Karratha or Gladstone
- Thread starter bugger40
- Start date
Me too !
Its the only reason I haven't jumped in...yet... Just have to work up enough courage based on the numbers and an educated guess as to the future in the region (thats the hard part right now).
Karratha may present a safer option as it looks like some of the properties I have been watching are near the bottom of the cycle, least ways thats my take so far. Rents have historically been around 9% with the replacement cost setting the bar for new stock and underpinning existing.
Yep, me too.
I think the answer is that a lot are trying to sell before their properties come up for release (a lot on the market have leases expiring within 6 mths) and they take a hit in the current market. I guess maybe their numbers don't work in the current rental market considering what they paid.
Devils advocate for a second, maybe they believe they great times are over and want to take profit (CG) after having 5+ years of great cashflow rather than tough it out until the next phase of works commence (they were only deferred, not canned).
But for sales to occur there must be buyers and things are slowly starting to move as vendors realize they must drop their asking price to bring the yield equation back up, then they start getting offers.
Exception to this is one property I missed out on as my finance wasn't ready. A near new 4/2/2 in Nickol that was lsited at 925k and had been leased to GROH for 5 years at $1850 in Oct. If agents are to be believed, it went very close to asking price to a Melb based investor into their SMSF.
Havne't been follwoing too closely since I moved away from K-town about two years back but:
There isn't much/any new land being released in Karratha now, is there? Baynton West is pretty much finished and I think that's it for now. So supply exceeding demand may just be a temporary phenomenon.
Rents are definitely down...but I heard next year was likely to be better. Had a look on the Pilbara Dev Commision site to see if there was enough upcoming projects to justify this, but still not really sure where this is heading.
Personally, I wouldn't sell now....I think more likely to head up again than crash.
My Karratha IP in Nickol West is still rented out at $1950/week for a yield of 17.04% (before RE fees and other expenses) - long may it continue!
There isn't much/any new land being released in Karratha now, is there? Baynton West is pretty much finished and I think that's it for now. So supply exceeding demand may just be a temporary phenomenon.
Rents are definitely down...but I heard next year was likely to be better. Had a look on the Pilbara Dev Commision site to see if there was enough upcoming projects to justify this, but still not really sure where this is heading.
Personally, I wouldn't sell now....I think more likely to head up again than crash.
My Karratha IP in Nickol West is still rented out at $1950/week for a yield of 17.04% (before RE fees and other expenses) - long may it continue!
Havne't been follwoing too closely since I moved away from K-town about two years back but:
There isn't much/any new land being released in Karratha now, is there? Baynton West is pretty much finished and I think that's it for now. So supply exceeding demand may just be a temporary phenomenon.
Rents are definitely down...but I heard next year was likely to be better. Had a look on the Pilbara Dev Commision site to see if there was enough upcoming projects to justify this, but still not really sure where this is heading.
Personally, I wouldn't sell now....I think more likely to head up again than crash.
My Karratha IP in Nickol West is still rented out at $1950/week for a yield of 17.04% (before RE fees and other expenses) - long may it continue!
That is a great return.
I'm going back into karratha. If anyone is interested this appears to be good:
http://www.realestate.com.au/property-house-wa-baynton-116930275
next door sold for nealry $900k a few years back
http://www.realestate.com.au/property-house-wa-baynton-116930275
next door sold for nealry $900k a few years back
Ausprop
Do you think karratha has bottomed? From memory you have a few props in the pilbara?
I am not aware of all the drivers, but it has suffered a setback from the highs a couple of years ago?
Do you think karratha has bottomed? From memory you have a few props in the pilbara?
I am not aware of all the drivers, but it has suffered a setback from the highs a couple of years ago?
i traded out of the market before it corrected, but you would have to think it has bottomed now? who knows tho.
'Evening All,
Not sure about others but I would still be very wary of buying into Karratha just yet.
Although there has been some positive media recently re some peripheral resource sector spending starting to emerge, there is still hundreds of properties available and other people are still building (although I suspect most of these are pre-committed constructions where people have purchased land from the LandCorp ballots and have to meet timelines for construction). If they are owner occupiers I have no idea where the hell they are getting jobs/work from. There may be a smattering of long term Karratha locals upgrading housing, but this would be the exception rather than the rule.
My view is Karratha pricing will always be a marginally above Perth metro just by virtue of disparity in cost of living and tyranny of distance.
Anyone looking at buying now would have to be holding for the very, very long term until pricing naturally starts to rise again (don't ask me what very, very long term is because I have no idea, but it sure as hell isn't going to be easy money like it was in mid 2000s; those days are long long gone and won't be back anytime soon).
Another wee concern I have is this bloody Mulataga development just will not go away. If these buggers introduce (either drip feed or enmasse) more land into the already haemorrhaging market and Karratha will tank even further because there is not enough industrial development in the wings to generate future commerce.
Two or three new blow fly infested coffee shops (to satisfy Colin Barnetts 'Cottesloe of the North' wet dream) ain't gonna drive your house prices up, period. And there is nothing happening with Woodside or RIO either (other than the long term repatriation of Dampier such that RIO has bought a few houses in Karratha for its' people, as has the fertiliser mob).
Some info below for ya. Hope the links work.
http://attachedfiles.aunz.s3.amazonaws.com/24820/2014Q1_Housing_and_Land_Snapshot.pdf
http://impactmediakarratha.com/2013/12/07/waterfront-mulataga-housing-lots-ready-by-2014/
Cheers!
Ian.
Not sure about others but I would still be very wary of buying into Karratha just yet.
Although there has been some positive media recently re some peripheral resource sector spending starting to emerge, there is still hundreds of properties available and other people are still building (although I suspect most of these are pre-committed constructions where people have purchased land from the LandCorp ballots and have to meet timelines for construction). If they are owner occupiers I have no idea where the hell they are getting jobs/work from. There may be a smattering of long term Karratha locals upgrading housing, but this would be the exception rather than the rule.
My view is Karratha pricing will always be a marginally above Perth metro just by virtue of disparity in cost of living and tyranny of distance.
Anyone looking at buying now would have to be holding for the very, very long term until pricing naturally starts to rise again (don't ask me what very, very long term is because I have no idea, but it sure as hell isn't going to be easy money like it was in mid 2000s; those days are long long gone and won't be back anytime soon).
Another wee concern I have is this bloody Mulataga development just will not go away. If these buggers introduce (either drip feed or enmasse) more land into the already haemorrhaging market and Karratha will tank even further because there is not enough industrial development in the wings to generate future commerce.
Two or three new blow fly infested coffee shops (to satisfy Colin Barnetts 'Cottesloe of the North' wet dream) ain't gonna drive your house prices up, period. And there is nothing happening with Woodside or RIO either (other than the long term repatriation of Dampier such that RIO has bought a few houses in Karratha for its' people, as has the fertiliser mob).
Some info below for ya. Hope the links work.
http://attachedfiles.aunz.s3.amazonaws.com/24820/2014Q1_Housing_and_Land_Snapshot.pdf
http://impactmediakarratha.com/2013/12/07/waterfront-mulataga-housing-lots-ready-by-2014/
Cheers!
Ian.
Thanks for the feedback Ian.
The notion of investing in a mining town in Australia at this point in time seems to be a very high risk proposition, it is not the right time in the cycle to be doing this, the mining boom is over.
Banks also view these areas as high risk and it is far more difficult to secure finance, that has to tell you something not to mention entry level is very high in particular Karratha.
I would not just be looking at the high yields, need to also look at the high number of rental listings and sale listings, once again that has to tell you something.
There are markets in Oz to play in at the moment which are rising, lower entry level and less risk.
The notion of investing in a mining town in Australia at this point in time seems to be a very high risk proposition, it is not the right time in the cycle to be doing this, the mining boom is over.
Banks also view these areas as high risk and it is far more difficult to secure finance, that has to tell you something not to mention entry level is very high in particular Karratha.
I would not just be looking at the high yields, need to also look at the high number of rental listings and sale listings, once again that has to tell you something.
There are markets in Oz to play in at the moment which are rising, lower entry level and less risk.
another thing to consider about these towns, although the yields are great. i know a few people with IPs in karratha/Port hedland areas. They have had long vacancies. Had to drop rents significantly. Another thing that people don't also realize is maintenance costs, tradies charge a lot more than perth - something normally costing 500 may cost up to 2000 in these cities.
the natural hand brake on supply is replacement cost, no one will bother building at these prices unless they are already committed. strong positive cashflow in a blue chip town that has taken a capital hit with bruised vendors that would - presumably - look at creative offers.... to coin a top gun phrase, sounds like a target rich environment to me. For prudence the surplus cashflow needs to be productively captured, develop a share portfolio, attack the debt to derisk, or last (and least) offset with a "growth" property
Similar threads
