Let’s reflect back to 2014, following a decade of strong export demand from China, Western Australia seemed to come out of the GFC relatively unscathed – with the mining boom playing a significant part in getting West Australian’s through the worst of the global financial crisis.
So, will mining help WA avoid the second financial crisis in a decade?
The economy certainly expects to benefit from two of our state’s key exports’ top performance.
In 2019, iron ore significantly exceeded conservative assumptions built into the WA budget with the price per tonne soaring. Following a decline in the resource’s price amid the COVID-19 outbreak, we’ve observed modest improvements throughout April*, and it’s expected stimulus measures are likely to be put in place by the Chinese Government to further support the sector.*
In conjunction with our state’s iron ore exportation, WA’s predicted ‘mini gold rush’ also gave renewed optimism for our economy prior to COVID-19. With a strong drive for ultra-safe investments, demand has been fuelled by central banks purchasing gold as a store of value, pushing gold prices up to record levels. Next year, it’s expected Australia will be the biggest gold producer in the world, with 70 per cent of the nation’s gold production taking place here in WA*.
Whilst some project investment has been delayed such as Woodside’s Scarborough and Browse*, the mining sector may still have positive impacts on our state’s population numbers and employment rates as well as our State Budget. We’re not a state who relies as heavily on tourism and entertainment like Tasmania for example. And in light of this, it’s expected we will be positively positioned to take on economic challenges, and even potentially experience growth.
Throughout April, we’ve observed the decline in sentiment having an immediate impact on our stock levels, however there is still consistent buyer demand, and quality stock coming to market is being absorbed quickly. We suspect as we return to ‘normal’, uncertainties or rather other priorities that are preventing sellers from coming to market will diminish and stock levels will slowly begin to increase.
Although it’s impossible to predict the long-term impacts the virus will have on the real estate market, we’re facing a very different situation to other states and territories and must stay optimistic in knowing these potential silver linings that will support our local economy through the next 24 months.
An up-to-date assessment on your home’s value will help you in making informed decisions whilst on your property journey. Lean on our experience over the coming months to understand how your property is faring in the market. Simply contact us and we will send through a digital report for your property.
*Soaring iron ore gold prices boost WA ecenomy
*Iron ore exporters banking on China stimulus
*Business Insider iron ore price
*Response to market conditions