This is why only some areas are experiencing property price growth

Last weeks figures showed that job vacancies improved (more jobs are being created).

Positive news ahoy as private sector Job Vacancies increased by +8.8 per cent over the year to August, suggesting reasonable employment gains ahead.

Total private and public sector vacancies were up by +8.5 per cent over the year to 160,200.

NSW economy leads the nation

Vacancies have followed rising house prices and dwelling construction in Sydney just as they did from 2002 as the property market ripped through its preceding boom.

Indeed, the correlation of job vacancies with housing markets is reasonably interesting.

New South Wales (58,100) comfortably has the highest number of vacancies followed by Victoria (38,900) and Queensland (26,800).

Services industries

Job vacancies are largely concentrated in the services industries, while on the other hand the mining, construction and manufacturing sectors appear to be weak.

The year-on-year change in job vacancies by industry tells a similar story with thousands of vacancies in services and tech industries, but mining, construction and manufacturing vacancies decling.

The wrap

In terms of what this means for local economies, the outlook appears to be concerning for a number of regions as the resources construction boom finally collapses in upon itself.

It was reported this week that house prices have been hit hard in Gladstone, Mackay, and to a lesser extent Townsville, as well as mining services towns around the Bowen Basin.

It is not yet known whether BlueScope Steel will close Port Kembla on the New South Wales south coast, although the company has flagged an intention to target $200 million of savings- this could result in another 5,000 jobs being cut, thereby crippling the Illawarra economy in the process.

A closure of the port would wipe an estimated $3.3 billion from the local economy thrusting it headlong into recession, resulting in a far bigger hit than the last round of layoffs in 2011 (the mining boom was still tearing along then to pick up some of the slack – but there will be no such luck in 2016).

Meanwhile South Australia’s employment shock appears set to accelerate, with Arrium announcing yesterday that it will aim to cut a further $100 million of costs in order to improve the viability of the Whyalla steelworks.

It has been a tough time indeed for the “Iron Triangle“, while the Holden closure still hangs the like proverbial sword of Damocles over the Adelaide economy.

Overall employment data over the past year has pointed towards rising regional unemployment and a dearth of employment growth.

The largest capital cities are generally faring well by comparison.

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Pete Wargent


Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog

'This is why only some areas are experiencing property price growth' have 3 comments

  1. October 8, 2015 @ 6:28 am Tom

    With manufacturing areas as as Adelaide, Wollongong and Orange ( Electrolux closing) what is the outlook for these areas. Wouldn’t that mean that prices here would continue to fall in the short to median term making it a good prospect to buy property up cheap or do you see this as a long term issue where putting more there would in fact put yourself in a situation where in real terms your assets would struggle to keep up with inflation?


    • October 8, 2015 @ 7:22 am Michael Yardney

      Tom, you make your money in property by buying the right property not by biuyng a “cheap” property. Buying in the regions you mentioned means you won’t gett he cpital growth you need for the deposit for your next property and you won’t get rental growth – you lose out both ways


    • Pete Wargent

      October 8, 2015 @ 7:29 am Pete Wargent

      Thanks Tom, that’s a good question, and I’ll give you my best answer.

      I understand why people want to buy property in areas which have been struggling, at least comparatively speaking – it seems attractive because entry prices are cheaper and the rental yields can be superficially attractive.

      I discussed on this website a few years ago how while the Sydney economy was set to boom, parts of the New South Wales south coast could be in for tough decade ahead.

      On Thursday BlueScope employees will vote on whether to accept a 3 year pay freeze and hundreds more job losses in order to save the Port Kembla steelworks, but the result of the vote isn’t known yet, so there are some significant downside risks to both employment and wages growth.

      South Australia is experiencing an accelerating employment shock at the moment, so it should be acknowledged that there are downside risks there too.

      Remember, it is really employment growth that helps to drive property markets, and while there are always ebbs and flows over time, agriculture and particularly manufacturing as a share of total employment by industry have been in a long, structural decline since the mid 1960s – from more than 25 per cent to less than 10 per cent of the workforce in the case of manufacturing – and that’s only going to continue.

      Sure mining has had a bit of upwards blip recently but resources remains only a comparatively tiny employer at just a couple of per cent of the workforce.

      The corollary of this is that services employment has been on a huge sweeping uptrend booming from only around 50 per cent to more than 75 per cent of the workforce today. It’s why cities like Sydney and Melbourne are becoming self-sustaining jobs magnets and creating the bulk of employment growth. The Reserve Bank has produced some fine research notes on why this is now happening.

      Don’t get me wrong, I am open-minded and I understand why people want to try to ‘catch the falling knife’ – but to take the case of South Australia the state hasn’t created a single full-time job a net basis since 2007 – so given that there are thousands more job losses (car manufacturing will be the next to go) in the post, personally I’d want to see some evidence of how and where the economy is going to begin creating employment before speculating on a property purchase.

      If it doesn’t happen soon the unemployment will hit double digit levels, and in fact it already has in some areas.


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