RAY WHITE COMMERCIAL (WA)

2022 In Review And 2023 Looking Forward

2022 Looking Back

WA’s business and property sector started 2022 feeling optimistically following strong results in 2021. WA had managed the pandemic incredibly well, our local economy had not skipped a beat, we were expectant of open boarders, interest rates were low and property prices had been restrained although on an upward trajectory since mid 2020.

By the end of the 1st quarter of 2022 this optimism was quickly replaced with uncertainty. Our premier backflipped on opening the boarders, our reserve bank back-flipped on their promise keep interest rates low, inflation spiralled, supply chains were interrupted, building costs spiralled, developers struggled with project cost certainty and viability, businesses grappled with staff shortages and with all this, sadly a number businesses did not survive (most notably within the building and construction industry) causing flow on impacts.

And then of there is the terrifying geopolitical landscape.

But, in the face of these anxiety inducing matters, WA’s property market has fared well. WA’s median house price increased by 3.4% over the year, including a 0.9% increase as late as December, while the rest of the country experienced the sharpest fall in housing prices in 40 years. Our office occupancy rate reached 80% (highest in the nation), compared to Sydney, Melbourne & Brisbane only having occupancy rates between 52% and 67%. We are one of the tightest industrial markets in the country with a mind-blowing low vacancy rate of 0.2%.

Global uncertainty still prevails and some would argue that the worst is still to come, which is possible. The full effect of the increased interest rates is yet to be felt, with an increase or two still on the way. Consumer spending is only just starting to slow. The US & UK are teetering on the brink of recession and the war in Ukraine together with relationships with China are taking its toll

However, WA has a strong history of resilience in the face of these types of national & global head winds and the most recent data suggests this looks likely to continue. So then, should there really be concern for WA’s property market?

2023 Looking Forward

There is strong reason for the property industry to be optimistic.

There are compelling reasons for the Perth and wider Western Australian property industry to remain optimistic for the year ahead.

For the first time WA’s median weekly income is higher that NSW or Victoria while our overall cost of living is 21% cheaper that Sydney and 6% cheaper than Melbourne. This has resulted in WA having the second highest level of disposable income, second only to ACT. Yet, our median house price remain the second lowest in the country, nearly half of Sydney’s median house price and 25% lower than Melbourne’s.