Commodities Bust Crushes Incomes, House Prices, & Rents in Western Australia, by Wolf Richter.
Perth, the capital of the state of Western Australia (WA), “hitched itself to the largest mining investment boom since the mid-19th century gold rushes, and in the excitement, forgot or refused to diversify its economy.
Believing the mining boom could end as suddenly as it did was considered outlandish. It delivered immense wealth and income to the government, business, and household sectors,” so a new report published by LF Economics’ co-founders Lindsay David and Philip Soos.
But now the reverse is taking place, and more recent property investors “are losing wealth and income by the day.”
Real and quality-adjusted housing prices peaked in 2007Q1, having risen rapidly from 2001. …
The mining construction boom proved a magnet to many, with WA experiencing the greatest population growth of all states and territories over the boom. Just as citizens and immigrants flooded into WA, the reverse is now taking place. Immigration has sharply declined and there is now a net interstate outflow.
2016Q2 recorded the lowest annual change in population, at 1.05%, the lowest growth on record in decades. Given the economic conditions, WA will likely experience negative net population growth in a couple of years’ time. The effect on the housing market is entirely predictable. …
The downturn in rents will predictably devastate the balance sheets of property investors, many lured into the market by previous rises and thinking the mining investment boom would continue for a lot longer than it actually did. It is difficult to blame the average investor for their poor judgment when this view was broadcast without pause from the highest levels of government and industry.
Removal companies in Perth for moving to eastern Australia are booked solid. The roads in Perth are gradually declogging as the population pressure eases and road construction catches up.