WA country towns become hot property

28 Aug, 2009 01:22 PM
WA mining towns have become the place to buy property ... again.
WA mining towns have become the place to buy property ... again.

WA's mining towns are again hot property, thanks to recently-announced mega resources deals.

RP Data national research director Tim Lawless said that during the 2005 – 2007 mining boom, investors flocked to

mining towns but fled in 2008 as the global financial crisis saw commodity prices plummet.

Mr Lawless said that investing in resource driven markets had always been more risky than conventional metropolitan property investments.

"Timing is crucial – buying into a resource driven market early is the key to strong capital gains and getting out at the right time is also critical," he said.

According to his statistics, the most pertinent example of mining town risk occurred in the West Australian town of Ravensthorpe where the BHP-operated nickel mine was mothballed and 6000 jobs shed.

The shutdown obliterated the local economy and only three properties have recorded a sale so far this year.

But Mr Lawless said there were spectacular profits to be taken by investors who got it right.

In the five years to the end of 2009, property prices on the Central Pilbara Coast rose by 230 per cent and rental yields were generally above 9 per cent.

Mr Lawless said that recent deals by the Gorgon consortium to supply gas to China and India could mean property investors hit pay dirt sooner rather than later.

"These latest agreements could provide the spark that reignites investor interest in Australia’s resource driven property markets," he said.

"The Gorgon project alone is likely to cost $50 billion to build and create jobs for 6000 workers during the peak construction phase of the project."

Mr Lawless surmised that with only half the project's 3000 workers to be accommodated on Barrow Island, the remaining 3000 would need to be housed in nearby locales on the mainland.

"Much of this housing is likely to be located in the major townships along the Pilbara coastline – Karratha and Dampier, or even the smaller township of Onslow which is closer to Barrow Island,” Mr Lawless said.

The Gorgon LNG project is not the only one likely to reignite the Pilbara coastal property market.

Woodside Petroleum also plans to triple the size of its Pluto LNG plant that operates out of Karratha.

Chevron is developing the Wheatstone LNG project at Ashburton - which is also on the Pilbara coast between

Karratha and Exmouth.

Pilbara house prices have remained high, with the median in Karratha and Dampier around $835,000.

Rents are even higher - with tenants paying well over $1000 per week for a house, providing rental yields above 10 per cent.



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