The WA investor’s guide to the latest Census data
What does the latest census tell us about growth in WA and how the state has performed compared to the rest of the country? Are the foundations set for future price growth?
The first round of data has recently been released from the 2011 census and we now better understand who we are, how we have changed since the last census in 2006 and how we compare to the rest of the country. For property investors focused on the WA market, the figures make very interesting reading.
Most property investors understand the importance of population growth for driving the demand for housing, and, in this area, WA is in a league of its own. The resident population of WA is now 2,239,169 – up from 1,959,086 in 2006. This is an increase of 14.3 per cent, the same growth recorded for the Perth metropolitan area.
The rate of WA’s population growth is particularly large when you consider that it seems to be accelerating. After growth of 2.1 per cent in 2010, the 2011 calendar year saw the population grow by a whopping 2.9 per cent. This is more than twice the national average of 1.4 per cent and miles ahead of Queensland (1.5 per cent), another resource-rich state. What’s incredible is that despite Queensland having a population almost twice that of WA, our population increased by more people – the first time in history this has happened.
In fact, of the 20 fastest growing local government areas (with more than 1,000 people) in Australia, 17 of them are in WA including 9 out of the top 10!
The major areas of population growth are concentrated on the fringes of the city and rural areas of Western Australia, where there is plenty of land to develop. According to the latest census data, the local government area with the biggest growth in WA is the City of Wanneroo, which has seen an increase of 41,136 people or 37.1 per cent.
Property investors should be aware that while population growth is important for capital growth, population hotspots don’t necessarily make good investment candidates. The reason is that these areas tend to have a ready supply of available land, which has the effect of containing prices. We almost always invest in established areas of Perth for our clients that have a very limited potential supply of new properties.
Along with our incredible population growth, rents have also soared in WA. Over the past five years, the median weekly rent has increased to $300 from $170 in 2006, a jump of 76.5 per cent. Compare this to the national growth of 49.2 per cent and it gives you some idea of the pressures on the WA market.
Some might assume that the colossal rental growth in WA was due to the extraordinary rents for property in the north-west of our state. However, it’s easy to dismiss this idea when you look at what has happened in Perth. The median weekly rent in Perth has increased over the past five years to $320 from $180 in 2006, which is an increase of 77.8 per cent.
Incomes, which also play a role in the demand for property, have grown as well since the last census. Median total family income has increased from $1,290 per week to $1,781, equal to 38 per cent growth.
The figures from the latest census definitely make encouraging reading for any investors focused on the WA and particularly the Perth market. While many were expecting WA to lead the nation in a number of key indicators, few anticipated just how much the disparity would be with the rest of the country.
I believe the future definitely looks bright for the real estate market. With our accelerating population growth, improving affordability, an undersupply of new housing and an extremely tight rental market, it won’t be long before we lead the nation in another area – growth in property prices.