Mining investment set to underpin WA property bounce in 2018

Media Release 

Perth, WA (3 January 2018) Leading property group Raine & Horne is predicting Western Australia’s renewed investment in resources infrastructure will underpin the state’s real estate markets in 2018.

“As the resources sector reasserts itself, those specialists who have been underemployed for the last few years, will begin to return to full-time employment,” said Paul Curran, Principal of Raine & Horne Rockingham.

“These technical specialists are employed in the construction phases of the projects and include boilermakers, welders and project managers. Many of them have been underemployed in recent times and have been living by means of casual work and savings previously squirreled away.

“With the demise of the 457 visas, those WA locals with skills perfectly suited to the resources sector will again be able to command top dollars, and this cash flow will find its way into the Perth property market.”

The value of the WA’s mineral and petroleum industry is about $105 billion, with royalties collected on behalf of the state in 2016/17 totalling more than $5 billion[i].

WA’s two essential commodities enjoyed a positive year with iron ore sales increasing by almost 31% compared to the previous financial year to nearly $64 billion, while gold sales rose to $10.8 billion, noted the latest annual report from Western Australia’s Department of Mines and Petroleum. Moreover, there is an estimated $101 billion worth of resource projects under construction or in committed development.

“Big-ticket projects such as Chevron’s Gorgon Gas Project are leading the resources revival, but there are a significant number of mining projects underway, which have now completed the tender process,” said Mr Curran.

“We expect to see employment at the new mines collect speed around the middle of 2018 as well as at the old mines that are reopening.

“Many of the mining specialists dabbled in the share market previously and were subsequently burnt during the resources downturn. Now they have a stronger preference for investing in the safety of bricks and mortar.”

Affordable real estate investments in the City of Rockingham such as Cooloongup and Rockingham will benefit from the resources sector bounce, according to Mr Curran. A three-bedroom brick house in Rockingham is selling for $230,000 and can attract an average weekly rent of $300.

Mr Curran said, “Those investors who buy into Rockingham can secure a healthy yield of 6.7%, which is competitive against the income returns offered by some listed financial services firms. 

“The nappy belt suburb of Baldivis will be another hotspot in 2018. Baldivis ticks plenty of boxes as it close to the Warnbro train station via a bus link, is located on the Kwinana Freeway, and offers plenty of new housing stock, which is great for landlords seeking an investment with decent depreciation benefits.”

Craig Abbott, General Manager, Raine & Horne Group said in addition to the resources sector, there are plans in place for jobs and infrastructure growth in Western Australia, which will drive property values in 2018.

The Western Australian economy is predicted to grow by 3% in the 2017/18 tax year[ii]. The WA and Federal Governments have agreed to invest $2.3 billion in road and rail infrastructure[iii]. This expenditure will boost WA's economy, with 6,000 jobs expected to be created because of the 17 new projects involved in the agreement.

“New infrastructure projects boost local economies by creating new jobs and attracting more people to a suburb or town, which lifts property sales and rental markets,” said Mr Abbott.

“Improved infrastructure provides indirect benefits such as consumer expenditure, which finds its way to local businesses. Business confidence is another driver of real estate demand, and it’s for this reason we are optimistic about the outlook for real estate markets across WA.”

For all sales and property management enquiries in the City of Rockingham and surrounding areas contact Raine & Horne Rockingham on 02 4390 9800.

–ENDS–

For further media information contact:

Paul Curran, Principal of Raine & Horne Rockingham Beach on 0418 946 993

Craig Abbott, General Manager WA, Raine & Horne Group on 0498 007 441

[i] http://www.dmp.wa.gov.au/AnnualReport2017/files/GWA-DMP-Annual-Report-2016-17-no-financials.pdf

[ii] https://www.ourstatebudget.wa.gov.au/