Mining house prices heading south with commodities

Property prices have plummeted in mining towns around Australia, closely tied to commodity prices according to a new report.

Real estate valuers Propell have charted the significant losses in the housing market in Queensland, Western Australia and New South Wales over the past few years, with projections showing housing prices will continue to fall.

Of the towns worst affected by the mining boom and bust, Propell listed Blackwater, Moranbah, Emerald, Muswellbrook and Gladstone as the top six, where housing sales have halved since 2011.

Blackwater only had 12 house sales last year, despite the 200 houses on the market.

Astronomical housing price growth was seen in three resources towns in particular since 2007.

Port Hedland has seen price growth of 47 per cent since the start of the boom, while in the Surat Basin gas fields Chinchilla housing price inflated 49 per cent, while nearby Miles saw a 91 per cent increase.

However, Port Hedland median housing prices have fallen 18 per cent in the past year, and are predicted to drop another 20 per cent by the end of the year with only 28 houses out of 77 on the market sold last year.

Chinchilla and Miles will also see substantial decreases of 15 and 10 per cent respectively, as the demand for gas industry construction workers and drill crews falls, and the industry transitions into the production phase.

Median housing prices in Karratha have almost reached their pre-boom level, with the current price at $540,000 compared to $643,000 in 2007, after a peak of $810,000, which spells trouble for any who invested in property there during the boom.

Broome is also on its way back to pre-boom levels, with housing down to $603,000 from the peak of $726,000 in 2007.

In Queensland the coal mining towns of Moranbah and Blackwater have suffered losses of 46 per cent and 36 per cent respectively since peak prices (38 per cent for each in the last year alone), and are forecasted to drop by another 8-15 per cent this year.

Prices are expected to remain steady in Gladstone, Mackay, Townsville, while in WA Geraldton is not expected to shift.

Kalgoorlie was the only mining town out of the 21 significant mining town which is expected to show growth, with a five per cent improvement to median housing prices expected due to expected recovery of the gold price.

Propell described property investment in mining towns as “a high risk play over factors well beyond the control of the freeholder”.

“Buying a house in a mining town is not so much a real estate decision, as a futures play on the global commodities market,” Propell said.

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