The challenge facing the Perth market is the how best to Retain and Attract people. This is for the purpose of economic prosperity.
The performance of the Perth new land market is currently being held back due to a lack of supporting demand. Underlying demand for new land is currently estimated to be 637 lot sales per month. Actual land sales are currently below 500 per month.
During the peak of the market cycle in 2013, when the number of people moving to Perth was at a high point, underlying demand for new land was 1,078 lots per month. New land sales were 1,145 per month.
The only real difference between 2013 and 2016 is the fall away in the number of people. The reason for this is well understood, jobs. It highlights that for a metro property market to become more resilient, against the extremes of population change, it needs to diversify its retention an attraction strategies.
Employment is a clear inducement for retaining and attracting people, however, as quickly as it can attract people it can quickly lose them. If a job is the only real anchor, then that market will become unstable.
The Human Anchor
The success of Sydney and Melbourne has been helped by the fact that more people need/want to be in these place due to non commercial reasons. The human or domestic anchor holds people longer in a place even when employment is weak.
This human anchor can be built through enlarging the brand of the city through a series of inter connected strategies. None of these are new, however I suggest that greater impact can be gained if they are connected. Remember it is about attracting people and getting people to become connected to a place through a wider spectrum of motivations other than just a job.
- Tourism and especially family tourism can create brand awareness. Cities which are isolated invest heavily into family tourism in order to put them on the map.
- Vegas, Doha, Dubai and even the Gold Coast
- Visiting is undertaken by people connecting with families or friends already living in a city. People visiting for these reasons will drive foreign investment in the housing market.
- Educate the children of families living overseas. No greater interest will be shown by people if their family or children are working or being educated in a place away from home. Each day international students communicate with family and friends. That talk will be positive or negative, but it will be important for establishing the city as a desirable destination.
- Family formation, once a person has lived and experienced that city, then they are likely to form relationships and then remain.
- A city with a wider range of ethnic groups will mean that they are more likely to attract family visas which will drive the market.
Driving Growth Through Domestic Investment
The majority of employment is driven by small business. Strategies which retain and attract people from overseas through the above process are likely to enhance the level of domestic or small business investment.
Perth lacks a diversified population base, currently has a low level of overseas students and is under developed when it comes to family based attraction. The Perth market has exceptional climate and coastal amenity which it can use to help lift family based tourism. Enlarge the international educational platform which will drive inner living and flow through to the wider property market.
The development industry is more than capable of responding to any uplift in demand. It must ensure that its products remain affordable and that the product offering fully leverages the natural amenity and reflects the lifestyle aspirations of its future customer base.
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