House costs come back to more reasonable levels in mining towns
For prospective buyers searching for a home in Australia’s once dynamic mining towns, it’s as if the nation’s mining boom never took place.
Median house prices in key mining centres in Queensland and Western Australia have fallen to below the average price of more than a decade ago. This has wiped out the capital gains of the iron ore and coal-fuelled mining boom.
In Queensland’s Mackay, the current $330,000 median house price is cheaper than the 2006 price of $338,000, according to CoreLogic.
Meanwhile, in Western Australia’s Port Hedland, the current median sale price for a house ($267,000) is less than 30% of the 2013 peak price and is two-thirds of the average price of a decade ago. As for Roebourne in WA’s Pilbara region, the average median sale price has reverted to $278,025, a low not seen since 2005.
According to Frank Gelber, chief economist and director at BIS Oxford Economics, the boom and the accompanying multi-billion dollar investment phase led to an increase in housing stock in these mining towns.
“It was a wild ride on the upside and downside but the benefits to the community were temporary,” he said. “People made a squillion along the way, and there were people who paid the price [when prices dropped].”
Gelber said that housing oversupply remains in the mining towns and may never be resolved. However, in more diversified economies, the increased housing supply would be beneficial when growth resumes.
It’s not all doom and gloom, though. Locals who were once locked out of the property market can now afford to buy homes.
According to REIWA President Hayden Groves, locals are once again buying homes in Karratha and Port Hedland, where homes are going for less than the replacement cost. Approximately one-in-five homes in Karratha are mortgagee-in-possession, and banks hold about 600 properties across Port Hedland, he said.