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Understanding the Drivers of the Property Market

Understanding the key drivers of long-term demand is crucial to making good real estate decisions and understanding when to purchase.

Population Growth
An increase in jobs means an ongoing demand for new housing stock. As population grows, new households are formed (or arrive) and need somewhere to live. New migrants from interstate or overseas are an important source of household formation, as is the transition from adolescence to adulthood and subsequent departure from the family ‘nest’.

WA’s Economy and Employment
Employment growth tends to grow alongside economic expansion.
The more employment opportunities created, the more people are likely to relocate and remain. Increasing labour demand via economic growth tends to drive incomes higher increasing affordability and confidence.

The amount of available stock will have an effect on demand and prices. Less supply means greater competition for fewer dwellings, as the population expands, pushing prices up. While strong supply an mean slower price growth and better affordability.

Consumer Confidence
Consumer confidence can affect what is happening in the property market, regardless of actual economic fundamentals. When potential buyers and sellers are unsure about the future, there tends to be less sales activity. The media and interest rates (which have been at an all-time low for over 2 years) contribute to the sentiment of buyers. However, confidence can bounce quickly, with prices and activity closely following.

If you’d like any more information on the property market or if you’d like to speak to us about investing in the property market, please give us a call 1300 729 095.

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