The End Of A Decade-Long Boom Sounded Alarm Bells
A report from News.com.au in Australia. “Last year their house prices were skyrocketing — now they’ve come back down to earth. Growth in property prices across a range of once booming Sydney suburbs has recently ground to a halt after hitting an affordability ceiling. The slowdown was most evident in Parramatta, where the median house price fell 14 per cent over the last three months after having nearly doubled between 2011 and 2015. Adjacent suburb Rosehill, where the average price of a house went from $470,000 in 2011 to $1 million in early 2016, recorded a 7 per cent drop in median price, Core Logic data showed.”
“Other suburbs in the region, including Granville and Harris Park had median price falls of over 4 per cent, reversing growth of about 60 per cent over the five years prior. Drops in prices were not restricted just to Sydney’s west. Inner west suburb Dulwich Hill’s median house price fell 8 per cent, while neighbour Summer Hill had a 5 per cent drop. St George suburb Kogarah’s went back 4 per cent. Median prices had grown more than 50 per cent in these areas over the last five years.”
“Starr Partners CEO Douglas Driscoll said slowdowns in price growth were inevitable in some areas because the supply of housing was slowly returning to normal. ‘Prices had been growing aggressively, especially last year, because there wasn’t much housing going around,’ Mr Driscoll said. ‘Supply and demand has become a lot more even since then.’”
News Corp Australia. “Latest Real Estate Institute of Queensland rental vacancy rates reveal the inner-city ring has remained relatively consistent – moving from 3.4 per cent to 3.7 per cent from the June to September quarters. REIQ CEO Antonia Mercorella said inner-city landlords, who were particularly sensitive to the current question of oversupply, had been extremely competitive with rents to lure tenants from middle-ring suburbs.”
“Place Projects business development manager Sophie Smith said that in addition to price cutting, landlords were offering incentives such as two week’s free rent to secure a tenant. Some were also cutting rents to keep tenants from moving out at the end of a lease.”
From ABC News. “WA Housing Minister Brendon Grylls says policies requiring prospective homebuyers to cough up deposits of 30 per cent in mining towns across Australia are a ‘hangover’ from the mining boom. The end of a decade-long investment boom sounded alarm bells for banks, with ANZ Banking Group the first of Australia’s traditional big four banks to enforce the policy in June last year. More than 40 postcodes across Australia are affected by ANZ’s policy, including Western Australia’s iron ore hub of Port Hedland, where potential buyers would require $135,000 for a deposit on an average-priced house. ”
“The ABC has spoken with community leaders in Kambalda who say times are tough but there has not been a mass exodus from the town. The average house price in Kambalda East has fallen from $100,000 to $55,000 in a year, while there has been a similar fall in Kambalda West, where the median price has tumbled from $140,000 to $95,000.”
“Ray White Kambalda principal Cheryl Davis, the town’s only real estate agent, told the ABC that times were tough, but there had not been a mass exodus from the town. ‘The Commonwealth Bank has been our saviour, they’re about the only bank that will deal out here,’ she said.”
Your Investment Property Magazine. “The demand for housing in Australia’s mining areas has declined significantly due to sinking commodity prices and dwindling mining investments. Median prices in Port Hedland peaked at $925,000 in June 2013 and sales volumes peaked at 402 in July 2006. Current median prices have fallen to $390,000 (-58% lower than peak), and current sales are 128 (-68% below peak).”
“Median prices in Karratha peaked at $815,000 in October 2010 and sales volumes peaked at 511 in March 2005. Current median prices have fallen drastically to $362,980 (-55% lower than peak), and current sales are 235 (-54% below peak). Median prices in Mackay peaked at $435,000 in June 2013 and sales volumes peaked at 3,264 in April 2004. Current median prices have fallen to $345,000 (-21% lower than peak) and current sales are 1,045 (-68% below peak).”
The Chinchilla News. “If those unacquainted with history are doomed to repeat it, then communities unacquainted to oil or gas booms are inevitably doomed to similar fates. Hoping to save towns from being swept up in the frenzy which accompanies sudden booms, researchers from the University of Queensland’s Centre for Social Responsibility in Mining (CSRM) have been analysing statistical evidence and interviews from ‘boom towns’ to try and assist communities to plan ahead and get locals ‘on the same page.’”
“Dr Kathy Witt explained ordinarily occurring patterns were ’sped up’ in boom-times, such as the sudden, dramatic, spike in the Chinchilla housing market prompting a lot of people to sell at the same time. ‘You can argue that one day Chinchilla may have got a KFC or Woolworths anyway, it just got sped up. So we can say it acted as a catalyst for change.. that’s brought on diversity that wasn’t there before. But there is a new normal, so it certainly has changed some of the (town’s) core characteristics,’ she said.”
“Local grazier, Joe Hill said the trend which had been apparent in the Chinchilla housing market was reflected outside town on the properties too, but while houses had been filling up again in more recent months, farm houses remained empty. ‘Around where I am, within a 50km radius, there’s roughly 12 homes that are not being lived in,’ Mr Hill said. ‘Families have moved out after the gas companies have bought them out and the local community is just disintegrating.’”
