West Australia Nurses Boom Time Hangover

So, screamed the headline in the Financial Review!

After the biggest resources boom in 150 years it seems, the party is over. Only a few short years ago experienced commentators and business leaders were proclaiming a resources boom lasting decades.

Alas, like so many crystal ball gazers, the predictions evaporated almost as soon as they were made. In the past eighteen months tens of thousands of jobs have been lost in the resources industry in Western Australia as commodity prices have collapsed and our number one trading partner, China, begins to run out of steam economically.

For every job lost at the coalface, there are many more lost in supporting industries. Even the professionals such as engineers, geologists, lawyers and specialist manufacturers are having to look overseas for work.

Naturally there is a trickle down effect when, in the major population centres, demand for business services and real estate hits the wall.

Rents in Perth for example have dropped by hundreds of dollars a week at the higher end of the market, but no area has escaped the falling rents.

In September 2012, there were only 2100 rental properties available in Perth at a very low vacancy rate of 1.8%. Today there are now 6291 rental properties available and the vacancy rate has shot up to over 4%.

As for property sales, only a few short years ago there were less than 10,000 homes for sale in Perth. Today, REIWA reports that there are now over 13,000 listings on the market. Sales are down by 19% compared to this time last year.

Whilst we are in a predictable cycle which is inherent in a predominantly mining/oil/gas economy, nevertheless it is probably only the start of a serious economic downturn in Western Australia.

As has often been said, downturns pass, as do booms and for those with access to money and who have a long term view of the world, these times often provide once in a lifetime opportunities to set themselves up for the next boom.

Interesting times indeed!

Source: Financial Review Jan 17, 2015

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