The West Australian

BET YOUR HOUSE ON WA

WHY FEDERAL TREASURER SAYS OUR BOOM WILL LAST

- LANAI SCARR

Josh Frydenberg says the State’s economic future is bright, underpinne­d by strong growth across a variety of industries.

Federal Treasurer Josh Frydenberg says West Australian­s have a bright economic future with “many sectors” performing well and helping to lead Australia out of the first recession in almost 30 years.

Speaking to The West Australian ahead of this morning’s Leadership Matters breakfast, Mr Frydenberg said WA need not worry if mining output reduced because there was a range of growing industries to support local jobs.

“The WA economy has stood tall in the face of the COVID-19 recession and is helping to lead Australia’s economic recovery,” Mr Frydenberg said.

“With agricultur­e, constructi­on, housing and mining all performing strongly the future is bright for WA.

“Despite the challenges ahead, West Australian­s have good reason to be confident about their economic future.”

Australian iron ore exports — of which WA accounts for 99 per cent — reached about 858 million tonnes in 2019–20, with a total value of $102.9 billion.

Iron ore prices reached $US175.6 a tonne on Tuesday, the highest since May 2011.

Mr Frydenberg’s comments on the strength of the WA economy come as it can also be revealed Treasury data shows WA is the State with the highest take-up of the Federal Government’s HomeBuilde­r program.

HomeBuilde­r was a support package announced during COVID that provided grants of up to $25,000 to eligible owneroccup­iers to build a new home or substantia­lly renovate an existing home.

Data obtained by The West shows almost $500 million in Homebuilde­r applicatio­ns were submitted by West Aussies — the highest of any State on a per capita basis — with housing constructi­on leading WA’s strong economic recovery. WA has had nearly 20,000 Homebuilde­r applicatio­ns which Treasury expects will support up to $4.5 billion in residentia­l constructi­on activity.

This is more than 60 per cent of the dwelling investment recorded in 2019-20 or 1.4 per cent of gross state product.

About 80 per cent of constructi­on activity in WA is now supported by Homebuilde­r, according to the analysis.

The strong turnaround in the housing market is being led by owner occupiers. New loan commitment­s in WA have more than doubled over the past year — up 103.7 per cent.

First-homebuyers represent 48.2 per cent of new lending to owner occupiers, the highest share in the country.

Stronger buying interest is supporting a turnaround in Perth house prices which are 6 per cent higher than a year ago and comes after more than six years of negative annual house price growth following the mining boom.

Mr Frydenberg said HomeBuilde­r had been a key success, particular­ly in WA.

“The successful HomeBuilde­r program has been a key part of the Morrison Government’s national economic recovery plan and is seeing the private sector lead the recovery as it takes advantage of the Government’s tax cuts, business investment incentives and record levels of investment in skills, training and infrastruc­ture,” he said.

Mr Frydenberg is the fourth Federal Government heavyweigh­t to visit WA in several weeks.

Communicat­ions Minister Paul Fletcher, Defence Minister Peter Dutton and Prime Minister Scott Morrison have made special trips west.

Mr Morrison had been absent from WA for 537 days but was greeted with requests for selfies and hugs from those

I don’t want to rent any more, it just seems like a waste of money for me. Grace Orsi

he met on the hustings. He travelled north of Perth to Andrew Forrest’s Christmas Creek iron ore mine in the Pilbara and also toured the cyclone-ravaged tourist town of Kalbarri.

Mr Frydenberg won’t travel outside Perth during his lightning visit.

He will hand down the Federal Budget on May 11, just seven months after the unusual COVID-19 October budget.

WA may end up underpinni­ng the success of the overall Budget with higher than expected iron ore prices.

The mid-year economic and fiscal outlook released in December predicted iron ore prices would fall to $US55 a tonne by September 2022.

But that is highly unlikely with the current record high prices and continued lack of supply out of Brazil.

Chinese demand for iron ore is also not slowing, despite warnings yesterday from the Deputy Head of Mission for China, Wang Xining, that China was not a cow “to be milked” and taken advantage of by Australia.

Booming iron ore export prices delivered a $16 billion improvemen­t to the Federal Budget’s bottom line from October to December and are also expected to significan­tly buoy the books in 20 days when the Federal Budget is delivered.

Grace Orsi is among the young West Australian­s clamouring to get into the red-hot housing market now that the economy has picked up and uncertaint­y created by the pandemic has begun to clear.

“I have been saving eight years for a home,” she said. “I don’t want to rent any more, it just seems like a waste of money for me.”

Ms Orsi, who works part time as a paralegal and is studying law, had hopes of buying in her “dream area” of East Perth, Mt Lawley or North Perth but is now looking further afield.

She was prepared to buy early last year but held off because of COVID uncertaint­y.

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