Home prices in mining towns decline on back of resources slow down
Increases outpaced the rest of the nation for a decade but are now tumbling as the boom in resources slows and companies lay off workers
After slashing the price of three planned townhouses by a third in the coal-mining town of Moranbah in remote northeastern Australia, agent Ricardo Baggio still can't find buyers.
Home prices in Australia's isolated mining towns, which outpaced increases in the rest of the nation over the past decade, are falling as companies such as Glencore Xstrata and Peabody Energy delay projects and lay off workers amid a slowing resources boom. The percentage of homeowners more than 30 days behind on their mortgage payments in Gladstone, a Queensland coastal town near more than US$60 billion of gas projects, was 0.94 per cent in March, according to Fitch Ratings, a 71 per cent increase in six months.
The Moranbah townhouses, which will be built on a flat, sparsely landscaped street about 1 kilometre from the centre of town, are on the market for A$525,000 (HK$3.7 million) each, down from an initial price of A$750,000, said Baggio. The median price of a home in Brisbane, the state capital, is A$425,000.
Prices in mining regions could fall as much as 30 per cent from a first-quarter peak, real estate-data company SQM Research forecasts.
Demand for housing in central Queensland and Western Australia state's arid Pilbara region, the nation's two biggest mining areas, is waning as record investment in resources peaks even as property developers keep building more homes. About A$150 billion of mining and energy projects have been cancelled in the past year as commodity prices declined, according to government figures.
"We expect we'll see an abrupt drop-off in population flows in mining towns," said Matthew Hassan, senior economist at Westpac Banking. "How that plays back to housing is extremely complex. But we know the direction: down."