Housing Decline Slowing In Mining Regions
Summary: There’s some good news on the horizon for Australia’s beleaguered mining towns, as sales volumes lift in some regions. There are also signs that the rate of decline in house prices is starting to slow down, according to the latest CoreLogic Property Pulse report.....
The flow-on effect of a commodity price slump a few years back saw property prices crash in most of the nation’s mining towns. This left investors high and dry as prices and rents declined by as much as 60% in some markets.
However, as CoreLogic’s recent report seems to indicate, is the worst finally over?
“History shows that mining booms don’t last forever and it would be difficult to find anyone that could suggest the house prices in many of these towns were sustainable during the boom,” said Cameron Kusher, research analyst at CoreLogic. “At the time, prices were being driven higher by a temporary influx of residents on high incomes, and therefore, creating greater housing demand at a time in which supply …was largely irresponsive, which drove prices to record-high levels.”
When demand began to subside, supply was beginning to increase; this in turn led to substantial falls in both prices and sales, according to Kusher.
Listed here are some of the key statistics for house prices in selected mining- and resource-related regions of Australia.
- Gladstone, QLD
The city noted 578 sales over the past year at a median price of $323,875. Sales volumes are 68% lower than their July 2007 peak, and median prices are 32% lower than their September 2012 peak.
- Mackay, QLD
The city saw 1,216 sales over the past year at a median price of $335,000. Sales volumes are 63% lower than their April 2004 peak, and median prices are 23% lower than their June 2013 peak.
- Isaac, QLD
A mere 198 sales were noted over the past year at a median price of $140,000. Sales volumes are 70% lower than their March 2012 peak, and median prices are 77% lower than their November 2012 peak.
- Port Hedland, WA
A modest 204 sales were noted over the past year at a median price of $300,000. Sales volumes are 49% lower than their July 2006 peak, and median prices are 67% lower than their June 2013 peak.
While each of these markets recorded significant declines in sales and selling prices following the commodity slump, more recently, each market has started to see sales rise again.
“While this result is unlikely to represent demand substantial enough to drive prices higher, it may be enough to slow or stop the declines in prices in the short to longer term,” Kusher said. “It’s also important to remember that it’s not as if there is no demand for housing in these towns, it’s just substantially lower than it was during the mining boom. Anyone looking to purchase now is securing a property at a substantial discount from previous highs. However, these towns also continue to achieve some of the best rental returns based on current pricing and rents.”