Iron ore boom town burns homeowners

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.”

Jonathan Barrett

http://www.afr.com/p/national/iron_ore_boom_town_burns_homeowners_KMU7sHtZineGs5Hn20psjK

 

Canberra median house prices down a ‘statistical’ 8.7% as property market treads water in March quarter: REIA report

By Larry Schlesinger
Thursday, 13 June 2013

The Canberra property market underwent a signficant statistical correction in the first three months of the year with average median house prices falling 8.7%, figures compiled by the Real Estate Institute of Australia show.

The headline Canberra correction is large and alarming, but only partially representative of the market as the biggest fall recorded across Canberra districts were 4% in Tuggeranong ($480,000) and 3.2% in Gunghalin ($455,000) with these two more affordable suburbs accounting for 80% of the 294 preliminary sales.

The much bigger weighting to lower priced house sales (which fell) were responsible for the higher 8.7% fall in the median price, using the REIA methodology.

The REIA determines median prices based on the reporting of sales information based on sales at the date of contract exchange.

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Canberra, Sydney, Melbourne, Adelaide and Perth median prices are based on preliminary unrevised figures based on a high (75% -90%) sample of final sales. Brisbane, Hobart, Darwin median prices are not revised.

Prices held firm in the more expensive districts closer to the centre of Canberra.

In the Inner Central district (Canberra North and Canberra South) house prices gained 0.6% to $746,300.

In the inner South (Woden and Weston Creek) house prices lifted 0.8% to $617,300.

REIA researcher Evgeniya Hawthorne tells Property Observer while final figures are usually revised upwards, the estimates are a “right reflection of the market” with Canberra vendors having to discount their offerings to achieve a sale.

Overall, the property market tread water in the March quarter with the weighted average median price for the eight capital cities falling 0.2% for houses to $534,015 with units down 0.9% to a median of $434,601.

Darwin was the strongest performer in the detaching housing market with its median house price up 2.4% to $592,000 with Sydney (up 1.6% to $673,681) and Perth (up 1.0% to $505,000).

Apart from the steep decline in Canberra house prices, the other capital cities to record noteworthy declines in their detached house prices in the March quarter were Brisbane (down 2.3% to $430,000) , Hobart (down 1.4% to $360,000) and Adelaide (down 1.3% to $395,000).

In the unit market, only Perth (median prices up 2.4% to $425,000) and Hobart (up 1.0% to $290,000) recorded gains.

Apart from Canberra’s 6% correction in its unit prices, Adelaide (down 2.3% to $300,000), Sydney (down 1.6% to $473.808) and Darwin (down 1.2% to $425,000) all recorded declines of more than 1% over the quarter.

Year-on-year house prices are up 4% with median house prices increased in all capital cities apart from Canberra, with values down 7.2%.

Darwin recorded the largest rise across the capitals, up 7.6% followed by Perth (5.2%) Melbourne (4.8%), Sydney (4.2%) and Adelaide (3.4%)

Unit prices are up 1.7% over the past year with Hobart recorded the largest increase, up by 13.7% followed by Perth (3%), Darwin (2.4%), Melbourne (2.2%) and Sydney (1.7%).

In terms of rentals, the REIA data shows that nationally, median house rents increased over the March quarter across the capitals, with Perth and Canberra recording the highest increases of 4.4% and 4.3% respectively.

Rents for two bedroom other dwellings increased in Melbourne, Brisbane, Adelaide, Perth and Hobart while median other dwellings rents remained unchanged in Sydney and Canberra.

Darwin recorded a 0.2% decline in rents for two bedroom other dwellings, which probably reflects the increased supply of apartments coming online in the Top End’s capital, said Bendigo and Adelaide Bank retail executive Dennis Bice.

The report was co-sponsored by Bendigo Bank.

Bice said that despite the slight decrease in the March quarter, the weighted average median house price has risen 4.0% in the past 12 months.

“With the exception of Canberra, there has been median house price growth in all Australian capital cities,” he said.

Lots ‘n’ lots queued for council approval

NEW figures released by the Western Downs Regional Council reveal a gradual rate of approval for housing developments in Chinchilla and Miles.

In Chinchilla 57 lots have been given the nod in the past two months while 514 lots have been passed in Miles, including 366 lots on Hookswood and Pelham Roads on the north side of town.

Still queued for approval are 2458 lots, including 454 on Price St in Chinchilla and 696 on the Warrego Hwy in Miles.

WDRC spokesperson for planning, Councillor Ray Jamieson, said the absence of sufficient infrastructure is preventing development approval in some cases.

“Council’s position is to support the development of long term residential population and Council has a long term strategy to upgrade infrastructure over an extended period,” he said.

“For any development refusals, the outcome would be based on planning grounds and could involve staged developments to be in line with Council’s Infrastructure Development Program.”

Cr Jamieson said residential development over the next two years will depend on the development of current approvals.

“In each of the centres… there are approvals that have either not been delivered or developed and not released to the market,” he said.

“It is expected that those currently going through the approval process will be approved subject to conditions over the next period.”

Developers are urging that continued development approvals would ease rental market pressures and encourage permanent residency in the Western Downs, maximising the potential community benefits from the resource boom.

The region dominated a new report released by the Surat Basin Property Group last month that highlighted the top 20 rental yield areas across the state.

Miles topped the list with a return of 9.3%, while Chinchilla recorded 7.7%, Tara 7.3% and Dalby 6.5%.

http://www.suratbasin.com.au/news/thousands-lots-queued-council-approval/1886421/