house prices in the mining region over the past year to $289,500. That figure represents the highest recorded in a six-month period since 2016. Rents are also on the rise in Karratha, Port Hedland and Newman as rental stock dips below the peak of the previous boom.

Pilbara Development Commission chief executive Terry Hill said interim data for the second half of the year was showing the upward trend witnessed in the first half was continuing. He attributed the rise to servicing and maintenance staff and contractors being needed as projects entered steady-state production after the construction boom of 2008-2014. He also cited a renewed focus on local procurement from resources companies and the growing proportion of operational roles that were more likely to be residential positions than fly-in, fly-out.

Importantly, Mr Hill points out employers are expanding their local presence in anticipation of more than $110 billion worth of projects either committed or under construction in the Pilbara over the next 10 years. The new projects are expected to create as many as 25,000 jobs during construction and 8500 new operational roles.

As well as a quartet of multibillion-dollar iron ore projects by BHP, Rio Tinto and Fortescue Metals Group already in progress, hopes for final decisions on the massive Scarborough and Browse LNG projects are boosting optimism and activity. The two offshore gas projects collectively represent a capital investment of about $50 billion.

WA Chamber of Minerals and Energy chief executive Paul Everingham said the Goldfields was also booming with a strong performance by its two key commodities, gold and nickel, driving new projects. He said many employers, including rail operator Aurizon and infrastructure development company Tellus, were citing worker shortages in the region. Mr Everingham predicted a looming final investment decision on the $15 billion Scarborough LNG project could be an ignition point for the WA economy.

Over the course of 2019, the established Perth residential market has seen a continued reduction in supply with the number of properties on the market at 14,330, down 18.5% from 17,578 at the same time in 2018. This is a very positive trend considering this is the most popular time of year to sell a property. Weekly sales of 648 properties was up over 8% on 598 from the same time in 2018.

Lot sales data in the UDIA graph below shows a continuation of the ongoing increase in sales volumes since August this year.

WA experienced the best monthly growth in household lending for owner-occupiers in the past decade among a lift across the country in new commitments in the past few months. September ABS figures showed a 6.1% seasonally adjusted increase over August figures. Treasurer Ben Wyatt said the numbers were a positive sign for the WA economy.

Over the course of 2019, the rental vacancy rate has fallen to 2.5% from around 3.3% in November 2018. The median rent has remained steady at $350 - $360/week. There are currently 6,131 properties available for rent, compared to 7,367 vacant properties at the same time in 2018. This is a fall of over 17% which is significant in terms of available accommodation.

 (Source: UDIA/REIWA)

Western Australia’s seasonally adjusted unemployment rate was steady at 5.7% in October. Once again, the only states with lower unemployment in October were Victoria and New South Wales, both at 4.8%. Western Australia’s annual average employment growth was 0.9% (12,204) for the 12 months to September 2019, compared to the same time in 2018.

(Source: ABS)

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