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PIPA In the News
Home values crash by nearly 80 per cent in post-mining boom areas
The dream of home ownership has turned to a nightmare for mining-boom buyers, with homes in former hotspots worth less than half of what they were a decade ago.
The brutal reality for property owners who bought towards the tail end of the mining boom – which lasted for around a decade and peaked in 2012 – has been revealed by new data from the Property Investment Professionals of Australia.
Six years after the bubble burst, regional areas of Australia's mining states continue to lead property price falls around the country.
Mining regions crushed by the end of the resources boom – Australia's biggest since the gold rush of the 1880s – have seen home values plummet by more than 75 per cent between March 2008 and March 2018, the data shows.
Property values have halved in these towns since 2008
Australia's resource-rich outback towns once lured a flock of investors attracted to premium rental yields and rising real estate values amid the nation's mining boom.
But a decade on, many have since discovered there was no gold at the end of the mining town real estate rush.
New research shows property prices in many of Australia's mining regions have in fact halved since 2008.
Using CoreLogic data to calculate the best and worst performing areas over the past 10 years, Property Investment Professionals of Australia (PIPA) chairman Peter Koulizos says mining towns consistently placed at the bottom of the findings.
"What this data shows us is that if you had bought property in one of these towns, not only did your property not increase in value over this 10-year period, but it is actually worth less," Koulizos said.
Careful with investing in mining regions
Aussies could use a reminder that a good location is a key to successful property investment. This, after a new study from Property Investment Professionals of Australia (PIPA) showed that property prices had halved in many mining regions over the past decade.
PIPA Chairman Peter Koulizos is in the process of re-examining research he undertook for a book published in 2008, and, as part of the new research, Koulizos examined CoreLogic's data to calculate the best and worst performing areas over the past 10 years. From there, he found a clear frontrunner for bottom of the pile – mining locations.
"What this data shows us is that if you had bought property in one of these towns, not only did your property not increase in value over this 10-year period, but it is actually worth less," Koulizos said.
"West Australia (WA) – which benefited the most from the mining boom – has also suffered the most from the mining bust."
Mining town house prices fall into a big hole
THE mining downturn stripped a number of towns reliant on the resources boom of their house values, with prices slashed by 75% in some locations, according to Property Investment Professionals of Australia, with Western Australian town hardest hit.
Chairman Peter Koulizos has compared CoreLogic data with research undertaken in 2008, and found that South Hedland, a suburb or Port Hedland, saw house values fall by 74.8% in the past 10 years, while prices in Queensland's Dysart plummeted by 77.4% as Brisbane prices increased by 24% over the same period.
"What this data shows us is that if you had bought property in one of these towns, not only did your property not increase in value over this 10-year period, but it is actually worth less," Koulizos said.
Investing in mining towns: Is it worth it now?
With the mining boom well and truly over, the question of investing into mining towns comes up every now and again. The latest research shows it may not be worth your time investing in them, and here's why.
Analysis by the Property Investment Professionals of Australia (PIPA) show property prices have declined by up to 77.4 per cent over the last 10 years.
Peter Koulizos, PIPA chairman, said if investors had purchased in mining towns in 2008, not only would they not see any improvement in price, they would be holding property that went down considerably price.
"West Australia – which benefited the most from the mining boom – has also suffered the most from the mining bust," Mr Koulizos said.
The truth for first time investors
There's no escaping it - buying your first investment property will become a benchmark moment in your life.
It's an instant full of risk and excitement signposting the start of a real estate journey that will hopefully end in building a successful and profitable portfolio.
In my experience, first-time investors tend to fall into one of two camps.
The first group is mostly under 30-year-olds, predominately single and raring to get into it.
This cohort is primed to perform and full of confidence – and they see plenty of upsides right from the start.
The second group is usually those older than 30 who already have a house or a little cash or equity and are looking to lock in their future financial comfort.
No matter which profile the investor comes from, first-timers need to comprehend a few basics to get them on the path to real estate success.
New laws protect renters
Victorian renters will enjoy the strongest protections in the country from July 2020, after the Andrews government's highly-anticipated rental reforms passed Parliament late on Thursday night.
The rest of the country will be watching Victoria to see how implementing the laws over teh next two years will play out, says Wendy Stones, associate professor at Swinburne University's Centre for Urban Transitions.
"Victoria is at the forefront of private rental tenancy reforms in all of Australia," she said. "For tenants there's an urgent need for reform."
The next two years were shaping up to be a messy implementation period, because investors were already less than thrilled with the news.
"Property Investment Professionals of Australia are surprised by the urgency of the Andrews government to rush through this legislation," chairman Ben Kingsley said. "We can't help but feel it's more political than suitable for the rental market.
Report reveals Perth suburbs on the rise
The City of Stirling is Perth's standout market, with 10 of its suburbs experiencing growth, a new survey has found.
The latest Price Predictor Index released by hotspotting.com.au shows that City of Stirling suburbs – including Carine, Doubleview, Gwelup, Innaloo, Joondanna, Woodlands and Tuart Hill – had rising markets, with another nine suburbs recording consistent sales.
South of Perth, the City of Melville had seven growth suburbs including Attadale, Bicton, Booragoon, Kardinya, Melville and Palmyra where sales activity is rising steadily.
The far northern municipalities of Wanneroo and Joondalup also showed growth in some suburbs, the analysis found.
The report also showed suburbs in the Cockburn local government area experiencing growth, including Bibra Lake, Coolbellup, North Coogee and Spearwood.
WA government policy undercuts resilient property
An interesting email hit my inbox regarding the resilience of Western Australia's property sector, not long after the state opposition reignited debate over the appropriateness of applying a tax to foreign buyers of residential property.
The email contained the results of a 30-year study on Australian capital city real estate markets, singling out which cities were the hottest performers across five-year market cycles.
What stood out was that Perth had the best five-year period (between 2003 and 2007) of any city over the study, driven by record population growth flowing from the mining investment boom.
During that time, property prices in Perth increased by 140 per cent, the Property Investment Professionals of Australia study showed.
High expectations of new prime minister
The Property Investment Professionals of Australia (PIPA) announced that they are looking forward to working with Scott Morrison to regulate the provision of property investment advice, after it was formalised on Friday that the country's treasurer is set to become the new Prime Minister.
PIPA noted that it had already raised the matter, alongside their input on the importance of property investment, with Morrison during his tenure as the Federal Treasurer.
While this shows some progress as far as the sector is concerned, PIPA chairman Peter Koulizos said that the property investment profession as a whole hoped that a period of political stability would allow a more significant discussion on the matter.
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