Could Perth's economy head in a different direction to other states

Whilst we acknowledge the ongoing impacts COVID-19 is having on the livelihoods among West Australian families and the wider global economy, we thought we would take a moment to reflect on WA's economic outlook, and its potentially positive recovery trajectory following easement of restrictions across the world.

It’s too early to predict the outcomes that COVID-19 impacts will have on our state’s property sector as a whole. However, having ridden a number of economic waves throughout Realmark’s 30 years of business, one thing we do know is that each market will respond differently, and some sectors of the Commercial property market will fare differently to others.

Let’s reflect back to 2014, following a decade of strong export demand from China, Western Australia adjusted to the GFC with the mining sector playing a significant part in getting West Australian’s through the worst of this global financial crisis.

So, will mining help buffer WA through second financial crisis in a decade? The economy certainly expects to benefit from the performance of two of our state’s key exports.

In 2019, iron ore significantly exceeded conservative assumptions built into the WA budget with the price per tonne soaring. Following a decline in the resource’s price amid the COVID-19 outbreak, we’ve observed modest improvements throughout April*, and it’s expected stimulus measures are likely to be put in place by the Chinese Government to further support the sector.*

In conjunction with our state’s iron ore exportation, WA’s predicted ‘mini gold rush’ also gave renewed optimism for our economy prior to COVID-19. With a strong drive for ultra-safe investments, demand has been fuelled by central banks purchasing gold as a store of value, pushing gold prices up to record levels. Next year, it’s expected Australia will be the biggest gold producer in the world, with 70 per cent of the nation’s gold production taking place here in WA*.

Whilst some project investment has been delayed such as Woodside’s Scarborough and Browse*, there has been recent positive announcements by BHP and Fortescue. The mining sector may still have positive impacts on our state’s population numbers and employment rates as well as our State Budget.

We’re not a state who relies as heavily on tourism and entertainment like Tasmania and Queensland for example. Although some sectors here in WA such as retail and office have taken an immediate hit due to COVID-19 restrictions, it's an encouraging thought that our economy is on track for a quicker recovery than most and that the more robust sectors such as mining will help fuel businesses who have experienced loss at a quicker rate of recovery.

Although it’s impossible to predict the long-term impacts the virus will have on the real estate market, we’re facing a very different situation to other states and territories and must stay optimistic in knowing these potential silver linings that will support our local economy through the next 24 months. Prior to the COVID-19, the economic fundamentals and property market trends were all heading in the right direction, and this will continue to underpin continued activity in WA. In this regard, the trend is certainly WA's friends.

Lean on our experience over the coming months to maximise your property's potential in the market. Simply contact us and we will develop a plan custom to your unique property needs.

*Soaring iron ore gold prices boost WA ecenomy
*Iron ore exporters banking on China stimulus
*Business Insider iron ore price
*Response to market conditions

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