Monday, September 17th, 2012 - Otan
The ongoing demand for natural resources in Western Australia will continue to provide the basis for Western Australia’s economy to grow well above the national average in the short to medium term, in turn boosting the property market according to research recently commissioned by Australian Property Funds Management group, Otan.

The research by MacroPlan Dimasi found that the money being spent in the north of Western Australia is directly translating into increased demand for residential products across WA.

Otan Managing Director Mr Mark Butler said that after 24 months of subdued activity in the residential market, a number of property indicators were now starting to show improvement and forecasting growth.

“The Western Australian economy has remained resilient throughout the after effects of the GFC and will continue to experience growth on the back of major mining investment – particularly in the LNG sector,” Mr Butler said.

“The increase in employment opportunities and population growth in the West due the current levels of investment and activity in the north-west is now putting pressure on various sectors of the WA property market.”

The report found that median house prices have now stabilised and have started to show some growth whilst plummeting residential vacancy rates have continued to put upward pressure on rental rates.

The supply of vacant, serviced residential lots in Perth has also tightened, in response to falling interest rates and a return of demand, largely due to the strong return of First Home Buyers and investors to the market.

“Following a peak of some 31,200 vacant lots in 2007-08, the supply has stabilised to around 25,800 vacant lots, which is below the average for the past decade,” Mr Butler said.

There are currently about 4,800 vacant residential lots on the market in Perth, consisting of 2,600 lots being listed through real estate agents and 2,200 lots sold through the major land developers.

The total stock of properties listed for sale in Perth, including all houses, units and lots, has also recently fallen below equilibrium level, indicating a return of a sellers market, according the report.

“Growth in the residential sector is expected to gain momentum as the projected growth in wages together with the recent moderation in established house prices is making housing products more affordable,” Mr Butler said.

The inner Perth and fringe apartment market also continues to perform strongly as increased employment opportunities also fuel the demand for accommodation product. The lack of supply during the GFC has seen the inner city vacancy rate fall to 0.6%, pushing up capital values and rental returns.

Future supply of apartment product is also relatively constrained. While 4,500 units are proposed over the next 4 years, only 1,100 are currently under construction.

“Because of these current market conditions, we project that the inner Perth and CBD fringe apartments can show an average annual capital growth rate of 5% per annum from 2012 to 2015 and a rental return in the order of 7% per annum over the same time frame,” Mr Butler said.

The report also examined the commercial sector in WA, showing a tightening of office market conditions and subsequent rental rises.

“Demand for office space has been extremely strong over the last 2 years with record net absorption in the CBD and above long term averages for West Perth, leading to a significant fall in the vacancy rate in these areas,” Mr Butler said.

“Rental levels have therefore increased and rental incentives decreased. It is likely that this will force mid-tier firms to look for cheaper alternative accommodation outside the CBD in the coming year.”

Overall, the report found that whilst performance across the various property segments differed, the general trend is positive for all segments.

“It is the economic fundamentals of Western Australia that remain sound and the ongoing investment in the resources sector – in particular the LNG market and its customers in emerging markets in South-East Asia – that will provide the impetus for a strong recovery in the Perth property market,” Mr Butler said.

Contact Profile


Otan Property Funds Management Ltd was established to make the most of a unique opportunity in the West Australian property industry. Otan has a retail AFSL licence and provides investors with the ability to participate in property investment opportunities mainly in Perth and Western Australia.

These are residential developments of apartments, infill site and broad acre subdivisions; and commercial opportunities of a passive nature which are based upon opportunistic acquisitions
Lorelei Campbell, Soapbox PR
P: 08 9279 5226


Mining Boom, Property Market, WA, Property Investment



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