Why house prices in Port Hedland, Western Australia, have skyrocketed

May 20, 2021

Why house prices in Port Hedland, Western Australia, have skyrocketed

May 20, 2021

House prices in the West Australian mining town of Port Hedland have climbed 34 per cent in the past 12 months, with border closures due to the pandemic causing a shift from a fly-in fly-out workforce to local personnel the likely cause.

Port Hedland, about 1600 kilometres north of Perth, led the charge for house price growth in regional WA, with a median sales price of $350,000 in the year to March, the latest Domain House Price Report has found.

Also notching up considerable increases in median house prices was Denmark, in the state’s south-west, at 26.7 per cent to $500,000, and in Esperance, on WA’s south coast, where house prices grew 17. 3 per cent to $400,000.

Domain senior research analyst Nicola Powell said one of the differing factors for WA compared with other states and territories, was the proportion of employees who were fly-in fly-out workers.

“I think the changing border restrictions has meant that fly-in fly-out workers have relocated and relocated their whole families because there has been so much uncertainty,” she said.

“Anybody moving from the east coast of Australia will view regional WA, and even Perth prices, as cheap compared to what they are used to paying in Sydney or Melbourne on the east coast. I think, supported by low mortgage rates [people] have purchased and have changed the dynamics of those resource-led areas.

“Also, is it investors jumping in and thinking rental markets are tightening and looking to those resource areas to capitalise on potential capital growth and an increase in demand from interstate workers moving.”

Port Hedland was the hottest market in Perth, if not Australia at the moment, Real Estate Institute of WA president Damian Collins said.

“It’s just fundamentally been the rise of construction of iron ore projects and obviously the companies are trying to ramp up new construction of new mines, but also get as much iron ore as they can,” he said.

“So, there’s just been this huge demand on housing in Hedland but we have got to remember it came off a very low base. I think the median dropped into the low $200,000s, but we have got to remember it peaked at $900,000 in 2011 or thereabouts.”

Hedland First National Port Hedland principal Morag Lowe said the upper end of the town’s housing market was seeing homes attract top dollar for rent giving investors a good return.

“We have got a shift from fly-in fly-out to a residentially based workforce so that’s created demand for rentals and it’s also encouraged people because of the price point and cheap money, to buy their properties. So you’ve got demand on two fronts — for rental accommodation and for occupancy.”

Demand from buyers seeking a tree change as a result of COVID-19 was driving up median house prices in Denmark and Esperance, with property expert and valuer Gavin Hegney saying the rises were a flow-on effect from Perth’s median house price increase.

“Normally, regional areas follow the capital city. Normally, Perth booms and it flows onto the regional areas so people can sell their home in Perth for a $1 million and buy in the regional areas for $500,000 and … have a great life … that’s the tree change,” he said.

“I think this is the cart before the horse. People have bought out of fear. Fear of lockdown, fear of pandemic and that includes also bringing forward decisions and virtually every regional area has increased in value with pandemic thinking.”

Mason Realty Albany licensee Rob Mason said interest in Denmark property had resulted in good sales on higher priced properties that were a struggle to sell a year ago.

“Primarily, what we are seeing is new interest from the metropolitan region but also interestingly enough, quite a bit of interest coming from the South West,” he said.

“Dunsborough to Margaret River, Capel are looking at Denmark as I guess the next, slightly quieter spot that gives them a lot of the things they enjoy about the South West.”

Source: Domain.com.au