So you’re waiting for a bargain? 

Because back in March, we thought the world was going to end. 

While I had a few initial concerns, record levels of government stimulus, liquidity, and federal policy changes have transformed the bleak outlook into a bull market in Western Australia. 

In fact, Westpac Chief Economist Mr. Bill Evans and senior economist Matthew Hassan predict a 15 per cent national price “surge” until mid-2023, or 7.5 per cent per year, led by massive gains of 20 per cent in Brisbane and 18 per cent in Perth. 

“This recovery will be supported by sustained low rates, which are likely to be even lower than current levels; ongoing support from regulators; substantially improved affordability; sustained fiscal support from both federal and state governments; and a strengthening economic recovery (particularly once a vaccine becomes available, which we expect in 2021),” Mr. Evans said.

I have had a few buyers suggest that they think they will be able to swoop up mortgage distressed properties once JobKeeper curtails post-September, however, I feel that this is a flawed plan. 

This is why I believe they are wrong:

1. Perth has had a long protracted downturn over the last 5-7 years with signs of recovery happening pre-COVID. We cannot hold onto our past traumas to predict the future. Furthermore, iron ore is sitting at $124 USD per tonne which means the mining sector is on a solid road to recovery as well.

2. There are around 3,000 fewer homes on the market than this time last year. Simple supply and demand economics 101, and with a predicted 8000 workers expected to migrate to WA from the east coast, this will put upward pressure on pricing and demand. 

3. Record low-interest rates from the banks and further expected rate reductions mean borrowers have a larger capacity. The Morrison government also announced its intentions to relax responsible lending laws to increase capital flows back to the market. Amen. 

4. Rental properties are in high demand as remote working has fueled the need for people to reassess their quality of life. 

5. On a global and national level, Western Australia’s COVID response has been great. While border closures have been controversial, it has assisted Western Australian businesses’ survival. I am also seeing a group of international and interstate expats moving back to Perth. 
   
6. Western Australia is the only state to report a surplus due to mining. Needless to say, Roy Hill and FMG have been one of the largest benefactors of China’s growth post-Covid.