Port Hedland locals feast on Pilbara
property wreckage
Port Hedland's median house price has slumped 66 per cent in just four years. Erin Jonasson
by Julie-anne Sprague
Port Hedland resident Craig Rowles counts himself as one of the lucky ones.
He recently bought a home in the West Australian iron ore town for his young family
for a staggering $810,000 less than what it sold for just four years ago.
Mr Rowles, who works for Rio Tinto, and his partner, Erica, who is a teacher, bought
a three-bedroom home on a 1089-square-metre block for $205,000. Four years ago
it sold for $1 million as investors clamoured to buy properties that could be rented for
as much as $2500 per week.
The end of the mining construction boom has meant towns like Port Hedland and
Karratha are no longer sucking in hordes of construction workers, which has
sent property prices plummeting.
Mr Rowles has paid $5000 less than what the property sold for in 2006 after buying
the property from a mortgagee sale.
Welcome to the Pilbara property crash.
"I definitely have a lot of sympathy," Mr Rowles said.
"We have got a huge bargain but there will be suffering at the other end. By the
same token there definitely was a feeding frenzy up here [four to five years ago]
because of the rental returns they could get. People were getting 10 per cent to 12
per cent [returns]," he said.
Bargains galore
A Port Hedland property on Harper Street sold in August for $280,000. A decade ago
it sold for $680,000.
Nearby another property sold for $270,000 after its previous owners paid $920,000
in 2010.
The downturn has also spelled trouble for property spruikers like Macro Realty
Developments, which the Australian Securities and Investments Commission has
accused of running an unlawful Ponzi scheme where interest payments from early
stage investors to the company's suite of Pilbara property developments have been
repaid using funds from later stage investors instead of any profit from the
developments.
Statistics from the Real Estate Institute of Western Australia show Port Hedland's
median house price has dropped 32 per cent this year to $407,500 after falling 34
per cent last year. It is the lowest median house price since 2005 and is 66 per cent
below its 2012 peak of $1.2 million.
It appears prices have become attractive enough to spark transactions.
Of the 55 property listings Jim Henneberry's Jan Ford Real Estate is managing, 25
are mortgagee sales as all four major banks foreclose on property owners.
Mr Henneberry said he had sold eight properties in August and seven in September
compared with two or three per month previously.
"All of the people buying are moving out of their rentals," Mr Henneberry said.
Recovery tipped
He expected mortgagee sales to keep pressure on the market until after Christmas
but anticipated the market to recover after the state election in March.
First National Real Estate agent Rick Hockey said he had been "extremely busy the
past month" as locals moved in to buy up the investor wreckage.
"It's all of our locals, I would say 99 per cent [of buyers] are owner occupier," he said.
Mr Hockey said mortgagee sales would keep downward pressure on prices for
probably 18 months.
Those that are buying he said were getting properties for less than the replacement
cost.
"As the mortgagee sales dry up the market will come back up to the replacement
cost," Mr Hockey said.
The winners are locals like Mr Rowles and his partner, who were unable to afford to
buy a home when they moved to Port Hedland seven years ago.
But the pair did the sums earlier this year and worked out that it was now cheaper for
them to pay a mortgage than rent.
"There's a few people at work doing it [buying] and there are a lot more entertaining
it," Mr Rowles said.