Everything you need to know about WA - With Junge Ma

Which state is the best to invest in? Not only now, but in a longer term too. Strong price growth doesn't always mean a strong area to invest in and build a solid portfolio. This four-part series, this time we unpack everything a serious property investor needs to know about. Victoria, Queensland, South Australia, and Western Australia.

I'm talking population, economic strength, affordability, and my analytical take on each state you won't find anywhere else. And best of all, I'm going to score each state on our InvestorKit leaderboard using three key metrics so you can see the highest and the lowest performance. This episode, we're talking about the fourth and final state of Western Australia. I'm Junge Ma. Let's get into it.

So let's start with population. In the last year, Western Australia's population has grown by 3. 3%. That is the highest among all states. And according to the federal budget paper, in the coming four years from 2024 to 2028, the total population growth in Western Australia would be 5%.

That is not the highest, but I guess you can't always lead the race, right? And inside of the population growth, one thing Western Australia should be really proud of is that it is one of the only two states that are receiving positive net internal migration. The first place being Queensland, second place being Western Australia. And in terms of economic performance, Western Australia is improving a lot. In the past year, growth state product in Western Australia has grown by 3.

5%. It doesn't look the highest if you compare it with South Australia. However, if we look at the trend over the past 10 years, you see that the growth rate has been largely increasing since 2017. So it is clear that the economy of Western Australia is steadily improving year by year. And unemployment rate tells the same story.

As of now, the average unemployment rate in the state is 3. 7%. And that is much lower than the last 10-year average of 5. 3%. To summarize population and economic performance, population growth has been high and is looking at healthy growth in the coming few years.

And in terms of economic performance, it is improving steadily year by year. So I would give Western Australia a 5 out of 5 in terms of population and economic performance. So now affordability. Perth's median house price is now $650,000. And that is 2% undervalued compared to its local residents' income level, making it one of the only two capital cities that are still affordable.

The other one is Darwin, but we all know that Darwin didn't grow well in the recent two years. It's worth noticing that not all subregions in Greater Perth is still undervalued now. There are 21 SA3 regions in Greater Perth area, and there are only 7 of them that are still undervalued. And if Greater Perth's house price keeps growing as fast as it is growing now, in a few months, Perth itself will become an unaffordable city soon. And in regional Australia, things are much better.

The median house price there is around $475,000. And out of the 13 SA3 regions in the rest of Western Australia, 12 of them are still undervalued or affordable compared to their local residents' income. These cities include Bunbury, Geraldton, or Albany. But there is one region that is considered overvalued now, and that region is called Augusta-Margaret River-Busselton. The median house price there is $780,000, and it's 27% overvalued compared to its local residents' income level.

Now let's talk about market pressure. Western Australia as a whole is facing really high market pressure now. Perth's inventory level is now 1. 4 months of stock, and it is still declining. Regional cities are also seeing lower than 3 inventory levels and still declining too.

Some examples are Bunbury 1. 6 months, Geraldton 2. 2, and Albany 2. 8. In Western Australia, we are actually seeing declining sales volume over the past year or so, but at the same time, the number of supply has been declining much faster than the sales volume, and that has made the decline in the inventory levels.

Days on market as well. Perth is seeing the lowest level of days on market right now in more than a decade, sitting at 34 days, and it is still declining. In the rest of WA, things are the same. They may see higher days on market, but trends are the same. They're all declining.

And in terms of a market cycle position, Perth's last 10-year annualized growth was only 2. 5%. That's low last 10-year growth, plus the extremely high market pressure right now is giving Perth a lot of potential growth in the coming few years. Same story in the rest of Western Australia. Most of the regional cities have lower than 50% total last 10-year growth.

That is well below 5% if we annualize it. So that plus their current high market pressure, we would be expecting high value growth in regional Western Australia as well in the coming few years. Incoming supply, the building approval rate in Western Australia in total is 2. 2%. That is also well within the balanced range of 2 to 3%.

So in the coming few years, we would be expecting not really high new house supply for the state. To summarize sales market pressure, I bet you can already tell both Perth and the rest of Western Australia are facing really high market pressure and there are signs of increase. So I would give Western Australia's sales market pressure a 5 out of 5. Now rental market pressure. Vacancy rate in Perth is now at 0.

6% and in regional cities, vacancy rates are mostly lower than 0. 5%, indicating really high rental demand. These vacancy rates are at the lowest range in over a decade ever since 2021 and we're not seeing significant signs of increase in the short term. Therefore, for rental market pressure of Western Australia, I would again give it a 5 out of 5, making Western Australia's total score a 15 out of 15, putting Western Australia at the top of InvestorKit's leaderboard with the highest market pressure and the best performance. If you enjoy this four-part series, walking you through everything you need to know about the four most popular states in Australia, comment below on what you want the next series to be on.

I hope you enjoy this one. My name is Junge Ma, the lead research analyst at InvestorKit. I'll see you next time.