Hmmmmm
Thanks Alistair for the free plug .
I’ll get you back when you least expect it….
Ironically I was in Melbourne with him 2 wks ago looking at Melbourne property.
Fact of the matter is we personally invest or buy all around Aus. incl. Qld, SA, Perth and the Pilbara WA.
If we had time and found the right property, we would add Melb. to the list.
I have watch this place unfold ( unravel if anything) over the last six yrs.
What we currently face is an accomodation crisis.
The same applies to a number of regional centres where there is so much mining, oil/gas activity.
Its becuase these places are no longer one horse towns, with layers and layers of different participants that has made it what it currently is.
Add to this an acute shortage of 'available' land and then another shortage of available builders to build on any land that does become available.
Looking forward there is at least 20 yrs of projects /catch up to happen before we see any end end to all this.
Lots of the other outlying regional activity is serviced out of Karratha.
roem, you could clarify when you bought this property and whether it was a strata unit off the plan or a green title property, the emphasis being on the 'when.'
Reason being I doub't they would have any more available and not at that price.
All land currently being released is by ballot and sold to individuals.
There are always disappointed people who miss out in the ballot.
We have investors who bought 2 yrs ago who are still waiting for their property to be completed.
The reason why they are not complaining is that in that time both rents and values have continued to rise strongly.
2 yrs ago we would have done projections based on rents at $600 pw and property prices around $450k.
That same property this year will rent for $1200 pw and sell for $650k.
We have Sydney investors who bought back then who are now collecting $1500 pw rent, and the property that cost $547k to complete ( land $120k, build $387k and $40k to finish off) has been valued this week for the bank at $800k.
Both the valuer and local agents are saying that the market is peaking out at $850k for new houses and rents at $1500 pw to $1700 pw.
Corporate tenants are refusing to pay more than $1300 to $1400 pw for rent ( but they will sign up for 5 yr leases or more ), but market rents are still running at $1600 pw to $1800 pw.
The top end of the market is $2000pw and even $2500 pw.
Many sales well into to $900’s k and even $1.1 mil.
Don’t ask me who is buying these houses … but they are selling.
Is it sustainable ??
Absolutely for the next few years.
When it finally does turn I believe the old stock in the old part of town will go off first.
Hard to justify prices well into the $600s’ k for 30 yr old stock even if it is currently renting for anything between $700 pw and $1100 pw.
We can duplicate that in the newer subdivisions for $600k and below, so that is suggesting that the 30 yr old property is at ‘land value’ of $600k which it is not.
Take the depreciated old house out of the equation and you potentially have a property at land value of $300k or at most $400k.
Its also sustainable because most of the buyers are locals.
There is a lot of demand from owner occupiers and believe it or not, many of these people want to live here and build their home here.
Moving to the city is not an option.
There is strong focus on the mining companies with regard to housing demand, but I have found there is equally strong demand from local business owners and many first homebuyers.
This state needs decentalised centres, and there is no doubt that Karratha is the regional centre for the Pilbara.
The place can’t help but to keep growing.
Pt Hedland 230 kms up the road ( its actually due West ….weird) is going through similar growth and similar pains.
BHP spending $140 mil on one contract for housing.
FMG are building 255 houses between now and the end of next yr. ( land already allocated).
Behind all this are the sleeper regional areas that will start to face the same problems and demands over the next 2 yrs.
We put some of this experience and theory into practice in Mt Isa and what we predicted 12 months ago is currently happening.
Both values and rents still rising strongly.
Just like the sharemarket setting new record daily, so are the prices for new houses setting new levels in these regional centres.
Agents haven’t seen it before, but it doesn’t mean it won’t continue to go up.
Worse case for it to slump will be for RIO, BHP, Dampier Salt, Burrup Fertilisers EDL to pack up and go home, and for FMG and Pluto to not get off the ground.
When is it going to end ?
Who knows and who cares !
Probably more important to ride the wave while it lasts.
Whats the new slogan all the experts are now using to describe this boom ???
“Stronger for Longer”
Looks like ‘Super Cycle’ is now passé…..
Kevin.