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The two speed housing market of Western Australia
September 27, 2011
While the housing market across Perth has remained somewhat subdued in 2011, the mining regions of Western Australia are bucking the trend creating a 2 speed housing market in the west much like the Australian economy. With WA’s mining industry booming, insufficient dwelling supply and higher wages are contributing to unique market conditions in WAs mining regions.
In the North West of the state demand is outstripping supply at epic proportions which has fuelled significant growth in rental rates as well as median house prices. Based on data from the Real Estate Institute of Western Australia, the typical rental rate of a 3 bedroom house in Port Hedland, South Hedland and Karratha attracts between $1,400 and $1,900 per week depending on location. Whilst the median house price in the region has topped $740,000 and in some suburbs surpassed a million dollars which is far greater than the median house price in Perth of $470,000.
When comparing current medians with those of 5 years ago, growth in the region has been significant with median house prices rising by 60% versus a meagre 4% growth in Perth over the same period. In particular towns such as South Hedland have experienced record growth with median house prices rising by 105% over the same period.
Further south the housing market has reached an affordability cap after rising fast over a short period of time. The goldfields region of Kalgoorlie/Boulder commands an overall median house price of $320,000 and over the past 12 months has been largely unaffected by declines in parts of the WA housing market, dropping only 1 per cent in the median house price. Growth over the previous 5 years has been modest in comparison to places like South Hedland, however are still significant when compared to the metropolitan Perth area. Boulder has experienced average annual percentage growth of 12.8 per cent over the last 5 years, while in Kalgoorlie this rate of growth is 13.4 per cent each year over 5 years.
With a pipeline of investment we at REIWA anticipate growth to continue in these areas in years to come. Although as supply begins to catch up to demand, we may not see the same level of growth experienced over the past 5 years in our booming mining regions.