WE ARE RELIANT ON PRIVATE INVESTMENT IN A NATIONALLY COMPETITIVE MARKET. IF OUR ECONOMY IS TO CONTINUE TO GROW WE NEED A STRATEGY TO ATTRACT INVESTMENT, NOT JUST FOR MINING PROJECTS BUT FOR HOUSING AS WELL.
Western Australia remains the top performing economy in the nation according to the latest CommSec report.
The report looks at the performance of each state and territory against their decade average to determine their performance. The report is based on eight criteria: housing finance, retail spending, equipment investment, economic growth, unemployment, construction work done, population growth, and dwelling commencements. Western Australia was leading in the first three categories.
Whilst overall Western Australia is the clear leader in population growth with an annual growth rate of 3.47 per cent, which is 46 per cent above the decade average, it was blitzed by the ACT which had a lower growth rate (2.31 per cent) but it was 57 per cent above the ten year average.
It was interesting to note that dwelling commencements in March were up 11.2 per cent on the decade average, well short of the 46 per cent population growth. Housing prices Western Australia and New South Wales, where there have been supply shortages, continue to outstrip wages growth (WA 6.0 per cent vs 3.7 per cent, NSW 2.9 per cent vs 5.6 per cent), where as in Queensland and South Australia wages are growing faster than housing prices (QLD 3 per cent vs 0.6 per cent, SA 3.3 per cent vs 0.2 per cent). In Victoria wages growth and home prices are currently rising reasonably consistently (3.2 per cent vs 3.4 per cent).
Whilst a six per cent annual growth rate for housing prices is well short of the peak of the boom, the challenge is that it is off a very high base, making it essential to continue to monitor the relationship between home prices and wage growth.
In a recent Auspoll survey, housing affordability was seen as quite important or very important to 84 per cent of voters. What is so surprising is that figure is above the issues of congestion (70 per cent), public transport (73 per cent) and border security (78 per cent). When it came to Australia’s performance only sixteen per cent said that it was good or excellent, the lowest of any of the issues covered in the survey and 72 per cent were not aware of any federal political party with a clear plan to improve the situation.
The challenge for housing affordability is that there is no silver bullet as governments don’t have the billions to deliver the dwellings required. That means we are reliant on private investment in a nationally competitive market. If our economy is to continue to grow we need a strategy to attract investment, not just for mining projects but for housing as well.