Boom-time in Australia's west

Record migration and a mining boom in the resources-rich state of Western Australia has led to unprecedented demand for property, with many home-buyers and investors choosing to protect themselves against skyrocketing prices by buying off plan in new developments.

Traditionally, Australians have preferred to see the finished product before opening their chequebooks, but a housing shortage has led to an increase in the number of off plan purchases, with buyers reassured by the certainty of having somewhere to call home. But property developers are also cashing in, some reporting that their entire allocation of apartments is selling off the plan in just days.

The first stage of the Claremont Residences, part of global construction company Multiplex’s revamp of an old shopping centre site, sold out within two days. The development is scheduled for completion in 2009. Another Multiplex property, The Esplanade Nedlands, sold out in even less time, with 37 apartments selling off plan in one and a half days, at an average $2.6 million (AUD). The Capital Square development, a joint venture between Saville Australia  and Babcock and Brown has reportedly taken $300 million in off plan sales to date, as part of a wider trend where apartments in Western Australia are starting to cost as much as homes.

The Australian Bureau of Statistics  reports Western Australia is leading the nation in population growth, at a rate of 2.3 per cent, largely driven by overseas migrant and workers attracted by large-scale mining and infrastructure projects. It took nearly 100 years after settlement for Western Australia to reach the half million population mark, yet projections show the state’s population could grow by that much again in the next decade.
These pressures on the market are producing higher values, with the latest figures from the Real Estate Institute of Western Australia  showing some parts of the state have experienced up to a 24 per cent increase in property values in the last 12 months. Investors make up a quarter of property purchasers in the state.

Housing construction data shows that despite an upturn in the number of new constructions, the state is still experiencing huge demand for new construction and land release.