THE communities which were once thriving with the mining boom, are now feeling the pinch as property markets plummet and ‘for sale’ signs take up long-term residency.
The six regions across the country worst affected by the mining downturn have been uncovered by a new report.
The report, The carnival is over: house prices in mining towns now the boom is gone, compiled by Propell National Valuers, said recent figures and stories of investors’ suffering “beg the question of why anyone would take the risk” of buying into these regions.
Central Queensland has taken a beating when it comes to the property market, with Emerald, Blackwater, Moranbah and Gladstone in the top six worst affected towns, alongside Muswellbrook, NSW, and Karratha, WA.
“The house price boom came to an abrupt end in 2013 and the last two years have seen drastic price falls in the worst affected towns,” the report said.
“The worst affected towns have the equivalent of three to five year’ worth of stock on the market for sale and it is a buyer’s market.”
For the six towns, including two from the Central Highlands region (Blackwater and Emerald), the number of house sales has dropped by half.
“There were almost 3,000 sales in 2011, as optimism about mine expansion and the dredging of the harbour to provide new port facilities reached its height,” the report said.
“By 2014, sales had dropped to 1225 as mine expansion plans were reversed, environmental concerns dogged the harbour dredging and commodity prices fell.
“Price increases of 10 per cent per annum, 20 per cent per annum or more have been replaced by falls in the past two years of up to 38 per cent per annum.”
The report said people buying into mining towns aren’t making “a real estate decision”, but instead are making “a futures play on the global commodities market”.
“Value depends on rent, which depends on accommodation demand for employees working on a resource project,” the report explained.
“When commodity prices halve, as they have in 2014, mines will shut down and houses, once in heavy demand, can lie empty.
“Even if demand is solid, the value van be eroded in other ways. Developers, lured by high prices, will develop new supply that can reduce rents. Mining companies can decide to build their own accommodation, and/or adopt FIFO policies, if that is cheaper than renting accommodation.”
These factors make a house in a mining town a “high-risk play over factors well beyond the control of the freeholder, in a small and volatile market”, the report warned.
Blackwater is the least popular mining town for buyers, with only 12 sales last year despite 200 houses being on the market.
Central Highlands Regional Council Mayor Peter Maguire said there was a positive to the downturn
“While the impact on lowering house prices is certainly impacting on our towns, in particular for those who bought in at the height of the market, the silver lining is it’s now more affordable for people, especially young people, to invest and live in the towns of the Central Highlands,” he said.
“Towns in the Central Highlands are not one industry towns and don’t just exist to service the resources sector.
“We have a rich and diverse agricultural industry as well as fantastic tourism drawcards such as Carnarvon Gorge, Fairbairn Dam and the Sapphire Gemfields, just to name a few.”
Cr Maguire invited the authors of the Propell report to visit the region “so we can show them all the things we love about living in the Central Highlands”.
“Maybe a trip out of the city into the fresh country air would be good for them,” he said.