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savagegoose

mining boom house prices outstrip sydney

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http://au.news.yahoo.com/thewest/business/a/-/wa/13529644/pilbara-house-prices-outpace-sydney/

House prices in the booming Pilbara region are continuing to outpace major capital cities, with recent sales fetching $300,000 more than the Sydney median.

Sixty properties in the iron ore hubs of Port Hedland and Newman sold for an average of $800,000 per property in the March quarter, Crawford Realty agents said.

The company said the average time for selling a property in the two mining towns was 14 days compared to almost 80 days in Perth.

The decision by BHP to commence work on the $1 billion outer harbour in Port Hedland combined with construction contracts now being awarded for the $7 billion Roy Hill mine in Newman are driving demand for properties in these areas, the company said.

With potential rental returns of between 11 to 15 per cent, buyers from the eastern seaboard were leading the charge, Crawford said.

The latest RP Data-Rismark Home Value Index showed Sydney remained the most expensive capital with a median house price of $485,000, while Hobart was the cheapest with a median price of $328,000.

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A property in the Pilbara is selling on average every 15 hours with investors clambering to take advantage of the housing shortage.

New figures show about 140 properties were sold across the region during the first three months of the year, a significant proportion of the entire housing market although a lower rate than last year.

Many of those - an estimated 80 - were in Port Hedland, while 60 properties were sold in Karratha and four in Newman, according to preliminary data from the Real Estate Institute of WA.

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Australian Property Monitors said the median price surpassed $800,000 for the first time.

APM senior economist Andrew Wilson said the level of turnover in the Pilbara was remarkable considering the small number of properties available.

"There's no doubt that there's an ongoing demand for properties in that area given the high level of economic growth, prospective high level of economic growth and shortage of new supply coming through," Dr Wilson said.

"There's not a lot of history in the Pilbara for [such] high turnover."

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Dr Nocredibility must now realise what a real housing shortage looks like and there is no shortage in the capitals. Sounds like a bubble tho.

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Now, not even 3 years later from the first posting above...

 

The Pilbara’s property market descent

 

 

The property woes of the Pilbara region in the wake of a moving mining economy are well known.

As the iron ore industry moves from the construction phase to the operations phase and commodity prices drop, so too have rents and home prices.

The Pilbara's property boom, a few years ago, saw investors chase after the stream of fly-in, fly-out workers that flooded its major mining towns. The promise of a population spike and an undersupply of properties lured in investors after sky-high rental yields.

There's no doubt that there was once money to be made by investors who purchased in the Pilbara's mining towns, but those who bought in at the height of the boom have lost, and lost big.

According to the Western Australian government's latestPilbara Residential Housing & Land Snapshot, all three major towns ­– Port and South Hedland, Karratha and Newman ­– have recorded rental declines in the December quarter of 2014, for the fifth consecutive quarter in a row.

Click charts to open in a new window:

Picture%2052.png

Home prices aren't faring much better, for those who are hoping to sell and recover some of the declining rental income with capital growth:

Picture%2053.png

In Port Hedland, rental prices have been declining for even longer ­– the last three months of 2014 marked the ninth consecutive quarter of declines. The average advertised rental price peaked in the September quarter of 2014 at $2,544 per week. In the latest quarter, the average was less than half that: $1,153 per week, a seven year-low.

The graph below shows just how volatile rents have been in Port Hedland, compared with the low steady growth of rents in Perth.

Picture%2054.png

Last week, Port and South Hedland real estate agent Barry Walsh of Jan Ford Real Estate told Property Observer the mining boom peak prices were unsustainable.

"It was totally unsustainable where it was, and now that it's stabilising, it will bottom out, and is in the throes of doing that," said Walsh.

"It was unfortunate that the market went where it did, to unsustainable and disproportionate price levels."

When workers began to exit the region in mid-2012, leaving a surplus of rental properties and driving down rents, investors followed.

The graph below shows the spike in homes on the market, beginning in the first quarter of 2013.

Picture%2055.png

One of the characteristic features of a single-industry town, particularly ones with a large proportion of investor properties in the market and transient workforces, is volatility. Karratha displays a similar pattern to that seen in Port Hedland, with the number of rental properties advertised rising dramatically in mid-2011, mirrored by a steep decline in advertised rents.

Picture%2056.png

That volatility is largely due to the region's transient workforce, which made up a large segment of Karratha's population and housing demand. According to the Australian Bureau of Statistics, Karratha's census night population (the people staying in Karratha on census night) increased from 13,257 in August 2006 to 20,061 in 2011. The "usual residence population", however, was only 16,475 in 2011, up from 11,727 in 2006.

Back-of-the-envelope calculations imply that in 2011, around 18% of the people in Karratha were not usual residents – presumably, many of them were fly-in, fly-out workers.

Karratha's home prices show the same pattern as that seen in Port Hedland, implying a stream of exiting investors – around six months after rents started declining, in early 2011, the number of homes on the market began to climb:

Picture%2057.png

Further inland is Newman, where the amount of rental stock advertised began to increase in late 2012 (see graph below).

Picture%2058.png

The four bedroom Newman home in a planned estate pictured below is currently available to rent. Its asking rent has more than halved in the past year: In March 2014, it was advertised at $2,000 per week. That number gradually eroded over the months, and landlords are now asking for $900 per week.

 

2 Hibiscus Way, Newman

They paid $408,146 for the property in 2012. If it's rented at its current asking price, it will yield 11.5%

Newman's property market displays the volatility characteristic of the region.

Picture%2061.png

Whether the Pilbara's property market has stabilized and bottomed out, or will continue to see declines, remains to be seen.

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Only if you believe the theory that Aussie home loans are somehow linked to coal and ore prices.   :stupid:

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Ehh... doubled house prices after 7 years???

 

So who owns the abandoned properties - is it the mine? Otherwise those owners would be taking close to a serious (100%?)  haircut if there is zero/minimal interest.

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So who owns the abandoned properties - is it the mine? Otherwise those owners would be taking close to a serious (100%?)  haircut if there is zero/minimal interest.

 

Cobran, cobran, cobran... are you going to believe the indisputable wise claims of the RE industry or your own lying eyes?

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Cobran, cobran, cobran... are you going to believe the indisputable wise claims of the RE industry or your own lying eyes?

 

Reminds me that it is time to have my eyes tested,  ^_^

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The boom that would last forever...

 

The Arrium collapse is not pretty for Whyalla property investors

 

 

With the future of Whyalla's steelworks remaining up in the air, the property market appears to be at risk of imploding.

 
With vacancy rates above 20 percent and rising, median asking rents appear to be dropping at a quite alarming pace. 
 
Asking rents down by about 30 to 50 percent over the last three years, with the pace of the decline having accelerated over the past year, and more so over the last quarter....

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