South West WA April 2018

The month in review: South West WA

By Herron Todd White
April 2018

The South West is one of the fastest growing regions in Western Australia. As the rest of the state is slowing in population growth, the South West is continuing to grow and expand.

So what are the drivers of the market in the South West? The region is a very desirable place to live as it boasts amazing beaches, surf, a good climate, a relaxed lifestyle and world-renowned wineries. Because of these characteristics, people want to live in the region. The demographics of the people moving into the locality range from young adults who love the beaches and work in hospitality, young families who want their children to experience a relaxed and outdoor upbringing and of course the baby boomers who have reached or are getting close to retirement and want to live the golden years away from the hustle and bustle of Perth.

The increasing population has helped the property market. The Perth market has been weak for an extended period of time and values have been declining because of a slow down in the state’s resource sector, continued weakness in the Perth economy and general economic uncertainty. The South West has traditionally followed the highs and the lows of the metro market, however, for the first 24 months the region bucked this trend and was more resilient and generally stable. It has only been in the past twelve months that the South West market has started to weaken but nowhere near the levels of the Perth market. The strong population growth has been a reason for this resilience.

The South West could potentially benefit from the Perth market improving. There are signs that the Perth market has bottomed and has started to stabilise. Historically a strong Perth market flows into the South West as many mum and dad buyers and small-time investors look at investing in a holiday home in the South West.

Another driver of the South West market is the tourism industry. With the Australian dollar steady and lower than in previous years, we have seen significant numbers of interstate and international tourists visiting the region. These numbers have increased considerably in recent times which has also helped underpin the overall local economy.

On a local level, the region would benefit from the expansion of the Busselton/Margaret River airport. The airport is looking at attracting more interstate flights and in the medium term potentially some international flights. This could fuel the tourism industry and have a positive effect on job creation.

On a national level, the continuation of low-interest rates is paramount. If the interest rates were raised it would take some prospective purchasers out of the marketplace and also restrict homeowners trading up. If this occurred, we would expect the South West property market to weaken.

Therefore drivers in the South West property market hinge on an increasing population, a strong tourism industry, performance of the Perth property market, local development such as the Busselton/Margaret River airport and continuation of low-interest rates.

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