Road to recovery: Buyers in regional WA ‘not going to lose money’

The signs are everywhere that the ailing WA economy is on the mend.

A once-negative media, which leapt on the state’s difficult transition from national powerhouse to its weakest performing economy in the wake of the resources slow down, is now clamouring to report that the state has turned an important economic corner in the past three to six months.

So what does this all mean for the once thriving Pilbara property market, where the bulk of WA’s resources activity is focused?

Richard Naulls, of Ray White Karratha, said there was no doubt the market was steadily on the rise in 2017, with local agents reporting both volume and prices increases during the second half of the year.

“I think the general sentiment up here is that the market bottomed out in 2016 and there is certainly a lot more confidence among buyers that if they buy now, they’re not going to lose their money,” he said.

The change in fortunes is a welcome reprieve for Pilbara home owners and investors who could only sit back and watch as their once valuable investments tumbled, in many cases, to less than a quarter of their boom time sale price.

Domain Group data tracking the median price of homes and units for the region is sobering reading. In Port Hedland, the median house price hit an astonishing $1.08 million at the height of the boom in September 2011, with unit prices in the dusty mining town $750,000.

By September 2015, the figures had dropped to $782,500 and $550,000 respectively, before diving further to a median of $450,000 in September 2016.

Prices in neighbouring Newman crashed from a median of more than $830,000 in September 2012 to a median of just $168,000 in September last year – a stark indication of just how far the Pilbara property market has fallen.

But in a clear sign the Pilbara market is on the mend, sales volumes in Port Hedland jumped from 42 house sales in the year to September 2016 to 71 the following year, with a jump from 35 to 77 for Newman for the same period.

Real Estate Institute of WA president Hayden Groves agreed the Pilbara market had stabilised.

“There remains some ‘shake-out’ to come in the short term, which may restrain immediate recovery, but as demand for housing improves in parallel with mining-related project commencements, rents and values will inevitably rise,” he said.

Mr Groves said although “distressed sales” were never good for a market, they generally signalled the bottom had been reached.

WA property analyst Gavin Hegney said increased volumes were the first signs of a recovering market, with a rise in prices set to follow.

“The increase in volume may be driven by forced sales and people needing to sell, however, the next step is locals finding they are able to buy in a market they were once driven out of and this can also help lift sales in the region,” he said.

“The Pilbara market has passed the point where you were seeing $850,000 homes selling for $250,000 and now you have homes sitting around the low $300,000 mark, which makes them highly affordable for those living in the region on an average wage.”

He said in general investors remained wary of the Pilbara market and would be slow to respond to any mention of a local recovery.

Rob Sleator, principal of Port Hedland-based Pilbara Real Estate, said things were definitely improving lately, especially when you looked at the figures for the last three to six months.

“I do think, however, that people are cautiously moving back in believing that they can only make money from this point,” he said.

Mr Sleator said opportunistic buyers were recognising the market had bottomed out. Others were finally comfortable to trade renting for home ownership in a market they were pushed out of.