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WA economy and the property market - summary

WA economy and the property market - summary
29Aug2018

If you missed our quarterly networking event, read a summary from each presenter here. Learn about the outlook for the WA economy, how this is affecting the residential property market and the finance options available to reach your property goals.

Yesterday evening, we hosted our third quarterly networking event of the year. Located in Perth’s recently developed Yagan Square area, Market Grounds proved to be a fantastic venue to bring together Perth’s professionals.
 
Our three guest speakers presented to an audience of 80 around the theme of the WA economy and the property market.

Josh Husdon – Non Correlated Capital

First to share their insights with Josh Hudson, Head of Research and Investment Manager at Non Correlated Capital, a Perth-based investment management company. Josh has 15 plus years of experience in business management, fund operations and portfolio management, (primarily based in Singapore) with focus on multi-asset multi-strategy portfolios.
 
“The impact of China growth slowing is particularly impactful for WA given that roughly half of our exports go to China. Growth in the state currently lags other states, as does employment and some other key economic indicators, however there are some positive notes to make regarding the local economy. The Aussie dollar is relatively cheap, which is particularly important for us here in WA because it makes our exports more attractive and we have seen the Aussie dollar come off significantly. Planned infrastructure spending on roads may be as high as 2.8 billlion, which will include, for example, Metronet and the Airport to Forrestfield link. We have also seen positive news with respect to lithium production and exploration on many resources (other than petroleum), such as gold, nickel and cobalt.”
 
*Please see disclaimer below.

 
Misha White – Colliers International

Misha has been the manager for research and urban economics for Colliers International (WA) for three years. Misha has over 20 years of experience in providing research and analysis across a broad spectrum of industries for both the private and public sectors with the last 10 years being focussed on the areas of property and land development.
 
“The key drivers for the property market to watch are economy and employment, population growth, supply, and consumer confidence/market sentiment. In terms of the property market here in WA, we’re definitely seeing signs of life. Unemployment fell to 6% from 6.8% in March 2018, and 11,799 jobs were created for the year to July 2018. Population growth is improving slowly with increasing overseas migrants. Interstate migration is still negative but moderating. These factors have a direct impact on the residential market. Vacancy rate is a key indicator of the residential market, and it’s falling. Vacancy rate is currently down to 4.5% from a high of 7.3% in June 2017. In summary, the outlook is up in terms of economic indicators. Spring is the peak selling season, so we should see an uptick in the market.”
 

Andrew Stephenson – Bankwest

Andrew Stephenson, Regional Manager of Bankwest's Perth Commercial Banking segment then gave. Andrew has 29 years of experience in banking of which most have been supporting Australian businesses from SME to larger mid-tier firms. Andrew spoke about industry trends, challenges and opportunities within property finance. Within residential lending Andrew outlined of some of the general industry changes that have been influenced by APRA. 
 
“These changes included some restrictions on interest only, high loan to income ratio as well as high loan to valuation (LVR) ratio. One of the key areas of opportunities is currently owner-occupied lending with most lenders competing within this sector. Andrew advised those who have not reviewed their own personal circumstances of late, that now is the right time to do so. In terms of commercial property lending, the key hurdle for developers is to achieve the required level of pre-sales. Given the subdued market, careful consideration needs to be given to the project’s marketing strategy. Commercial property investors need to look for properties with strong tenancy profile and good WALEs.  A key metric for lending against commercial investment property is for a strong interest cover ratio with most lenders now looking for this to be at least two times.”
 
Thank you to everyone who attended. Ticket sales were donated to Oxfam as we have a team participating in the Oxfam 100km Trailwalker event later this year. Couldn’t make the event? Click here to make a donation.
 
*Disclaimer
The information herein is presented in summary form. And is therefore, subject to qualification and further explanation. The information in this document is not intended to be relied upon as advice to investors or potential investors and has been prepared without taking into account personal investment objectives, financial circumstances or particular needs. This information is not personal or general financial advice. It was prepared by non correlated capital ("ncc") for individuals identified as wholesale investors for information purposes only, under section 761g(5), (6), (6a) or (7) or section 761ga of the corporations act 2001 (cth) (corporations act) Recipients of this document are advised to consult their own professional advisers about legal, tax, financial or other matters relevant to the suitability of this investment service.
Whilst this report is based on information from sources which ncc considers reliable, its accuracy and completeness cannot be guaranteed. Data is not necessarily audited or independently verified. Any opinions reflect ncc judgment at this date and are subject to change. Ncc has no obligation to provide revised assessments in the event of changed circumstances. To the extent permitted by law, ncc, its directors and employees do not accept any liability for the results of any actions taken or not taken on the basis of information in this report, or for any negligent misstatements, errors or omissions.

 
 
 
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