Monthly Hours Worked
Sales over the past two weeks decreased by 10% from 803 to 716 then increased by 19% to 834. Listings increased by 1% from 10,735 to 10,798 and then remained stable recording 10,807. House, unit and vacant land listings all are remaining relatively very stable over the recent period. The graph below shows that the downward trend in listings for this year has come to at least a temporary halt.
As we watch listings and sales continue to stabilise it will be interesting to see if dwelling prices from next weeks August Corelogic Home Value Index vary much compared to July’s figure.
However rental listings have continued to decline down to 3,314, which is now over 50% less than this time last year. This is in very stark contrast to other capital cities with Perth’s vacancy rate down to an incredible 12 year low of 1.6%. Furthermore vacancy rates have now remained below 3% for 21 consecutive months. Back in 2016 the vacancy rate was 7.5%. REIWA believes a vacancy rate of 3% strikes a balance between supply and demand so at 1.6% we anticipate rents to increase over the next 6-12 months.
Domain released an article just recently looking at the continuing dwelling and rental price increases in the Pilbara. The iron ore price is still around US$100/ton, in large part due to the lack of supply from Brazil because of their massive health issues, indicating why 4 of the top 5 performing regional suburbs in WA are in Karratha. The peak median house price in Karratha was approximately $990,000 in 2012 dropping 65% to $346,500 in 2016-17. According to Domain Karratha has seen a 22.9% increase in median house prices over the year and Port Hedland has increased by 12.9%. Furthermore rents have increased by 20-30% in Dampier and Karratha.
Part of the reason is the expansion of mining employment but there is also a trend away from fly-in fly-out with families moving permanently to the Pilbara. The improvement in local facilities and a large drop in land prices since the last boom along with WA Government grants for people to stay are putting pressure on existing stock. However you look at it, it is a positive indicator for the mining sector and the WA economy.
Last week the ABS released the latest July employment figures. Most of our readers would be aware that employment figures are probably the most important indicator we have to gauge how the economy is travelling. However we also know the actual unemployment figure is biased and that is why we prefer to use monthly hours worked.
WA’s monthly hours worked increased by nearly 2.9% over July and continue to claw back from the 10% drop in April. The graph below shows WA’s trend back towards pre-pandemic levels. If the current trend is maintained we should be back to those pre-pandemic levels before Christmas, which is really good news.
Just for comparison; NSW hours increased by 1.4%, Victoria increased by 0.07%, Queensland decreased by 0.03%, SA increased by 2.9% and Tasmania increased by 3.0%. The states with better health outcomes and therefore fewer restrictions are experiencing more hours worked except for Queensland. Even though Queensland has few cases of coronavirus, reduced tourism as a result of travel restrictions is clearly hurting Queensland’s economy especially during the tourist winter season.
To finish, last newsletter we wrote that economic forecasts are very unreliable in the current climate and the biggest factor will be a vaccine. The Federal Government has just signed a contract with UK pharmaceutical giant AstraZeneca for 25 million vaccines currently being developed at Oxford University. The hope is the vaccine will be available in the first half of 2021. Fingers crossed.
Reproduced with permission from:
in house economist from Michael Keil @ michaelkeil.com