Port Hedland desperate seller

Ausprop said:
wonder why Dec 31 is so important? it's not like it will settle any time soon
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Bit more info for anyone interested,

Will be officially 12 months on the market on NY.
Started at 725k, dropped incrementally each month to all the way down to 425k

Looks to be rented @ $650 pw down from $750 in may.
 
Still too much risk for me, seems buyers think same if been on market for 12 months no takers.

Are rents still falling?? I expect so

This agency alone has 70 properties listed in South Hedland, that is a worry.

Are prices still free falling??

Even at figures quoted, cash flow still not enough for me to take the risk at this in the cycle. If too much stock it could take months to rent out, there goes your cash flow and in the red.

Also banks consider this high risk, harder to source loans.
 
I do find Hedland a very interesting market - I don't own property there and the last year has seen huge drops in both prices and rents. I'm keeping my eye on it, there is lots of building going on plus bhp are pulling out of the private rental market.

For eg, the house we rented in March was $2k/wk and now might get $1100 or so on the private market, if that.

Also the vacancy rates up there are high atm - is just a matter of watching closely to see when the fundamentals of the area start to change. When they do, there could be some good buying opportunities.
 
I think mining recovery/cycle is something like 20 years from what I have been reading, its not like property.

Not on my radar while there are drops in iron ore etc etc.

No point holding onto an asset that is volatile or in a declining market, makes no sense whatsoever. What you perceive as a bargain today, is IMO a lemon.

MTR
 
MTR said:
No point holding onto an asset that is volatile or in a declining market, makes no sense whatsoever. What you perceive as a bargain today, is IMO a lemon.

MTR
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All depends on yield, I have properties that are declining in value slightly but still up considerably on purchase price and holding costs are a small % of rental income so why would I sell?
 
DEC said:
All depends on yield, I have properties that are declining in value slightly but still up considerably on purchase price and holding costs are a small % of rental income so why would I sell?
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Need to compare apples with apples, without knowing exactly what you purchased and where I can not comment on your particular scenario and how it compares to South Hedland market which is what I am specifically commenting on.

If the value your property has declined slightly but still up from purchase price it will be dependent on when you purchased in that particular cycle, and where.

The question and the most important factor IMO is to establish whether the market you purchased in is still declining?

Holding costs is only one consideration.

MTR
 
values there are not related to 20 year cycles tho, they tend to roll from project to project. When the projects roll out one after the other you achieve super profits. You also benefit from underlying general growth as well e.g. from memory a house in karratha in 1990 was $40k when I was looking... regardless of whether the market can possibly go any lower or not you will still benefit from asset inflation just as in any other place.

there is an opportunity to become exceptionally wealthy by correctly staging a re-entry into this market
 
My point is the mining boom is over and recovery could take years regardless.

Jumping into this market now is absolutely high risk because we have no idea how low it will go, rents could still continue to fall as well as values as there is an oversupply.

Investors can not sell stock, pretty scary stuff.
 
MTR said:
My point is the mining boom is over and recovery could take years regardless.

Jumping into this market now is absolutely high risk because we have no idea how low it will go, rents could still continue to fall as well as values as there is an oversupply.

Investors can not sell stock, pretty scary stuff.
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Wise words MTR.

Regional one-horse towns give high yields. And with those high yields comes risk.

PH and Karratha were great buying around 2003. I know people who bought in early and got returns as high as 25% return perannum, just in rent. Those days are well and truly over.
 
the mining boom is over thing is more of an eastern states property spruiker's throw away line "come, buy and hold in docklands, it's just like 2007 again".

there's actually a lot still happening, perhaps not at the frenetic pace it was but it was probably too much anyway. A company I am involved with just got a contract with a huge new infrastructure development but no one seems to know about it, so not sure if it is public. And Ankatell point I am told will probably be the next shot in the arm for karratha

my point is don't get caught up with the animal instincts, there's a lot more to it than just either the boom is on or off
 
Ausprop said:
I don't understand PH but there is nothing one horse about Karratha
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Personally, I love Karratha a lot more than I do PH. The fact that big retailers have moved into Karratha in a big way suggests that demographers and economists have confidence in the place. Nevertheless, Karratha is basically an iron + oil and gas town. Prices for both these commodities are down. Although Woodside has locked-in long term contracts with its customers (at massively inflated prices), spot prices for gas have crashed. Great for consumers and the world economy. Terrible for Woodside.
 
was going through old receipts last night for tax, it's amazing how much the retail price of petrol has dropped! combined with switching to a more fuel efficient car my fuel bill has been cut by about 60%
 
Ausprop said:
the mining boom is over thing is more of an eastern states property spruiker's throw away line "come, buy and hold in docklands, it's just like 2007 again".

there's actually a lot still happening, perhaps not at the frenetic pace it was but it was probably too much anyway. A company I am involved with just got a contract with a huge new infrastructure development but no one seems to know about it, so not sure if it is public. And Ankatell point I am told will probably be the next shot in the arm for karratha

my point is don't get caught up with the animal instincts, there's a lot more to it than just either the boom is on or off
Click to expand...
Actually the 'mining boom' is over. I can't think of one large mining project apart from Gina Rinehart that is in construction in WA? Lots of miners shelved big plans to develop mines in the Pilbara back when IO prices started to fall below $100/tonne. You may say that production has increased, yes - but to run a mine you don't need a huge amount of people like you do in construction.

I now see old colleagues moving back overseas, driving taxis, working in warehouses etc. These were people who were building/operating mines a few years ago. The industry has changed a lot. There are still mines in the pipeline, but they would be mines to sustain production once existing orebodies are depleted.

Infrastructure is not mining. They occur at completely different stages in the investment cycle.

Happy to be proven wrong :)

Like you said, it's only one part of the story. Not everything in WA relies on mining, and now that it isn't a huge growth driver, WA needs to find something else. It was the story for Port Hedland/Newman etc. Karratha is a bit better insulated due to more Oil and Gas activity.
 
...... and the major players in WA are moving into other areas including exporting cattle.

The easiest way to make money as a property investor is to find markets where demand is greater than supply, not the other way around.
 
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