EP. 12 | WA – State of Investment | Property Market Outlook 2026

Parag Dixit

Hi guys. Welcome back to our next state in the state of investment series. How are you mudit, how are you Julius,

Julius

I'm good. How are you

Parag Dixit

very good. Welcome back to the studio. I'm good

Mudit

as well. Been busy times.

Parag Dixit

Yes, enjoyed enjoying the break, enjoying the last few weeks of school, schools, and then the holidays coming,

Mudit

looking forward to it, just planning a small

Parag Dixit

trip.

Mudit

But yeah, it is, yeah,

Julius

I'm eagerly waiting for

Parag Dixit

you take a break.

Julius

Yeah,

Parag Dixit

from, from what, from, from the war, and from the stuff which is happening around every day is a new day, right?

Julius

Yeah, it is. I can see a lot of implications around now.

Parag Dixit

I know, I know. And there is, there's a lot happening. There's a lot of stuff happening in the market. There's a lot of stuff happening in the environment and geopolitical stuff, economic stuff, new budget, new discussions and lots and lots are in place for this. I think the crazy years, which started from covid, are still not ending. We still have more more craziness to come through

Mudit

absolutely and every every conversation with every client, anybody this, the geopolitical is definitely one of the topics that people are talking about. So that is on everyone's mind because it's impacting all of us. So,

Parag Dixit

yeah, absolutely correct. Absolutely correct. No, that's, that's very good. Welcome guys. I think today we will be talking about our next state in the state of investment, which is, which is WA and Perth. In particular, Perth spin, booming, standout capital of 2026 you know, up 22% annually, though listings are still lagging about 50% below their five year mark. That's so much has happened there. Rate cuts, rate rises have barely impacted. The last two have not done too much there. Regional WA running even hotter on trends, and the affordability is changing. Lots happening in Perth, but the biggest question, which all the investors are asking is, has Perth really has had its run, or there is lot of gas still remaining? You know, there's mining, there's population boom, and there's under supply of properties, all that we will be talking about today, we will talk about breaking down between Perth and regional WA like the format which we've been following for all these things. We'll talk about purchase affordability. We'll talk about Rental Affordability. Is in 20,025 how it has moved in, and the outlook for 26 to be already into March, but outlook for 26 and see what to look forward to in that state, in this state of investment, where does it stand? Where does it stand, and do investors are still look forward to it, or will the investors not look forward to it? How did the first home buyers and owner occupiers look at it? Let's get into it, guys. Let's get into deep dive. Now,

Mudit

absolutely, and it's interesting how you said that is there still gas in Perth. And incidentally, gas is one of the top four exports there as well, right? So there's no gas, it's going to be a big problem. So just on the light, yeah, I hope

Parag Dixit

there is gas. I hope there is all this stuff which is happening in the petrol station and the service stations and all that. But, yeah, this they did. It is. But anyway, so let's start. Let's start with Perth. Let's start with Perth, which is, which is the biggest and by far the most happening place right now in terms of investment, you know, buyers are now paying, I think still they are paying, 10 years ago, kind of prices of Sydney right now, so they're still behind. There's still a lot of way to go with respect to catching up with Sydney, but there is an under supply story which is playing out in Perth. So what, what? What have you seen in terms of data, in in for Perth right now, in terms of purchase affordability, there

Julius

purchase affordability is extremely good, yet, even though it's rewarding faster, if you look at the buying affordability sits at 50% but still it's much below for lot of capital cities like Sydney or Brisbane, when you look at the Adelaide Perth is still much better. When you look at the renting affordability, incomes are pretty good. In fact, rentals are rising, so the renting affordability is around 30% of the income, okay, plus extremely lower supply of properties at this stage, the median prices are sitting at very close to $980,000 not bad. And units and houses don't have much gap, so units are very close to $670,000 yeah, yeah. In terms of growth from last entire last year, houses grew by around 15.7% and units grew by around 17.5%

Parag Dixit

awesome. No, that's, that's fantastic. In fact, I think I read somewhere, and I was noting that that Perth has now really crossed even Melbourne in the median prices which it had, it's, though it's gone up, what, 90% or something in the last five years, or something which is super good, because Perth has really, I think, single handedly taken people across the last two years in the investment landscape, two or three years, right? It's really taken a margin. It's really had some wealth creation for a lot of guys who could invest in time in Perth. And there's still not a bad time to invest. But I'm saying still they're investing in droves there. But whoever is invested in the last two to three years, they made good money. I think about. 20, 20% kind of a return, or overall, Perth dwellings in units and houses and Parag houses and everything together in the last year, 25 and both, both of them, I think the stocks are limited, and both investors, owner occupiers, everybody chasing the same stock and but that's the good part about Perth. What has happened there? You know, this, this and this profile of people is also good, right? Mudir, yeah.

Mudit

So, no, absolutely. The kind of growth it has seen, it has been pretty phenomenal. Of course, there was a there was a long period of time where there was less growth, but last few years and last year also, the same question was there whether it will continue to grow like it has been growing in the last few years. And out of all the capital cities it has been, it has seen one of the fastest growth. The problem is that, because of the sudden growth in prices Perth, is one of those cities where there's a lot of demand, the genuine demand of owner occupiers. But owner occupiers are getting priced out of market because a lot of investor activity has started happening because of the kind of growth it has seen. So owner occupiers are getting priced out. That's that's a part of the story. I mean, there's good and bad about any kind of growth. So that is something which is, which is, which is happening there.

Julius

Yeah. WA, if you look at the WA, is a state compared to most of the states across Australia, for an example, if you compare with the Queensland or South Australia, especially because they had a very big run from last four, five years, the investor proportion in WA is still much below 35% in entire state. And Perth, it's still very close to 32%

Parag Dixit

okay. Versus

Julius

Brisbane is sitting at close to 44 45% as a state, and Queensland as a state, it's around 52%

Parag Dixit

okay.

Julius

So in Perth, the maximum demand when you look at to both the cycles, either it's investor cycles or the owner occupy cycle, it's hand in hand, but investor cycle, or investor demand, is extremely higher all the time in Perth, and that is a good sign.

Parag Dixit

Yeah, absolutely right, yeah. And in fact, the last four or five years has been crazy. There was a time when Perth, like madith, was saying, was a leg out. It was not going anywhere. It was just flat. I think even South Australia was like that. But Perth in particular was just, despite being such a economically vibrant state, and there was lots happening there because of the mining downturn and up and down, there it was. It was pretty much silent. But 25 has been phenomenally good for Perth, and it has done really nice for people. It has done it's, I think got the best yield combinations and the growth combinations, you know, you're getting phenomenal yield. You get rental yields, and you're getting phenomenal capital growths in the state. What more can you ask for? Right? But unfortunately, like you said, local buyers, they were kind of getting pushed out. They were not getting much out there in 25

Mudit

absolutely right? And overall average growth has been pretty high, and the affordability number of years has gone up to like we are saying 50 years. It is one of the fastest deterioration in terms of the affordability matrix, because of the sudden increase in the prices. So there's a cost to it as well. Yes, 5%

Parag Dixit

and all driven by interstate investors who and migration which is coming in, and the employment which has suddenly happened in the mining sector, all led by the commodities uptron, which is happening, and good money which is coming into commodities, steel and all that stuff there. So the demand has been structurally driven by all of these three factors together, coming in into that same state. Population growth has been amazing for I think wa cross three mil or something in 2024, at the state, and which is the fastest growing state in Australia, fastest growing so it and you have everything there, right? Population growing, the economics coming in, there, migration coming in, there, resources coming in, there. What more do you ask?

Julius

Employment is more diversified, and then incomes are like pretty good than most of the states. And then also, when you look at the supply metrics, stock and market is still below point 3%

Parag Dixit

All right, yeah.

Julius

And when you look at liquidity score, which is days on market is below 35 days, yeah, which is pretty good. None of the LGs witnessed negative growth.

Julius

Every LG across the Perth grew faster than what we were anticipated and especially towards. In last year, we had witnessed two booms within a single year. First was where the investors are very much interested, and second was mostly towards owner occupiers. So that was like the growth was outpaced rather than all the other states. But when you look at the broad demand based, then it's not a speculative investment, or it's not a speculative boom, it's where there is a fundamental boom, where supply is extremely lower, demand was extremely higher from investors because of the good yields. When we look at the community yields, they are around 3.7% but when you look at lot of LGAs, where the investors are interested, and then property prices are still below $900,000 yields are still 4.5 to 5%

Parag Dixit

all right,

Julius

that kind of yields you're sitting on,

Parag Dixit

absolutely right? And and I think despite the. Kind of actions which investor lending is bringing in through and all that. Despite all of that, what is happening, the demand structurally remains extremely strong there and that. And the reason is very clearly. So see, if you just look at what you said the listings, it's about, as I was saying at the start, it's about 50% lower than the average of the last four, five years, right? So five year average is pretty high, and still, you don't have listings. Don't have properties, owner occupiers. Those started later, but they are still vying for it. There is this. Not so much of stock available. This stock level is so tight that people are just there's a cube, yeah. In fact, in fact, although surprisingly, although building approvals grew by 45% last year, which is phenomenally, a phenomenal increase in a year, but still, there's a huge lag. And that is what so structurally, the demand has gone up, but the supply has remained constrained despite higher approvals happening. It is there's so much gap still, and that's where the whole story, whole stories, and I think, I think the sweet spot is within $800,000 kind of a property, because that is where the everyone, the investors, want to be there. That's where you get the yield. The owner occupiers want to be there. The people who are wanting to upgrade their house do whatever they want. Anybody who wants to get into a property, that's the action point. I think that's the that's the choice point where, okay, I want to be in that segment, and I want to be in that place, to be there. So Perth has been phenomenal for all of these things. But what? What about WA? What about regional WA? This is this? I think WA is bit behind Perth as well, right? Perth used to be five and a half 6% yields in rental yields or yields in but now that's where WA is, right. Houses are growing 16, 17% not bad, right? Not bad. When you compare to Perth, it looks bad, but not bad. Who doesn't want 16% growth? But there's no it's not there anywhere in Australia. That's right, right? So what? What else you see in data out there in terms of the regional Western Australia.

Julius

Regional Western Australia depends on the LGAs, but there are a lot of alga is fast and fastest growing across the Australia. The median houses close to mid to high 600 depends on in which LG we go towards. And units are still at below $400,000 there's a huge gap between the units, unit in terms of the townhouses, the block of units, or the villas kind of thing, where there is a big gap, houses grew by 16.5% where the unit performance was not great. It's around nine and a half percent. But regional WA has compounded around 88.8% in last five years. So it has extraordinary and it's still affordable. So if you look at the yields, yields are still very close to 6% supply is extremely tight. There are no houses at all. And then even though we can see there is a good mining boom towards the biggest mining LGs as well. So market is pretty tight. There is big momentum in property purchases from the investors, as well as what I could see is basically there is lot of net internal migration towards the regional town centers, because they lot of investors, or, sorry, lot of FIFA workers, a lot of people from Metro Perth or metro Brisbane or Sydney, they are trying to move towards the bigger side of the regional town center, which are the significant urban area, because of the good income, yeah, and because of that extra extraordinary demand towards those properties, we could see there is a tightness into the listings. Where do you go towards Geraldton or go towards Bunbury? You go to the Albany? Everywhere you can see the stress within the property prices.

Parag Dixit

All right, okay, and that's why, that's, that's, that's why I think we finding more rerating happening in terms of the regional WA areas. More and more areas are becoming hotter and better, and we are finding, we finding people are vying to stay there, whether it's down to Bunbury area or up to giralton and all of these areas, people are wanting to go there. They are not No more no no areas. And still, we are having five and a half, 6% kind of a yields out there, 8% plus of apartment or unit yields out there, amazing kind of yields. You don't find that anywhere, right? I think if you combine all of these, more than 23% return, it's an amazing return which people have got in 2025 all driven by the resources sector, all driven by all, all of these mining and the employment which has come through. There's been a strong, strong driver of business out there. And I think no LGA has, has been, has been bad. I think every LG is all round kind of activity which has happened there in this area. I think we've seen that right all these areas of whether it's Bunbury, around that area, Geralt and karate, all of those areas, port, headland, all of these, though, they are mining in coastal hubs, but they are still equally going strong.

Julius

Resource sectors have a lot of boom, and then they are extraordinary with it's a long term. Home, yeah, especially when you look at look towards the Calgary as well. Then company were trying to set up the camps now to accommodate the workers because of the fact that there are no houses, yeah. Also there are a lot of places are diversified. And then wa the state is trying to diversify the regional town centers as well. They don't want to focus more towards the Perth as a city. So they want to create, they would like to create more employment opportunities towards the regional areas, like a significant urban area. So we could see there is a significant amount the population growth in those areas. But when you look at the houses over there, the trades are short. Property prices are going up because of the two factors, not more supply, not new building approvals, the construction cost is extremely higher in the remote regional because of the trade shortages as well as material shortages, land is cheaper, but because of the construction delay, there is more pressure on the property prices.

Parag Dixit

Absolutely right, and I think you're right. So the demand and the employment which is being created by, you know, mining and energy and construction and all of these segments have been strong, strong drivers of, not even the growth, but also population. And population inflow is all was always contributing to what's happening in WA suddenly, you know, there is so much of stuff which is happening. There are LNG projects coming up, and I think there is a strong demand which is going to come up across a large area of WA, regional WA, because of that which is, which is that happening in the severe, serious supply constraint is still there. Like you rightly said, camps are being set up. I was, I was surprised to read that's a 500 bed camp being set up in an area. But that being that being said, it's not that only that is happening in government is pumping in money towards roads and regional hubs and trying to create broad based employment structures in there, which is great, which is really good, because then you're looking at the demand spreading out. It's not concentrated in one

Mudit

town

Mudit

from from a demand angle, I think Perth has been doing, and the intentional push to develop holistically has been great. Definitely, it has been a great policy there. I think what needs to be solved, and which is not an instant solve, is the supply thing. So that's us. That's the solution that will solve the problem for housing. But again, it's not an instant solve. It takes time. The whole ecosystem around construction and approval and building, it takes time. So, so that's, that's something which will, which will be very important factor to see whether, how, how the next, next one year looks like.

Mudit

Yeah,

Parag Dixit

it's a bit of it. It's a bit of a tight situation that inventory is not going to get solved so easily. There's, there is nothing much there. There's not much happening. Because, again, we have to see that they are. It's, again, if you look, when you're looking at giraldon from Perth, it's not a short distance. It's a pretty it's part pretty far off. If you go down to Albany or something, it's pretty far off. It's a four, five hour drive. It's a long distance away. If you go to karate, or if you're going to all of these areas, you know, Calgary, you know, pretty far off area. So it's not so easy to be able to to be able to set up infrastructure out there. It's not so easy for construction being concerned to come about there. There's a massive trade shortage out there. Whenever somebody wants to talk of construction,

Julius

inventory scarcity has multiple reasons. The number one is the federal investment. So when you look at the projects, the amount of projects they have, like ocus announced 10,000 jobs. They have a lot of defense, housing, like a Garden Island. It's few billion dollar projects. Then it's only state which is surplus and GST. And then they are investing more towards the real infrastructure, where the Metroid project is connecting most of the is across the Perth, or the greater Perth, or the remote Perth, towards the Perth CBD, where they'll be spending more than $16 billion so most of the construction workers are engaged into those type of major projects where there is a serious supply of workers, or the construction workers supply shortage of Those towards the housing, and that's the reason why, okay, you still have a little bit of land release, and then when they release the land, it just booked by developers immediately. It's not like you have oversupply of the land which is coming up. Second thing is, when you look at the construction timeframe, extremely high construction cost is higher the amount of pressure thought inventory, which is being generated versus amount of consumption, consumption is pretty strong. So from last few years, inventory is much below three months and it's not growing at all and it's shrinking

Parag Dixit

absolutely no. And that's a fair point. You know, when people are getting more and more employed and engaged within the Perth CBD, in itself, regional, Western Australia is taking a hit because the labor doesn't go there. They need to go there. They can still find an employment out there, though, there is a there is a net migration, which is happening outside but not at that scale, especially the labor. They're just not going out there. They don't need to. They're still getting great stuff out there. And then. The material to reach in these smaller areas is, again, there is a there's a cost to it, and that brings up the cost compound it with labor shortage. So labor cost also goes up. Hence the cost of construction is too constrained out there, and not even the cost of construction. But even, even there are not enough people to be able to do stuff there, and which is why it is causing the whole inventory to become even more severe, a shortage, rather than, then what it looks like. And that's a that's a bit of a concern, which is there in terms of what, what most can happen. And that's why prices are still going up for whatever you have. You have to take that right, and you have no other choice from and

Julius

it has lot of impact on the rentals as well. So when you look at the rental turnovers, vacancies are much below 1% in most of the places, yeah, even though, if you look at the bigger suburbs like ivis, or if you go towards the lake lands, or if you go towards the northern side, the max vacancy is 1.2% where the suburb size is 12 square kilometer. That's how the supply shortage is. So because of that supply shortage in terms of the rentals, yeah, plus the fastest rental turnover vacancies extremely low, which creates more pressure on a rental prices,

Parag Dixit

absolutely right. Now, that's, that's, that's a good start. So Okay, now let's talk about Rental Affordability in the Perth. Perth itself, right in 425, what happened there? Now we've seen that right because of these same factors, because people want to stay there. There's so much of economics happening. There's so much of work which is happening there. It's, it's under severe rental pressure. Yeah, it has. It is the tightest in all the major markets. It is, it there is no, no respite to it, the trends are up, say, 6% roughly 6% on houses, up more than six, 7% in apartments are there. So in Unit sector, phenomenal yield. As an investor, I'm loving it, right? I know what, what? What better can I get? I'm having a cap 20% capital growth, and I'm having a six, 7% 8% rental growth. Why do I not like it. I definitely like it, and that that's why the rental growth is there. That's why every kind of stuff is there. It some supplies comes up. Little bit of better Betterment versus 24 has happened in 25 but not doesn't look, doesn't look, looks more like a structurally under supplied rental markets.

Julius

And then I witnessed, like, we bought few properties, and especially when you go towards the inner CVD of birth, there are, like, 3637 families, and then your house can get rent or in within within it for first or second open home. Yeah. Plus, few months ago, we see, okay, the 600 to 650 was a common rental per week for three bedroom and bathroom houses. Now the situation is you can cross $7 per week, since the incomes are higher, renting affordability is still below 30% and

Mudit

there

Julius

is a very limited availability of the houses where the demands from mining sector is too good, demand from other employments is extremely good. Plus you have very limited stock. Plus lot of people are buying home and becoming an owner occupiers. So the new population, which is moving there their own houses rent, and that is creating additional

Parag Dixit

pressure, yeah, yeah, absolutely right. And that's that's creating a lot of pressure in the market there, because population is still growing, right? Population continues to grow. And when they continue to grow, there is a demand which is a demand which is coming there, and that demand is just not being you know, you don't have sufficient dwelling completions, housing completions, of construction completions which can cater to the rise of demand. So you're one. You did not have the enough stock already. Now you're lagging in the new stock coming into it. So rents are going up and they are accelerating, or year and year they're accelerating for last couple of years. You know, fastest, I think, must be the fastest in any other capital region, yeah, just because of the demand and supply gap in terms of rent in the Perth city and and it this, there is no quick fix, right? Again, like we talked about other areas, there's no quick fix. There's not enough land which is coming. That's not enough. There is. The resources sector is demanding more and more. The construction workforce is demanding more and more in the in the Perth, but it's just not happening. And I think you're right. There's a lot happening in infrastructure build up across Perth, which is creating more and more demand for people. And you can you now finding, I was, I was surprised. You were now finding houses getting into dual key, kind of a structure where people are dividing their house into two, and still, there

Julius

wasn't a concept in Perth as it like they had a dual income properties. But now we could see there are a lot of properties either converted into dual income. Lot of land developers, or home and land packages have been come up with the dual

Parag Dixit

income

Julius

properties because of the fact that shortage of the properties. Second thing is Perth. Historically, Perth rentals was extremely higher.

Mudit

Yeah,

Julius

last year, the entire National Rental rise is around 4.8% five Perth was around 5.2% all right? And. Especially on towards the higher segment of the rental band,

Parag Dixit

yeah.

Julius

So that's because of extremely supply crisis.

Parag Dixit

That's the supply crisis, correct? That's, that's because of the supply crisis, which is why we are finding that it has one of the lowest listing volumes across the country, lowest, like you rightly said, one, one and a half percent kind of a vacancy rate, which is, which is practically nothing, you know, just

Julius

even though, if you release the land also, you need two years to build house,

Parag Dixit

yeah, you need two years to build a house. So,

Mudit

it's

Julius

just, I was reading the data so, so per to become supply neutral, it will be looking at around 2030 to 2034,

Parag Dixit

okay, still

Julius

there. It's extremely low supply area where,

Parag Dixit

which means that when we look at and when we will come to it, when we when we talk about 26 but it's going to remain as a poor situation in terms of supply in 26 as well. And that's that's because there's not much in terms of supply coming in there. The rental listings are so far, so far down. It's just not helping you in any way at all. In

Mudit

although, although the rental listings increased a bit, but still, like you're saying, it's been below one and a half percent, roughly in that range. So the structural supply constraint continues to be the key dominant factor which is causing the rental crisis as well as the purchase crisis.

Parag Dixit

And what do you what? What do you see? If you, if you think this is where Perth is, how bad is regional, Western Australia, if you, if you look at the same thing in terms of Rental Affordability, positioning,

Mudit

Rental Affordability, so it is gross yield for for units, for example, in the rental in the regional is 8% plus which is, which is, by far, probably the highest in the country anywhere, right? So that, that one number itself shows you that what kind of crisis of supply is there, right? So, so that return in terms of investment has been 23% because of the rental plus the growth you've seen there. It's phenomenal, that ways,

Parag Dixit

yeah, I think, I think the must be the, by far the highest in the country, right? If you have an 8% rental yield in units, then I'm 2% or something two and a half percent or something positive, versus my loan, cash rate, cost, and even this is great, right? What else do I want?

Mudit

Absolutely and even for houses, the gross yield has been 5% plus. So So regional in terms of, again, the rental supply, it is doing pretty great, because, again, supply shortage, rents have gone up by 10% in the last year, right? So the so regional, if we compare with Perth, has seen fast more growth in terms of the rentals and the yields and the overall return overall last year.

Parag Dixit

But I think you know, if you there's two sides of the coin. So if you are a migrant worker, or if you are coming from outside, or if you are working in the mining or construction or energy or all of these segments, if you're working there, I think you're in a good, good space, right? You're getting heaps of money, and you are able to afford and you go there and you splurge, and you pay more, and you can pay rent. But I think you feel for the local guys, the local earners who are working in your grocery stores, who have a cafe, who, who, who's living there, I think then they struggle, right? It's tough for them. It's tough for them on what's happening in the regional market. And there is absolutely this. This workforce is not going anywhere because there's so much of employment. So you don't think that this is transient. It's going to it's not temporary. It is permanent out there, and there is no supply which is going to come. Hence the Rental Affordability is going to remain worse and worse,

Julius

worse and worse and worse and and then that's that. That's what we can witness from data. 10% rental rises, yeah, that means amount of pressure,

Parag Dixit

yeah,

Julius

on a listing. So the inventory is extremely high. Can't control it, because employment is good. Lot of migrant workers are coming there to work. Need lot of houses and supply is extremely low, plus skill shortages. So it is going to be like that for longer time, for

Parag Dixit

long period of time. And I think we've already spoken a lot, and we can't pressure more on this part that the whole resources, the construction and the LNG and the LPG and the energy and all of these are really driving demand. But one more hidden factor, not hidden, or maybe new, emerging factor, which has come in into regional and especially the southern regional WA, is the belt, you know, right from Esperance, if you've gone there, beautiful town, I would love, I'll tell you go there a beautiful, beautiful town. But right round from when you come down the coast in raventhorpe, and then you come to Albany, that whole belt, to burnbury, Mandurah, and below Mandurah and all that. Oh, beautiful areas. But what a tourism demand which is coming there. I was, I was there last year, and then it's, it's. All full. At Christmas, there was sheets are full, shops are full, cafes are full. You need to book appointments, and it's all full on that, that new bit of tourism and lifestyle, which used to be one strong point of gold, coast and sunshine, coast and all that bit in Queensland that's now coming in that bit areas as well. It's also there in North WA, but not so much more as much is in the South Western Australia, which is a new factor, which has come in there, and that is really driving demand. There was, I was there in a town called bustle town, okay, right. So bustle town, you get houses are now close to, I was told that by the real estate agent. They're close to a million dollars. And Busselton, if you go there, it's at the longest jetty, beautiful one, but you can that's amazing town. But a million dollars out there, that's a regional WA thing. You don't get houses on trend there at all. All this is a new, new addition to WA, which was never there. So tourism is also now driving in regional WA, the demand for renters and people are coming in there and staying in there. And that's that makes it the fee for workers, the construction workers, the tourism place, people, the tourists, which are coming. So everything is demand. Airbnb, the whole works is driving demand out there.

Julius

WA was added in mainstream from last four, five years, and there is lot of information around, okay, where to go, what to go? Because, yeah, when you go towards the southern side, beautiful beaches. You go to the secret Harbor, beautiful beach, Rockingham, for sure, amazing. Then when you go towards Mandra, it's another second city which is coming up, nice coastal lifestyle towards the secret Harbor. And then you still go down towards the manbury. Yes, there is lot of tourism demand, for sure,

Parag Dixit

correct? And that decreases the rental inventory, right?

Mudit

Yes,

Parag Dixit

the inventory available to you is so it gets constrained. You know, the capacity gets constrained. Constrained. Everything gets constrained. You just below the it's just there's no improvement, like mudit was saying, it's just no improvement. Significant amount of properties were allocated to the Airbnb. Yeah, yeah, correct, yeah, it is it, and 26 doesn't look like it's going to happen. Do anything much in for anyways, 25 was constrained for w, for the regional w as well. 26 doesn't look like it's going to be there. But before we get into 26 okay, very quickly, can we? Can we just, maybe just see what are the factors which are going to be important in the year 26 and how would it look like? So if we were to look at, maybe, let's, let's look at what's the impact of inflation with it, what would you say? What would be the impact of inflation and how it is running through in the WA market in 426

Mudit

See, inflation is one of the, one of the primary factors which is going to drive 2026 not only, not only wn, but but everywhere else. And the problem with inflation is that we have started seeing that in the fish is going up. We have seen the result of impact of it, of directly, that RBA has started increasing the interest rate, cash rate as well. The one of the challenges there is that, how long the geopolitical issues continue, and how long will they continue? How much impact will it have on inflation, right? So per CPI, it through, through to to last year. Last quarter grew by 3.9% which is not a small percentage growth, right? So inflation is directly going to impact the interest rate, which has a direct impact on people's capacity to spend. Good thing about WA is that propensity to the disposable income is a little bit on the higher side. Having said that, that's still an average kind of number. So when we go to household number, household level number, it becomes very different.

Parag Dixit

Yeah, absolutely. And we've been all going gaga about the, you know, the rents are rising and phenomenal rental yields and construct and the cost is rising and construction cost is rising. But these are the exact factors which are driving the inflation out there. If you look at inflation in WA or in regional WA, or in Perth, all of these, these rental, rental increase which is contributing to the inflation, increase the construction cost, which is contributing to inflation, increase, energy cost, contributing to construction and to inflation increase, all key ones. And these are, like we said, these are sticky. They are not going away anywhere when, because they are sticky and they are a nature of WA market today, and expect it to be there in the year 26 and beyond as well. So doesn't look like at least for the waw state itself. It's going to come down into the two to 3% band, which RBA wants it to be there if, and Perth is a large state or wa at large states, if it's not going to come down to that two to 3% there have to be that hard work has to be done by some other states which have, which have to contribute to bringing the inflation down. Which are those states is a different thing to talk about. But Perth is going to run, WA is going to run pretty hot in terms of inflation in this in this current year, and if. Look because of this, when we look at the interest rate impact which is coming there, you know the we are seeing that. Okay, we've seen that all the time. The variable rates have gone up. We've just seen fixed rates now touching 7% with some banks for one year, they're touching 7% huge impact. Now all of that is is going to be having an impact on WA. The good part of WA is because they have the rental yields are much better, so maybe borrowers are still going to be able to afford it here. Borrowers will still be better off there. But the weather is the Adi, a cap, which is come, which is coming through February, about 20% cap. How will that impact? It's it's going to be seen, but largely because of the rental increases and the yields, we may find that the interest rate environment, which is getting tighter and tighter, may still become a kind of WA can become a kind of a place where people can still look at investing, because they find that okay, despite inflation going in, despite interest rates going in, I Am I find that the yields are better. So let me, let me explore that area, and let me invest there. For someone who's still keen to invest. So interest rate environment is going to be, is not going to be so much of a driving factor. It will be, but it may be, became, becomes counterproductive, that it people would want to come there to invest, because you're finding that it is a better state, which is where it is, and that's why the economic outlook of WA becomes very important, right? And economic outlook of WA looks pretty strong. You know, it looks pretty very, very strong. You're still finding that the that the government is expecting, that this still will have a great GDP forecast, which is going to go up, we are finding that there will be a phenomenal demand increasing, which is going to happen. We cannot keep on saying about housing and housing and housing, but household demand

Julius

is getting driven by nothing,

Parag Dixit

right? The

Mudit

unemployment was was roughly 3% in the last couple of months ago, right? So overall, we are seeing that you're absolutely right that the interest rate increase has is a negative factor, but because of the rental corresponding rental increase, it may still continue to become more attractive. How and the supply constraint there will continue to push to put the pressure on the rental increases and and that's what we are going to see here there,

Parag Dixit

yeah, and like, whenever RBA talks off if employment is going to keep on rising and unemployment, basically, which is what RBA is trying to touch. If unemployment is not growing there, we don't want people to lose jobs, but if that's the factor which contributes to inflation, but if an unemployment is not going to be growing there. If wages is going to be growing there, then these are the factors which really are going to keep on impacting the economic outlook there, because it's going to keep on tightening, it's going to keep on contributing to inflation rising, and it's not going to have there. But I think the biggest, if I look at the overall infrastructure, economic and the whole thing there, I think the biggest, maybe the caution point can only be the demand which happens in commodities, the iron ore demand, which can be there, if there is an any kind of an impact on iron ore demand, that is the only bit which I think can be kind of a headwind on in what happens to the WA market. Otherwise, the economic outlook is pretty strong, right?

Mudit

Otherwise, it is very strong. But you rightly pointed out that the demand, especially from China, now that is, again, another big factor, the political factor there, that how much? Because there's already a drop in the demand there, and if that drops further, that's going to be a little bit of problem there. But yeah, of course, it's a national it's not just a state level problem. It's a it's a problem to be solved at the national level. So,

Mudit

yeah,

Parag Dixit

right. In fact, there are some large, I don't know, mines which have opened up. And there's a big mine which which opened up in Africa, which is, which is going to have a demand impact on especially the China market. China is the biggest purchaser for iron ore for Australia. So if that mines is going to provide cheaper or better, or any other has any kind of a way to impact, what is going to happen? Wa is going to straight feel the impact, and then the employment drivers, which are the resources industry, is going to be the first one to be impacted, and hence contributing to the full cycle. Maybe that's the only cautionary tale which we can see in the WA market. But otherwise it is phenomenally good, you know. But again, the another factor which we spoke about during this thing was, was migration population. What would you see as an as an outlook in migration population for this year now, 26

Mudit

see the population. WA has been the fastest growing population has seen the fastest growth. It is surpassed 3 million, and so the growth has been roughly 2.8% last year. And the expectation is that it may not remain at that level, somewhere between, somewhere closer to 2% that's where the population growth is, but that's also quite a large number of people from a net migration perspective. Especially given that housing supply has been a constraint. So population net migration into WA is going to continue, and that is one of the factors, along with more robust economic activity, which is the strong driver there, actually.

Parag Dixit

And I think both NSW and Victoria in particular, are losing people to Queensland and WA is also one of the biggest gainers of population movement,

Julius

correct? So two years ago, people were moving towards Brisbane because it's affordable. Brisbane is in a situation where it's sitting at at least one to $1.2 million as median house prices. Moreover, the incomes are not that great. So the lot of people are moving towards the WA because of the more employment opportunities. Housing is still affordable, and then incomes are pretty good, which is giving more pressures towards the property prices. But when you look at the current medians, now still it is an affordable segment,