GMO Buy a Business

Is 2017 The Year That The WA Economy Rebounds?

Leading Perth Finance Broker Mike Coombes tells GMO Business Sales team that there are ‘Green Shoots’ appearing in many sectors of the WA economy.

A number of clients have advised that during the last quarter of 2016 they experienced uplift in enquiries which have been converted to orders. Particularly pleasing from a WA economy point of view is that it is the mining sector is the major driver of the Green Shoots. The likes of BHP, Rio and FMG are placing large orders for upgrades of their facilities in the North West to maintain the record production of iron ore. This is providing a much needed boost for businesses supporting the mining sector.

The property sector is also going through a recovery, though it is very early in that process. REIWA figures show that the number of properties listed on the market has decreased slightly and that residential property sales in January 2017 were well above January 2016. There is still a major oversupply of apartments in the CBD with some experts predicting it will take 3 years to clear the oversupply. Residential property values in the outlying suburbs such as Alkimos and Baldivis will most likely remain subdued for some time whilst the oversupply in those areas is soaked up, but many suburbs within a 15km radius of the CBD are experiencing good clearance rates. The Western Suburbs, which has been one of the hardest hit areas over the past 8 – 9 years, is stabilising though most property owners have a lot of lost ground to recover. Commercial property is also showing signs of recovery but this is very patchy and dependant on location and property type.

All this means that there is likely to be a more positive outlook for business in WA in 2017 and that should flow onto the banks being more willing to provide funding. 2016 certainly saw a tightening in credit policy amongst the lenders, in response to the subdued economy, but hopefully the banks will be monitoring the recovery closely and be prepared to do their part in providing funding to sound businesses.

Business loan interest rates remain very competitive and the banks are keen to lend for the right deal. It is more important than ever to ensure that a request for new finance or for the extension of an existing facility is supported by a detailed and accurate finance submission with relevant financial data. The old adage of “it’s how you tell the story” is more important than ever.


Written by our favourite finance broker Mike Coombes of Southshore Finance.