Market update – June 2016

In our update last quarter, we commented on what a volatile finish to 2015 and start to 2016 it had been, and the second quarter of 2016 has proven no less interesting – with equity and commodity markets, consumer confidence, and employment data all making significant movements!

Equity and commodity markets have recovered somewhat from their mid February lows, although the recovery is fragile and subject to large swings in sentiment weekly, if not daily.

Against this backdrop we have a very “mixed bag” of news to deal with: a double-dissolution Federal Election having now been called for early July, an official interest rate cut, and a very “plain” Federal budget, albeit carrying the good news that the full negative gearing and capital gains tax concessions for property investors are to be retained.

Here in WA, although consumer confidence obviously remains cautious, there has been some very positive news in the employment data, with the unemployment rate now recovering strongly from its post mining construction boom peak, with more sustainable industries starting to flourish, such as education, healthcare, tourism and personal services.

It’s for some of these reasons that the Australian Bureau of Statistics predicts that over the next 20 years Perth will grow to between 3.2 and 4.0 million people (from just over 2 million people currently) and will overtake Brisbane as Australia’s third-largest city behind Sydney and Melbourne!

I personally believe that property – and particularly off-the-plan apartments – is a good investment opportunity right now for investors taking a medium to long term view – the chance to buy at (or very near to) the bottom of the Perth market cycle, attractive interest rates available for investors who have a good deposit (20% to 30%), and rental yields which at 4.0% to 4.5% are very attractive in a low yield, low interest rate environment!

As mentioned in my last quarter’s commentary, we’re continuing to see signs of a stabilising property market here in Perth, with several key indicators having bottomed and now starting to turn positive.

This view was reinforced at our very popular seminar with BT Chief Economist Dr. Chris Caton – 2015’s most accurate economist – a couple of weeks ago.  The evening gave many interesting insights into the effect of the Global and Australian economies on the Perth property market.

Click here to register to be the first to know when we announce the next seminar date, as these events are proving very popular!

Darren Cooper
Blackburne Chief Executive Officer