Karratha

[pango]

Well, ive had the place advertised at $1250pw for 2 weeks now and no bites.

Just instructed the agent to go for absolute market reality to get me a tenant. That is now $1100pw apparently, as she just signed one up at that rate for 12 months with 6 monthly review.

Thats $1700pw to $1100pw in one review cycle.

I now expect that my $675k all up purchase price in 2006 will come under pressure to sustain itself.

Anyone else experiencing similar declines up there??

Pango.

 

[venno]

Revisiting this old thread as my attention has swung back around to karratha now that the rent drops seem to have stabilised and house prices have dropped to match yield.

I'm thinking this may present an opportunity to buy at the lower end of the cycle up there (on the under standing of what a 4x2 costs to build up there) in advance of the project pipeline cranking up again later in the year.

Now that prices have dropped there are some interesting yielding properties that enough lease on them to push into next year for a safety buffer should the coming projects experience delay.

Interested in comments on Karratha market.

cheers

 

[Ausprop]

I agree - it does sound look like go time

 

[MTR]

Revisiting this old thread as my attention has swung back around to karratha now that the rent drops seem to have stabilised and house prices have dropped to match yield.

I'm thinking this may present an opportunity to buy at the lower end of the cycle up there (on the under standing of what a 4x2 costs to build up there) in advance of the project pipeline cranking up again later in the year.

Now that prices have dropped there are some interesting yielding properties that enough lease on them to push into next year for a safety buffer should the coming projects experience delay.

Interested in comments on Karratha market.

cheers

What is the price for 4x2

 

[Ausprop]

I can say a 3x2 has moved from $880k to under the $800k mark now

 

[HotRod]

Karratha is probably what the Hedlands and Newman will be like in a year or so.

Rents have come back and thus yields on the old prices and now prices are adjusting to bring the 10% yields back.

 

[MTR]

Karratha is probably what the Hedlands and Newman will be like in a year or so.

Rents have come back and thus yields on the old prices and now prices are adjusting to bring the 10% yields back.

Hi HR
I still see lots of property on the market, nothing seems to be moving, am I right

Also, lots of rental properties, no takers??

 

[HotRod]

Hi HR
I still see lots of property on the market, nothing seems to be moving, am I right

Also, lots of rental properties, no takers??

Coming out of the wet season, projects being pushed back, RIO taking hits, land being released are all taking the heat out of the market.

 

[venno]

What is the price for 4x2

To build I think you would be looking at 400-500k for something decent turn key, plus whatever you get the land for.

Around 800k for a 4x2 on a reasonable plot size of 600 to 700m2 would be an underpinning price and represent the entry into market so prices should sustain to this level. Although I could be completely wrong!

 

[venno]

Coming out of the wet season, projects being pushed back, RIO taking hits, land being released are all taking the heat out of the market.

Haven't been up there for a few months now, but it was construction grand central and I assume it still is.

Do you think the market can absorb the impending supply?

 

[HotRod]

To build I think you would be looking at 400-500k for something decent turn key, plus whatever you get the land for.

Around 800k for a 4x2 on a reasonable plot size of 600 to 700m2 would be an underpinning price and represent the entry into market so prices should sustain to this level. Although I could be completely wrong!

Agree with that assessment.

That is the support mechanism for the sale market.

Not too sure about the rental market. Might just come back to historical yields of 10% which will be about $1550 to $1600pw for high quality new 4x2.

 

[billie]

Hey guys
i haven't read the whole thread, so apologies if already covered. If you're looking into Karratha, Hedland, Newman note there's quite a few initiatives by the department of housing to deliver more affordable housing to these areas.

They are re-furbishing homes and delivering new homes (built in Perth) to ease the pressure on rents. See articles below. The average price of these homes is 480k to 520k

http://www.dhw.wa.gov.au/news/Pages...-worker-housing-shortage-in-Port-Hedland.aspx

http://www.southhedlandnewliving.com.au/

We're just going through some due diligence work ourselves...

 

[MTR]

Hey guys
i haven't read the whole thread, so apologies if already covered. If you're looking into Karratha, Hedland, Newman note there's quite a few initiatives by the department of housing to deliver more affordable housing to these areas.

They are re-furbishing homes and delivering new homes (built in Perth) to ease the pressure on rents. See articles below. The average price of these homes is 480k to 520k

http://www.dhw.wa.gov.au/news/Pages...-worker-housing-shortage-in-Port-Hedland.aspx

http://www.southhedlandnewliving.com.au/

We're just going through some due diligence work ourselves...

Thanks for the update.

 

[Ausprop]

gees there is some action in onslow at the moment!

karratha - good opportunity to buy on a dip. presumably those DHW ones are by ballot for 1st home buyers?

 

[MTR]

gees there is some action in onslow at the moment!

karratha - good opportunity to buy on a dip. presumably those DHW ones are by ballot for 1st home buyers?

So what is happening in Onslow, see lots of under offer stuff $1M+

 

[MTR]

Any updates on Karratha.
Still plenty of properties on the market for sale and rent?

I know there are a couple of OTP projects that will be coming on the market shortly, that may be tough....

 

[Ausprop]

don't think there is anything particularly good or bad to report Marisa. that's the beauty of Karratha, it's a stable multi industry town.

is the OTP stuff apartments? there are huge question marks over whether that stuff is at all suitable to this market, so was always going to be a hard sell.

 

[MTR]

don't think there is anything particularly good or bad to report Marisa. that's the beauty of Karratha, it's a stable multi industry town.

is the OTP stuff apartments? there are huge question marks over whether that stuff is at all suitable to this market, so was always going to be a hard sell.

I know someone who is looking at funding for OTP apartments, I doubt it will fly, wrong time in the cycle.

This group has stuff in Karratha and Pt Hedland (see link), I would say their quoted initial returns would be totally off the mark now. I am told rents in Karratha have dropped 25%, I would also think the expected sale price has dropped.

http://eosproperty.com.au/armchair-developments-2


Might be a few who will get burnt with the Karratha stuff.

 

[Ausprop]

not sure what the man in the big hat is on about here:

http://au.news.yahoo.com/thewest/business/a/-/business/17629710/beware-of-nw-rent-bubble/

'spruikers' i.e. real estate agents as opposed to spruikers masquerading as not-for-profit clubs with secret commissions, are not promising the returns, the returns are in place and are not extraordinary, they have always been this.

some green envy perhaps?? shoot down the competition?

 

[HotRod]

not sure what the man in the big hat is on about here:

http://au.news.yahoo.com/thewest/business/a/-/business/17629710/beware-of-nw-rent-bubble/

'spruikers' i.e. real estate agents as opposed to spruikers masquerading as not-for-profit clubs with secret commissions, are not promising the returns, the returns are in place and are not extraordinary, they have always been this.

some green envy perhaps?? shoot down the competition?

Sort of agree.

The markets in the NW are finally having the correction that was bound to happen with construction investment winding back. Karratha has come off about 20% in prices and rents, so the yields are still about 10%. Has been that was for 10-15 years and will probably keep at those high yields. It's the nature of the region. High rents for high risks (cyclones, mines, heat etc etc). Same now happening in Hedland and I guess soon in Newman. The land releases in those towns also easing the cost of living.

So, I would be careful investing in these areas as rents are dropping, thus taking 20% of your equity with it as yields rebalance to 10%ish.

However, some of the newer product offering rent guarantees, might be the way to go. I say might with caution.

If the guarantee is long enough, it might see you through till the next upswing in investment in mining as companies start to make investment decisions towards the end of this decade to meet the next peak in demand around 2020 out to 2025.

It will then cushion the effects.