Stronger wage growth across the state coupled with lower interest rates has given Western Australia the economic capacity to achieve substantial rises in property values after years of contraction in the local property market.
This according to Nu Wealth Managing Director Daniel McQuillan, who said Perth’s property market would continue to boom for as long as wages across the state continued to rise.
“There is already a shortage of houses listed for sale in Perth and this is set to increase as more people move in Western Australia because of the booming state economy,” he said.
“The latest CommSec State of the States report for April 2021 showed Western Australia has jumped over all the other states and is only behind the Australian Capital Territory in terms of relative economic growth.”
Despite recent rises in property values, WA still remained the most affordable capital city in Australia, according to the report.
“You can still basically buy two houses in Perth for the price of one in Sydney or Melbourne,” Mr McQuillan said.
“This is despite the fact Australian Bureau of Statistics figures show average weekly wages in WA are higher than either New South Wales or Victoria.
“For example, average weekly ordinary full-time adult earnings for Western Australia are $1840.50, compared to $1718.50 in Victoria and $1751.90 in New South Wales.
“As a result of this strong economic activity in Western Australia, Nu Wealth expects more property investor activity in Perth over the coming year from property buyers over east who realise the economic fundamentals in Perth allow for strong price growth compared to their home cities.”
Mr McQuillan said Western Australia’s booming mining sector was underpinning strong wage growth in the state.
“The mining sector enjoys the highest average weekly adult earnings in Australia at $2633.20, compared to the overall average weekly wage in Australia at $1711.60,” he said.
“WA’s growing economy has resulted in jobs surging by a record 32,610 in March 2021.
“The unemployment rate fell 4.8 per cent in March – the lowest of all the states and the lowest unemployment rate in WA since December 2013.”
Rising wages will make Perth property even more affordable and encourage more people into the real estate market, according to Mr McQuillan.
“This is already occurring, with buyer enquiry levels received by Nu Wealth already up by over 100 per cent compared to this time last year,” he said.
“It is predicted that property values in Melbourne and Sydney could fall next year due to constraints on wages growth.
“However, in Perth the opposite will occur and that will make it one of the top performing real estate markets in the nation for several years.”