Why the time to invest in Perth property is NOW

November 2016

An educational presentation by

www.aviategroup.com.au

“Be fearful when others are

greedy and greedy when

others are fearful.”

Perth CBD, from South Perth

Warren Buffet

Mining is along-term cyclical

industry, that is here to stay

There are hundreds of active resource projects in Western

Australia

Map courtesy of WA Department of Mines and Petroleum http://www.dmp.wa.gov.au/

Western Australia is a major world supplier of 50 different minerals and petroleum products

Zircon

Gold

Gold bar from the Perth mint

Iron ore

Main image: Cliffhead Oil Field in the Perth basin

(Elixir Petroleum)

What about iron ore?

In 2016, China imported iron ore worth US$57.9 billion Of this total, US$36 billion was imported from Australia

In 2016, China imported 63.5% of the world’s total iron ore

Next is Japan with US$9.3 billion (10.2% of total)

In 2016, China is the world’s largest iron ore importer

- Source: http://www.worldstopexports.com/iron-ore-imports-by-country/ accessed November 2016

WA holds 37% of the world’s share of iron ore production

in 2015

Main image:

Port Hedland

- Source: http://www.worldstopexports.com/iron-ore-imports-by-country/ accessed November 2016

China’s demand for raw materials keeps growing

Source:http://www.businessinsider.com.au/chinese-

demand-for-iron-ore-is-higher-than-ever-2016-8 accessed November 2016

With a total build cost of US$180m and completed in September 2016,

the Pingtang telescope is the world's second-largest radio telescope. Its

dish measures 500m across.

There are many incredible construction projects in China

Source: Wikipedia, 2016, images by getty images

Let’s go back to the beginning, in 2003…

In 2003 demand for Australia’s natural resources surged, most of it due to China.

The graph shows China’s huge growth in demand for iron ore exports, from 2003 until the present.

The soaring commodity prices pushed massive investment in mining projects

Perth property market explodes

Perth units experienced total capital growth of approximately 110% from 2003 to 2008

Then…remember 2008?The strength of the mining sector helped Australia’s economy during the GFC

2011…

Mining was seen as Australia’s cash cow. Australia’s politicians thought the party would never end.

But in 2012, a structural shift in China changed everything

• 2012 sees China’s economy growing at its slowest pace since 1999 (at 7.8%)

• Many major mining projects are shelved

• Investment in mining starts to drop

• The population and housing boom peaks - cyclical low of 1.8% vacancy in September 2012 (the “equalibrium rate” is 3%)

2003 to 2012 Focus on mining exploration,

investment and construction in WA

2012 until today Focus on mining production in WA

Today we are producing and exporting more of our natural resources than ever.But we are receiving less for it due to falling commodity prices.

Western Australia’s economy continues to grow, boosted by the mining industry

The new Elizabeth Quay precinct, Perth

Photo: robdose.com.au

Perth city skyline Photo: Kirkhille photography

Perth is experiencing slightly higher unemployment as the economy transforms

People in Perth believe in a positive future Retail spending and consumer confidence remain high

Mining employment, as a proportion of the total workforce

1999-2000

4.7% 7%2015

Mining has never been a huge source of permanent employment in Perth

Perth property market follows the same story as mining

After 2008, Perth dwelling prices have remained mostly flat

The average property cycle from growth phase to growth phase is 8-10 years…

Watch your step! Some areas in Perth will suffer from over-supply

Dwelling supply has been high over the last few years in certain areas of Perth

Building approvals are now coming back to the 20-year average

If you are purchasing a property in Perth, ensure you have researched the supply in the suburb or contact Aviate Group to view our research

Growth of housing supply in Perth is likely to drop to below average levels in the next 12 months.

8401 dwellings commenced construction in Q3 2014

6421 dwellings commenced construction in Q4 2015

In the year to April 2016 dwelling approvals were down 23.6% having fallen for nineteen consecutive months.

High vacancy rates of 5.6% in March, 2016 and flat capital growth has put a damper on development.

Tap into this trend by buying property in a suburb that currently has limited supply. Aviate Group can help you identify these suburbs.

Watch your step!Only quality properties will hold their yields

• Buying a new property may help you secure tenants when compared to older homes

• As dwelling supply slows, tenants will begin the flight to quality.

Make sure your investment property is high quality, in a good area. Talk to Aviate Group for more information.

Do the research!We can help!

All Aviate properties satisfy our 32 Key methodological research and

selection process.

Contact Aviate Group for first choice of our off-market property

opportunities

“Be fearful when others are

greedy and greedy when

others are fearful.”

Perth CBD, from South Perth

Warren Buffet

If you are looking for a great investment property, contact Aviate Group

We can help you select an investment property that will position you well.

1300 81 55 02 (Australia) +612 9331 5577 (international)

www.aviategroup.com.au