WA Has Port Hedland hit the bottom?

Hi all,

I live in Port Hedland and I'm just shocked by how much the prices have dropped here. The median house price has dropped by 66% in the last four years and apparently the house price is now below the replacement cost. Locals are now buying houses for a quarter of what they used to be.

I live in a company provided housing so I don't need anything urgent. However some mates at work are of the opinion that this is a great time to buy.

What are your thoughts?

Cheers!

 

Is Port Hedland where you want to live? Or are you thinking as an investment?

 

I'm thinking of it only as an investment. We will most likely move to Perth within the next 5-10 years and we are currently researching Perth market.

 

I wouldn't buy there until mining or gas start picking up again. Not for a while IMO. With IP I think its better to buy on the way up.

 

I was also thinking something along those lines. However my colleagues seem to be adamant we'll miss out if we don't buy now.

My strategy for Perth is to wait until we see 5-6 months of consecutive price increases and then jump in.

 

I actually dont think its the worst idea. The lower the price, the less the risk. How are vacancy rates? No use being cheap if you cant rent it out?

 

just curious, other than mining workers, do people actually choose to live there??? understand the local school teacher might, but I doubt a supermarket checkout chic would

 

Its not for everyone and certainly not for me but a lot of people genuinely love living in the Pilbara

 

I would chat to a few agents to gauge vacancy rates - last I heard it was about 23%. Last time I was up there there was so much construction going on and this is the concern - BHP are roviding their own new housing so who's going to rent an old property in the wrong end of town? Plus insurance costs are astronomical.

 

as OP mentioned vacancies are high, and rents have dropped significantly.

The question you need to ask yourself is when will this market recover? Holding property in a dead market is a poor strategy IMO and mining towns make it a much higher risk proposition. Its not like there are buyers lined up, quite the opposite, people selling and no buyers.

MTR

 

If you are going to always struggle to get a tennant then dont do it!

23% vacancy rate suggests it will be difficult to let consistentley and as your tennant is your business partner its going to be difficult to "do business" without a partner.

 

Yes, as radson said people do like it up there it's a nice spot - great fishing and bush. Not everyone wants to live in a city. There's also local indigenous people that live there.
Population is around 20k so it's a decent sized town for wa and that brings all the other businesses and opportunities with it.

Mining booms come and go and the long term locals would have seen it all before, there's usually a nice town behind the "mining boom" tag. It's the grubby subbies that do most damage.
These towns aren't "pretty" when you're surrounded by industry but you drive 10 min and you're in virgin bush or out on the water so it's easy to escape

 

The current vacancy rate according to SQM is 6%, which isn't great, but it's not horrific either - SQM Research - Residential Vacancy Rates

 

I think Perths at 7% so thats not so bad.

If you can find a property that is in high demand as a rental you may do well.

 

I would question that rate - it seems far too low?

One of the RE's had close to 1 in 4 of their properties empty at one point which is not reflected in that data.

 

Yep and look at the number of listings for rent on realestate.com.au.... its actually staggering and frightening at the same time.

I guess for a primary residence perhaps a different story, but my concern is when you want to sell, the market is saturated with properties and no one can call the bottom unless they can see in the future, if this is the case.... can they give me next weeks lotto numbers.

MTR

 

"Looking to move to Perth in 5-10 years" If you're going to live in the house you buy for the next five years maybe. As an investment I'd wait until things pick up again and the trend lines start to swing upward, then I'd consider it, then I'd remember that these towns are very high risk and put my money somewhere else.

 

Thanks very much guys! Really lots of valuable thoughts.

I decided not to get into this adventure. Potentially great returns but way too risky. I'm quite risk adverse so definitely not for me. I'll wait instead for a good deal in Perth. It might take a year or two, but I know this is going to be my PPOR one day so it seams like a logical step.

Many thanks!

 

but how cheap is cheap, because comparing to the peak of above 1m is not appropriate, i have been looking at port hedland, i still think it's not that cheap even at this level.