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Beaches, Great Booze And Real Estate Set To Boom

Beaches, Great Booze And Real Estate Set To Boom
January 12, 2021 Propertyology Head of Research and REIA Hall of Famer, Simon Pressley

Its median house price has barely moved for 13-years, but I’m tipping that real estate in this location will soon be so hot that it will become one of Australia’s best-performed property markets over the next few years.

About two hours south of Perth is the picturesque regional city of Busselton. It offers a relaxed lifestyle which is complimented by beautiful beaches, a country town charm, quality amenities and a traditional 4-season climate.

The area is surrounded by numerous outstanding wineries in the nearby Margaret River and some truly spectacular national parks.

 

Property Market History

We need to go way back to 2007 to revisit the last time that Busselton real estate prices did anything meaningful. From December 2002 ($174,000) to December 2007 ($496,000), the median house price almost tripled in just 5-years.

Over the 13-years since then, Busselton’s median house price has trickled up to $515,000. That long, flat stretch is a reflection of Western Australia’s weak economy throughout the last decade.

The property market of literally every Australian location has its own periods of strength and weakness. When averaged out over the last 30-years, Busselton’s annual capital growth rate of 6.5 percent is superior to Perth (5.8 percent) and Brisbane (5.7 percent) and is very similar to Sydney (6.6 percent).

Get ready, Busselton’s current property market fundamentals have all the makings of a property boom just around the corner!

 

Location Attractions

Busselton was originally established as a cattle station and for the provision of timber to support development of early European settlement.

Its reputation for professional fishing started to grow during the mid-1900’s.

The region’s agriculture is still important today and has expanded to include world-class wine. Many of the wineries play a dual role of attracting a strong tourist trade to their breathtakingly landscaped vineyards.

A number of monuments and cultural facilities are on display to commemorate the role that Busselton played in military training during World War II.

It was after the war that Busselton’s popularity as holiday location really started to take off. By the 1970’s, the attractive lifestyle had evolved to being a very desirable retirement destination.

In oh so many ways, I regard Busselton as Western Australia’s equivalent of Byron Bay (New South Wales), Noosa (Queensland) and Lorne (Victoria). Each of these three idyllic locations were among Australia’s best-performed property markets over the most recent 5-years.

The township’s protected beaches feature a beautiful 19th-century jetty with wooden pier that stretches 2-kilometres out to sea to a popular underwater observatory, where life in a coral reef is on view. And humpback whales are another popular drawcard.

Throughout the year, Busselton hosts a range of major events including triathlons and ironman events, surfing carnivals, and festivals for food and beverage.

Other popular attractions include the locally-grown produce, cafes, galleries and craft shops, several national parks, state forests, and guided tours through interesting caves.

 

Housing Supply

Busselton’s 40,000 population are accommodated in 19,400 residential dwellings.

89 percent of residential dwellings are detached houses and 9 percent semi-detached, such as townhouses. Apartments represent an insignificant volume of housing stock.

The median advertised rent in December 2020 of $450 per week was 50 percent higher than a decade earlier. An increase of $50 per week over the 2020 calendar year is indicative of how tight the local rental supply has become.

At a time when both Sydney and Melbourne are challenged by all-time record high vacancy rates, Busselton’s residential vacancy rate of 0.1 percent in November 2020 was the lowest in Australia. Busselton is caught up in the current nationwide rental boom.

The supply of dwellings available for sale is also incredibly tight. The total resale volume in November 2020 was 20 percent lower than 12-months earlier and the lowest in 6-years.

Whilst Busselton hasn’t seen any property price growth for many years, the current pressure has all the makings of a strong price surge.

 

Housing Demand

Busselton is home to a mature demographic. The median household age of 42 is higher than the Australian average of 38 while 54 percent of households are occupied by married couples (well above the 48.1 percent national average).

With a population growth rate of 33.9 percent over the 10-years ending June 2019, Busselton is already growing at a faster rate than every Australian capital city, and nearly double Perth’s 19.6 percent.

Health and retail have the biggest workforce representation, while tourism, agriculture, fishing and forestry are also important industries for the local economy.

31 percent of Busselton’s workforce are either trade workers, technicians or labourers (cf 28.2 percent national average) while 15 percent are employed in the capacity of a white-collar professional (cf 20.5 percent nationally).

The progressive improvement of Western Australia’s economy over the last couple of years has flowed through to Busselton’s tourism trade and its economy more broadly.

I am anticipating that a recent airport expansion plan for direct flights to and from Melbourne to be a boon for Busselton.

Similarly, construction is due to commence in 2021 on a jetty development for a new Australian Underwater Discovery Centre.

Busselton’s idyllic lifestyle and (2-hour) proximity to Perth make it a prime candidate for the work-from-home phenomenon.

Fast-tracked by restrictions imposed for COVID-19, hundreds of thousands of Australians have recently made the permanent decision to embrace technology and claw-back 10+ hours per week from not having to commute to work each day. A segment of this cohort will pack their bags and relocate to their lifestyle of choice.

I am anticipating that Busselton will be one of many Australian locations to become a beneficiary of a transference of housing demand created by this structural change to Australian real estate.

In recent times, Perth’s property market has been (finally) attracting some upbeat commentary, but I regard Busselton’s property market credentials over the medium and long-term to be superior to Perth’s.

Most Australians have never been to Busselton, but that’s no reason to not take an interest in it. I am tipping Busselton will be one of the best property markets in Australia in 2021-22.

Busselton is one of several solid locations that Propertyology predicts will perform strongly over these next few years. In our ‘2021 Propertyology Property Market Outlook Report’, we have predicted that more than 40x locations have potential for greater than 20 percent capital growth in 2021 alone.

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