For years the resources boom made Port and South Hedland one of the tightest property markets in Australia.
Now, the cancellation of big projects could leave the remote West Australian city with a property glut and a lot of burned investors.
Hundreds of homes have been placed on the market in neighbouring towns. For the first time in years rental properties are freely available.
The impending fallout is linked to a pullback in major resources-related construction projects that formerly filled the towns’ private housing, delivering landlords yields above 10?per cent.
Greg and Karen Thompson pulled their home off the market in Hedland after just one viewer inspected the house over three months.
“We had to take it off the market,” Mrs Thompson said. “It’s dead.”
The couple, who have lived in the area since 1996, planned to use the proceeds to help fund their retirement.
Mr Thompson said he would now continue to work as a train driver at BHP for another year before testing the market again. “I am hoping things change after the election is out of the way,” the 55-year-old said.
Even though iron ore exports continue to grow, the end of the construction project boom that requires a large work force means there is less interest in housing and equipment, which now lies idle.
In 2010, Port Hedland residents could expect to pay about $1500 a week for a steel-framed and clad house to secure a property near one of the busiest mineral ports in the world.
The high-risk, high-return market now has about 300 properties for sale in Port and South Hedland, according to property searches.
One of the region’s most active employers, BHP Billiton, has pulled many of its workers out of private housing and into existing work camps after it shelved plans to construct a major outer harbour development at Port Hedland.
John Briggs of Port Hedland Real Estate predicts tough times ahead. “Sales are few and far between,” he said. “Anybody who has bought in the last 18 months is in for a torrid time.”
A banking source said lenders would require potential buyers to have about 50 per cent equity to buy into the former mining hot spot, rather than the 10 to 20 per cent required in stable markets.
Marketing brochures for the region have targeted investors seeking a highBoom towns leaves return through rents, such as retirees.
Economic data last week hinted that the economic and jobs engine room of the country was either experiencing subdued growth or even contracting in the December and March quarters.
“Clearly the economy has slowed from a very, almost over-heated level of activity,” he said.
“We are returning to more normal conditions,” said West Australian Premier Colin Barnett. “There are still major resource projects in construction or going into construction and this economy will continue to be strong.”
The severe cycles of a mining state have been felt in other regions, such as the Geraldton suburbs that were expected to cater for workers on the long-delayed Oakajee Rail and Port project. Suburbs like Drummond Cove, located just south of the proposed Oakajee port site, are saturated with properties for sale.
Gavin Hegney, of valuers Hegney Property Group, said the construction phase of the resources boom that drove property prices higher had clearly subsided. “Anyone looking to buy into towns like Port Hedland is buying at the wrong end of the market cycle,” he said.
“There’s also the threat of a collision of new supply coming on the market and falling demand.”