[XU8i6ysK]

WA mining towns hot property again

WA mining towns have become the place to buy property ... again.

Chris Thomson
August 28, 2009 - 6:51AM
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.

[XU8i6ysK]

http://www.voteconfidence.com.au/

The case for confidence.

Life's pretty good over here in W.A. While the rest of the world is running around like a bunch of headless chooks caught up in recession fever, West Australians are busy getting on with the job of making this state a top-notch place to live.

Everywhere you turn, you'll find confidence. It's in the people. It's in the economy. And no, that's not lavender in the air, that's confidence and a can-do attitude.

In the last few months, surveys have shown that consumer confidence is back to where it was before the global economy went kerplunk. Just take a look at how we're spending our hard-earned cash. Between April and May 2009, retail purchases were up 3.4%* and car sales up 3%*. And according to 59%** of people surveyed, current buying conditions are positive. In fact, property developers are planning on expanding retail businesses over the next five years***. Not bad considering we're supposed to be in the midst of a global financial thingamaggiga.

The mining sector is on the rebound too. Billions of dollars have been invested into major oil and gas operations, including the massive Gorgon gas project that's just been given the green light. So it comes as no surprise that W.A. employers have the highest rate of confidence in Australia. Even one in five international businesspeople**** believe there's nowhere better to be living right now, than right here.

But it's nothing West Australians didn't already know. We're already busy buying up houses and homes in preparation for a brighter future. Real estate sales have jumped by 23%*****, and home loan approvals have skyrocketed by 30.8%* in the last year. That's what happens when 56%** of West Australians reckon our economy will go from strength to strength in the next 12 months.

References:
*Chamber of Commerce and Industry - "Economic Trends"; 9 July 2009

**Curtin Business School - "CCI Survey of Consumer Confidence; June quarter 2009

***Press Release - "Development survey shows long-term confidence in WA retail property"; 19 December 2008

****Press Release - "Nowhere better than Australia to ride out crisis: survey"

*****Press Release - "Real estate is safe as houses for investors";
8 July 2009