Not all of Western Australia is following in Perth’s footsteps. It’s important to investigate markets based on their individual merits.
All around the country – in fact, the world – a large majority of the information that hits the newsreels each day is capital city-centric. This includes property news: the fortunes or misfortunes of property markets in each state and territory often get wrapped up in whatever is occurring in the capital city. The reality is that the property markets of the various regional towns within that state may contrast starkly with the capital.
What I’ve just described is currently very applicable to Western Australia. A downturn in iron ore prices, combined with the completion of the construction stage of a few very large mining projects, has resulted in diminished demand for property (and falling values) in the Pilbara. The shedding of thousands of managerial and administration jobs in the state’s capital, plus a significant increase in housing supply, have combined to cause Perth property values to decline. Meanwhile, a completely different mix of economic drivers in regional cities like Bunbury provide real cause for optimism in the property market.
Located on picturesque coastline 180 kilometres south of Perth, Bunbury is a hub for business, industry, culture and shopping. With a population of approximately 35,000 people, it is one of the fastest-growing regional cities in Australia. WA’s unofficial second capital city has evolved into the main service centre for the south-west regional population of 130,000 people.
When Propertyology took a more forensic look at Bunbury’s economy we discovered that an extra 2,000 jobs were created from January 2013 to November 2015. That’s the opposite to the mass job shedding that is likely to continue further north in the state.
Mayor Gary Brennan’s vision for Bunbury to become a very progressive city is indicative of its modern infrastructure, and construction being the city’s biggest industry employer.
The region is rich in minerals including alumina, mineral sands, silica and coal. The processing of these commodities feeds a thriving a local manufacturing industry. Worsley Alumina recently completed a refinery expansion and an upgrade of its facilities at the Bunbury Port. The port also services the region’s farming (sheep and cattle) and timber industries.
Andrew Forrest purchased local beef processor Harvey Beef in 2014. China’s biggest importer of Australian red meat, Grand Farm, was also part of a $1 billion joint venture in 2014.
Already one of the busiest regional ports in Australia, state government planning provides for further expansion to double the port’s capacity and upgrade both rail and road freight infrastructure.
Over 400,000 people visit Bunbury each year for its beaches, wineries, scenery and restaurants. Approximately 85 per cent of these visitors are WA residents.
Retail facilities in Bunbury are first-rate. Education facilities include public and private schools, plus tertiary education through the Edith Cowan University and South West Institute of Technology.
According to the ABS, Bunbury had the highest population growth rate in Australia in 2005/6. Over the three year period 2004 to 2006, Bunbury's median house price increased by a whopping 85 per cent.
New housing supply eventually caught up with demand and subdued property price growth followed from 2007 onwards.
Housing supply has been much more controlled over recent years. With promising times ahead for the region’s tourism, agriculture and manufacturing industries, there is every reason for optimism for the property market of Bunbury. Mark my words, it will outperform Perth!
Simon Pressley is Managing Director of Propertyology. Having being awarded Australia’s buyer’s agent of the year on three consecutive occasions, Simon is a REIA Hall Of Fame Inductee. Propertyology’s core business involves full-time analyses of property markets all over Australia. Working exclusively for property investors, their service involves buying properties in strategically chosen locations all over Australia.