In today’s show Simon Pressley from Propertyology has been analysing the latest employment data for locations right across Australia and has found some interesting discoveries that will impact property.
Kevin: As any seasoned investor is going to tell you, employment trends can be a precursor to property market trends. Propertyology’s Simon Pressley has spent quite a considerable amount of time analyzing the latest employment data for locations right around Australia. He’s come up with some pretty interesting discoveries that we’re going to talk about.
Hi, Simon. Thanks for your time.
Simon: Thanks for having me, Kevin.
Kevin: Simon, firstly, what did you find out?
Simon: Looking at employment trends is something we do several times throughout the year, Kevin, because it’s important to see where the jobs are that people might move towards.
Nationally, Australia is actually performing a lot better than broad unemployment rates would suggest. Obviously, over the last couple of years, unemployment rates have trended up – not to alarming levels – but we’ve actually created a lot more jobs. There are 3% more jobs here in Australia today than two years ago.
Kevin: I know it’s one of the factors you need to look at when you’re determining where you want to invest. It’s a pretty good one, too. Where does it rank in importance from some of the other factors?
Simon: I would always say affordability is the number one consideration we look for. But employment and economic development would be a very close second.
Kevin: Have you noticed any trends in there with employment and things like developments and infrastructure around Australia?
Simon: There is. Infrastructure, depending on the nature of the project, can create a lot of jobs, but it depends. For example, Northern Territory – Darwin specifically – has created really good jobs over the last two years, but a big chunk of that was the Equus LNG Project, so it’s a short-term job creation factor. There’s devil in the detail when looking at job data. It’s not just looking for big numbers; it’s looking for the sustainability of it.
Kevin: How important is it to differentiate between actual job numbers and unemployment rates?
Simon: Look. It’s critically important, I think. Generally speaking, what we read in the media about employment is a very broad unemployment rate, and even then, it’s usually “Queensland is this, WA is that.” Well, as a property investor, that’s really useless information to us. We’re not going to invest in the whole state.
Even if you have stripped down an unemployment rate, to say, one city – like Brisbane – we see more value in what is the trend of that? You can have an unemployment rate that might be above the national average but fast trending down because it’s creating lots of jobs. Looking more at the job creation data rather than the broad unemployment rates is a lot more valuable to us.
Kevin: What did you find out state by state?
Simon: State by state, Victoria and New South Wales have performed very strongly, and there’s no coincidence there that Sydney and Melbourne have had really strong property markets. At a state level, New South Wales has 4% more jobs today than two years ago against a national average of 3%. Victoria has 2.9% more jobs. The big surprise in there for some would be Tasmania. Of all the eight states and territories, it’s performed the best. There are 5.5% more jobs in Tasmania today, Kevin, than two years ago.
Kevin: Why is that? What’s driving that?
Simon: Part of it, I think, is a change of government about 18 months ago. Tasmania had a 16-year reign – from memory – of the same state government, which is a long time for one party to be in office. I think just a fresh face. Tasmania is really benefiting from what we know as the Asian century. Its industry drivers there are perfectly placed to benefit from job creation stuff as it takes advantage of the Asian century.
Kevin: Of course, a majority of people choose to live in the eastern states in some of the capital cities, and you get down into the regional areas and it’s pretty sparse in some ways. Is that actually changing?
Simon: Look. I think we can be guilty as human beings for generalizing too much. Some say that capital cities are better than regions, and regions are mean risk in all that stuff. Well, it’s a really general comment. There are risks in some regions, and there are risks in some capital cities. But there is some really exciting employment data in some of the regions.
The best performing region in all of Australia over the last two years has been the Orana region, which is central west New South Wales. The official capital of the Orana region is Dubbo, and there are 32.6% extra jobs in the Orana region today compared to two years ago.
Kevin: What’s behind that?
Simon: It’s one of Australia’s best agricultural sectors. We’ve probably all heard that terminology Australia is Asia’s food bowl. Dubbo itself isn’t an agricultural town, but it’s a big city that services a broad agricultural region. That’s one factor behind it. There’s some tourism out there. The Western Plains Zoo is expanding, and there have been a few infrastructure projects in the region, as well.
Kevin: You mentioned Sydney and Melbourne as the two highlights out of the report. What about some of the other capital cities? You mentioned Brisbane, but what about Perth? You mentioned Hobart, what about Perth and Darwin?
Simon: Yes. Darwin has created the most jobs of the capital cities, 8.3%, but when we really look closer at that data, that really relates to a big influx of jobs in the first of those last two years, and that was directly related to that big gas project that we spoke about. The devil is in the details in the Darwin data.
In Perth, there’s 2.4% more jobs created over the last two years – which, at least, is positive data – but it is below the national average. We should expect that understanding that a big part of Perth’s economy is heavily influenced by iron ore and what’s been happening there.
Kevin: You talk about the influences. You look at Canberra, some pretty big influences there, but it’s all based on what’s happening in politics.
Simon: Yes, definitely. About 28.5% – from memory – of all jobs in the nation’s capital of Canberra are government jobs one way or another, and obviously, it’s widely known there’s been a lot of shedding of jobs there as governments try to balance budgets. Of all the capital cities in Australia, Canberra is the only one where there has been a decline in jobs – 2.2% fewer jobs today than two years ago, Kevin.
Kevin: Yes. It’s a bit of a cot case, the old Canberra. You drive around there and you see a lot of vacant buildings, as well.
Simon: Yes, it’s had a lot of extra housing supply, mainly unit stock there, so it’s a double whammy.
Kevin: Yes. I’ve been talking to Simon Pressley from Propertyology. The website is Propertyology.com.au, and a great report. That’s available on your website, Simon?
Simon: It is indeed, Kevin.
Kevin: Yes. Good stuff, and great talking to you, mate. Thank you for your time.
Simon: Thanks, Kevin. All the best.