Australian Property Investors – Keep An Eye on WA’s Next Boom

The Western Australian government is so worried about the impact of the next boom on the state's property prices that they are running an emergency meeting including State government officials and developers to consider how the state is going to avoid a repeat of the last property price bubble in Western Australia.

Between 2004 and 2006, at the height of the last boom, the average price for a home in Perth jumped $200,000 to $460,000 - immediately making Perth one of the most expensive capital cities in Australia for home buyers.

Now on the back of China and India's ongoing demands for Western Australia's minerals, not to mention the enormous LNG project at Gorgon, in the state's NorthWest, predictions are that WA will need another 38,000 workers by 2012.

To be honest I seriously doubt the state's ability to manage this size boom any better than it did the last one. After all this is an incumbent government which can't even legislate to allow late-night shopping never mind Sunday trading! It would indeed  be logical, and indeed strategic - given the population pressures in over-crowded Indonesia just to the north, for Western Australia to actually spend some serious money and effort and develop the huge state north of the 66th parallel. At the moment it looks like again that most workers will fly-in, fly-out from Perth to dormitory resorts in the north. Perth may expand from its current population of 1.5 million to over 4 million by 2020. Meanwhile the largest town north of Perth - Geraldton is only 30,000. In the far north Broome is by the largest town - with a population of 10,000.

Thousands of miles of undeveloped coastal property, Exmouth, WA

Due to the lack of infrastructure in remote towns, it is impossible to buy a family home for less than $775,000 in Karatha. Land is relatively cheap - but to build a standard home costs around $600,000 in the Pilbara, twice the price of building the same home in Perth. Those at the bottom of the ladder - though often earning $200,000 a year - live in a caravan park - because that is all that's available - at the price is still over $300 a week (for the site not the van - BYO!)

Yet these towns have climates which make Florida and southern Spain look down-right second rate. Set in the tropics air conditioning is essential, but the benefits include year round swimming and a only a short wet season which extends for around 3 months. Damage causing hurricanes are rare and don't occur each year.

To get families to move there full-time, and for those who have enjoyed the high-wages from the mining industry to retire there, the government would have to take some radical decisions and make a serious effort into reducing transport costs, freeing up land for workers, developing appropriately priced single person's quarters, and developing community and educational opportunities in the region. At least the shops in the Pilbara are allowed to open on Sundays …