Introduction
In previous episodes, we presented videos on the budget plans of New South Wales and Victoria, which received an excellent response. Many viewers requested that we create a video on the Queensland and Western Australia budgets to help them determine the best direction for property investment in Sydney, Melbourne, Brisbane, or Perth in the next 12 months. Today, we will fulfill that request by providing a comprehensive analysis of both states.
Similarities between Queensland and Western Australia
Queensland and Western Australia have several similarities. They have similar economic sizes and rely on resource exports to some extent. Their capital cities are medium-sized and attract both domestic and international immigrants. Over the past five years, their housing prices have been skyrocketing.
Western Australia's Budget and Property Market
Financial Health
Western Australia has the best financial situation in Australia, with seven consecutive years of budget surplus since 2018, including during the pandemic. In the 21-22 fiscal year, the surplus reached a record high of 60 billion Australian dollars. In the 23-24 fiscal year, it decreased to around 45 billion Australian dollars, and in the 24-25 fiscal year, it was 25 billion Australian dollars, even with only 75% of the GST allocated. The remaining 25% was used to support Victoria. In the 25-26 fiscal year, the projected budget surplus is slightly lower at 24 billion Australian dollars, but it is expected to gradually increase to 28 billion Australian dollars in the following four years.
Economic Performance
Despite being ranked fourth in terms of economic size, Western Australia has the lowest government debt-to-GDP ratio at around 9%. In contrast, Victoria's ratio is 20%, and Tasmania's is 35%. Over the past five years, Victoria's population has increased by 300,000, and its economy has grown by 26% compared to pre-pandemic levels, while the national average is only 16%. Therefore, Western Australia can be considered the healthiest economy in Australia.
Budget Allocation
In the 25-26 fiscal year, Western Australia allocated 14 billion Australian dollars to the "Made in Western Australia" plan to promote local high-end manufacturing, clean energy, and economic infrastructure. This includes establishing a strategic industry fund with a 10 billion Australian dollar injection, providing infrastructure for industrial areas, supporting clean energy projects, and enhancing the productivity and efficiency of the real estate industry. Additionally, 300 million Australian dollars was allocated to provide free TEF courses for construction and manufacturing workers.
Property Market Support
Western Australia has introduced several new initiatives to support first-time homebuyers. The government partnership home purchase plan aims to assist low- and middle-income earners in purchasing apartments and townhouses. The government can contribute up to 30% of the funds, with a minimum personal contribution of 2%. There is an income limit of $123,000 for single applicants and $189,000 for joint applicants, and the current floating interest rate is 7.35%. Another subsidy is for detached houses, including existing and newly built ones, with a minimum down payment of 2% and no mortgage insurance. The income limit is increased to $148,000 for single applicants and $218,000 for joint applicants, and the maximum purchase price is 730,000 Australian dollars.
Property Market Outlook
In the past few years, Western Australia has experienced the fastest population growth among the states and territories, leading to a rapid increase in construction completions. Although the supply of housing is still insufficient to meet demand, the gap has narrowed compared to 2022 and 2023. Therefore, the driving force for a significant increase in housing prices in Perth is no longer present. In the short to medium term, without any unexpected events, housing prices in Perth are expected to remain stable with a slight increase.
Queensland's Budget and Property Market
Financial Challenges
Queensland's budget has also faced challenges. The 25-26 fiscal year budget showed a debt level nearly 20 billion Australian dollars higher than last year's forecast, which has raised concerns from international rating agencies. The government attributes this to a sharp decline in coal resource tax revenue, a disadvantage in the national GST distribution, and the poor financial management of the previous Labor government.
Infrastructure Investment
Despite the financial challenges, Queensland has made significant investments in infrastructure. The Wave project, which aims to improve the transportation between Brisbane and the Sunshine Coast Airport, will upgrade and build railways and light rail. The government has also allocated funds to upgrade the train lines in Logan and the Gold Coast, which will reduce commuting time and increase regional labor mobility. The Ripley Town Center will undergo a comprehensive upgrade, including the expansion of the shopping center and the construction of commercial, office, and residential buildings. Additionally, 4.7 billion Australian dollars has been allocated to continue the Olympic Games projects.
Property Market Support
Queensland has also increased its support for first-time homebuyers. The existing first-time homebuyer subsidy has been extended for one year, and eligible buyers can receive a one-time subsidy of 30,000 Australian dollars. The government has also introduced its own version of the government partnership home purchase plan, Boost to Buy, which allows the government to contribute up to 30% of the funds for new homes and 25% for existing homes. The minimum down payment is 2%, and the income limit is $150,000 for single applicants and $225,000 for joint applicants.
Property Market Outlook
Queensland's budget deficit and increasing debt have raised concerns about the future of the property market. However, the government's significant investment in infrastructure and support for first-time homebuyers are expected to have a positive impact on the market. In the short to medium term, housing prices in Queensland are expected to remain stable with a slight increase.
Conclusion
In conclusion, both Queensland and Western Australia have their own advantages and disadvantages in terms of the property market. If you are a first-time homebuyer, Queensland offers more attractive subsidies and support. If you are an investor, Western Australia may offer more stable returns in the long term. However, it is important to consider your own financial situation, investment goals, and risk tolerance before making a decision. Additionally, it is recommended that you consult a professional property advisor for personalized advice.
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