T4 Introduction to Property Markets and Key Indicators

Key Economic Indicators for Property Markets

Economic data serves as the foundation for monitoring property markets. Key indicators provide insight into the macro-environment that influences both buyers and sellers.

• Gross State Product (GSP): A measure of the total economic production of a state or territory. It serves as the state or territory equivalent of a nation’s Gross Domestic Product (GDP). In the context of property markets, GSP functions as a primary demand-side indicator.

• Gross Domestic Product (GDP): The national measure of total economic production.

• State Final Demand: A measure of economic demand for products within the economy. It is an aggregate obtained by summing the following components:

  • Government final consumption expenditure.

  • Household final consumption expenditure.

  • Private gross fixed capital formation.

  • Gross fixed capital formation of public corporations and general government.

  • Note: State Final Demand differs from GSP because it excludes international and interstate trade as well as changes in inventories. It is considered a demand-side indicator.

• Labour Force Metrics:

  • Unemployed: Individuals aged $15$ years and over who are not in a paid job and are actively looking for work. The unemployment rate is the proportion of people in the labour force who are unemployed.

  • Employed: Individuals aged $15$ years and over who are paid for at least one hour of work per week. This includes both part-time and full-time workers.

  • Participation Rate: The labour force expressed as a percentage of the working-age population. The working-age population typically includes Australian residents aged $15$ years and over, excluding specific groups like permanent defence force members.

• Wage Price Index (WPI): This index measures the change in the price of wages and salaries in the Australian labour market over time. It is a critical demand-side indicator.

• Interest Rates: Influences borrowing capacity and the cost of debt.

• Exports: Economic output sent to international markets.

• Investment and Investment Projects: Captures capital expenditure and large-scale industrial or infrastructure development.

• Global and National Economic Confidence: Subjective measures of the current and future state of the economy.

Demand Indicators for Property Markets

Demand indicators track the appetite for property and the financial capacity of participants in the market.

• Population Growth: Comprised of natural increase (births minus deaths) and net overseas migration (migration arrivals minus migration departures). It serves as a demand-side indicator and provides information on the total supply of housing needed.

• Household Income and Expenditure:

  • Average Weekly Earnings: Broadly defined as current and regular payments in cash to employees for work done. This excludes salary sacrificed amounts unless referring specifically to the Average Weekly Cash Earnings series.

  • Gross Disposable Household Income: Calculated as gross household income less income tax payable, other current taxes on income and wealth, consumer debt interest, interest payable by unincorporated enterprises and dwellings owned by persons, net non-life insurance premiums, and other current transfers payable by households.

• Consumer and Business Confidence:

  • Consumer Confidence Providers: Roy Morgan, Westpac / Melbourne Institute, and the CCI-WA Super Survey of Consumer Confidence.

  • Business Confidence Providers: NAB Business Survey (monthly and quarterly), Chamber of Commerce and Industry (CCI) Business Expectations, and the Property Sector Confidence survey (ANZ / Property Council of Australia).

• Housing Finance Commitments: These indicate who is participating in the market, distinguishing between owner-occupiers and investors.

• First Home Owner Data:

  • Includes First Home Owner Grants and the number of finance commitments for first home buyers.

  • Significant impacts are often seen from the Commonwealth Boost to First Home Owner Grant and Home Builder programs (Commonwealth and State).

• Residential Lot Sales:

  • REIWA data: Indicates land available for sale (listings).

  • UDIA data: Records the actual number of lots sold by major developers and the specific prices at which they sold.

• Prices and Time on the Market:

  • House Prices: Median prices for houses, units, or land parcels Indicate demand trends, assuming supply remains relatively stable.

  • Time on Market: Includes the total number of residential properties listed for sale and the median number of days required to sell a property.

• Rental Market Indicators:

  • Median Rents: The price at which houses or units are leased.

  • Vacancy Rates: The proportion of the residential market available for lease. These help predict the direction of future rents and demand for owner-occupied properties.

Supply Indicators for Property Markets

Supply is categorized into established stock (existing properties for sale) and new stock (development of lots, house-and-land packages, apartments, or commercial spaces).

• Established Stock Indicators:

  • Supply listings.

  • Price growth.

  • Number of sales.

  • Average days on the market.

• Private Rental Market Indicators:

  • Vacancy rates.

  • Median rents.

• New Stock Development Pipeline:

  1. Lot Approvals (and Listings): Subdivision applications lodged with and approved by the Western Australian Planning Commission (WAPC). These typically focus on residential lots under $3,000\,m^2$ zoned as residential. They provide context for future housing supply.

  2. Building Approvals: Issued by local authorities to commence work on approved development applications. While not all approvals lead to dwellings, the correlation with commencements and completions is very strong. This is a leading indicator of new supply.

  3. Dwelling Commencements: The number and value of building works actually started, compiled from returns by building industry participants.

  4. Dwellings Under Construction: Indicates the balance between traditional houses and multi-residential dwellings currently being built.

  5. Building Completions: Dwellings that have finished construction and are ready for occupancy.

Interaction Between Supply, Demand, and Price

• Median Price Drivers: Primarily driven by the supply of established dwellings (what is currently on the market).

• Oversupply Scenarios: An increase in listings combined with weak demand leads to falling prices.

• Undersupply Scenarios: Few dwellings available for sale combined with strong demand leads to rising prices.

• Impact of New Supply: New housing supply typically adds only about $2-3\%$ per annum to the total housing stock. Consequently, it has a limited impact on price unless the supply is concentrated (e.g., large-scale apartment developments in a Central Business District).

• Conditions for New Supply Affecting Prices:

  • New supply impacts established prices only if it successfully reduces demand for established dwellings.

  • Strong new supply will have no impact on established prices if overall demand remains strong.

  • Strong new supply will impact local prices if established supply is already high and demand is weak.

Data Resources for Property Markets

Specific agencies and reports provide the quantitative data necessary for market analysis:

• Australian Bureau of Statistics (ABS): National accounts, state accounts ($2022-23$ financial year), wage price index ($2023$), lending indicators ($2026$), and building activity ($2026$).

• Reserve Bank of Australia (RBA): The RBA Chart Pack ($2026$), publications on unemployment measurement and types.

• Department of Jobs, Tourism, Science and Innovation (DJTSI): Western Australia Economic Profile ($June\,2026$).

• Western Australia Treasury Corporation (WATC) and Department of Treasury: WA economic data and indicators.

• Industry Bodies:

  • REIWA: Perth Metropolitan Market insights, median house prices, and rental data.

  • UDIA: Land and developer sales data.

  • WAPC: State Lot Activity reports ($March\,Quarter\,2026$).

  • Housing Industry Forecasting Group (HIFG): Forecasting Dwelling Commencements in WA ($April\,2026$).

  • Bankwest Curtin Economics Centre (BCEC): Housing Affordability in Western Australia ($2025$).

  • AHURI: Research on housing supply responsiveness in Australia, identifying drivers such as institutional settings and barriers to new supply.