Property prices in mining towns are once again on the rise, following the settled debate over the Resources Super Profits Tax (RSPT).
Ray White joint chairman Brian White says while results in the mining cities had been very average over recent months, “those cities reported a quick upswing as soon as the new Prime Minister declared that an agreement had been reached with the mining companies.”It seems that now might be an opportune time for buyers to invest in mining town property. With the uncertainty removed, investors now know where they stand and with a combination of market knowledge and good timing, significant returns can be made.
According to Cameron Kusher, RPdata research analyst, the strong resurgence in commodity prices over the last year “will mean a higher level of demand for housing in what are generally chronically undersupplied markets.”He identifies a number of stand-out regions that will likely offer strong prospects for property buyers: Roebourne Local Government Area (LGA) in WA, and the coal-rich LGA of Isaac and the Western Downs region, both in Queensland.
In Roebourne LGA, for example, the median house price sits at $880,000, only 3.3% below peak prices experienced in 2008. With a huge demand for iron ore and a limited scope to expand the existing township, house prices in the region are being pushed up.
Kusher says it isn’t just the prospect of growth in house prices that makes Roebourne attractive, with the median weekly advertised rents recorded at $1,575, suggesting an indicative gross rental yield of 9.3%.Isaac LGA is experiencing similar trends, while Western Downs is likely to become a quick moving, resource-driven market of the future.
Kusher does warn property buyers that mining and resource-rich towns do hold an inherent risk due to their dependence on what is often a singular commodity.