With Karratha and Port Hedland home prices and rents down by half (or more), the Real Estate Institute of Western Australia (REIWA) believes that Pilbara property might have found a bottom. From The ABC:
WA Real Estate Institute (REIWA) president Hayden Groves said the situation in the Pilbara may have bottomed out and this year could see some recovery.
But he also said there were still some challenging times ahead, and a clear picture may not emerge for some time.
“The Pilbara really has taken an absolute battering in its median house price, similarly in its median rents,” he said.
“The Pilbara is very much a fickle market, it is so reliant and so connected to the mining sector.
“Perhaps the worst of it is over but we may see some further washout as the jobs sector changes in those areas”…
Here’s my tip: Pilbara property values and rents will keep on falling. Why? because the employment situation will worsen before it gets better, due to the ongoing falling commodity prices, along with the epic fall in mining capex, which still has miles to fall before it reverts to pre-boom norms (see next chart).
Remember, there’s still two giant LNG projects under construction (Gorgon and Wheatstone), which will wind-up construction next year, iron ore is on its way into the teens which will drive major ongoing cost cuts as well, leaving thousands jobless.
Moreover, asking house prices ($393,000 Karratha; $782,000 Port Headland) are still excessive, as are asking rents ($490 pw Karratha; $752 pw Port Headland), suggesting a lot more downside.
