Get the dirt on Mining Property

If you’ve never taken notice of property prices and rental returns in mining areas, it may be a real eye-opener, but for the agents in these remote areas it’s just another day in the office. This snapshot of some of Australia’s major mining areas was put together by RP Data.

The commodity price index for base metals has showed a recovery in recent months after the index fell by -64.7% peak to trough in a matter of just 21 months. Since the index value reached its trough in February 2009, the index value has increased 54.6% to its current value of 115.0 points. "The recent improvement in the index for base metals suggests that demand for iron ore such as that found in WA’s Pilbara Region is once again heating up."

Roebourne LGA, Western Australia
The Roebourne LGA in the Central Pilbara region includes the townships of Karratha, Dampier and Roebourne townships. Over the last 10 years median house prices have jumped 29.4% on an average annual basis, the last five years has seen average annual growth of 23.4% and the last 12 months has seen prices fall by -7.1%. As the graph shows, growth in this market didn’t really start to take off until 2005, the same time the base metal index started showing exceptional levels of growth. It’s not surprising given that the Pilbara region is well known for its iron ore. Today the median price sits at $830,000 which is -8.3% below the Oct-08 peak of $905,000.

Rental rates in the region have actually eased over the last year with median house rents falling by -13.5% however, today they still sit at $1,470/week resulting in extremely attractive gross rental yields of 9.2%.

Port Hedland LGA, Western Australia
Port Hedland LGA incorporates the areas surrounding Australia’s largest tonnage port, Port Hedland. Over the last 10 years median house prices have recorded annual average growth of 20.3%, the rate of growth has been significantly greater during the last five years with median prices recording annual growth of an average of 28.7%.

Again, the dramatic increases in median house prices coincides with the time that the base metal index began to show strong growth. Earlier in the year there was a softening of median house prices but in recent months they have taken off once more and have recorded annual growth of 24.0%. The current median of $620,000 is the region’s greatest ever median price.

Rental rates in the Port Hedland region have jumped by $100/week during the last 12 months and now sit at a median of $1,200/week. The result of these strong rental rates is a very impressive indicative rental yield of 10.1%.

The commodity price index for non rural commodities has also recorded a slight increase in recent months after a sharp and dramatic fall. The index peaked at 211.0 points in May 2007 and in a matter of eight months the index fell by -37.7%. Since July 2009 each month has seen an increase to the index, however, they have all been quite minor. Today, the index is up 3.5% from its recent low. Despite this, the increase may indicate the beginning of a recovery in the non rural commodities sector.

Isaac LGA, Queensland
The Isaac LGA in Queensland’s Bowen basin includes coal mining areas such as Dysart and Moranbah. Over the last 10 years median house prices have jumped 40.2% on an average annual basis, the last five years has seen average annual growth of 25.9% and the last 12 months has seen prices increase by 11.9%. Growth in this market has been quite consistent with the real growth starting around 2003, the same time the non rural commodities index began to show strong growth. This isn’t surprising given that in Australia, coal is a major non-rural commodity and the index is actually quite heavily weighted towards coal (gold also has a strong weighting). Today the median price sits at $395,000 which is -1.3% below the July 2009 peak of $400,000.

Rental rates in the region have shown exceptional growth over the last year with median house rents increasing by an amazing 45%. The region continues to struggle with an undersupply of housing, today rents sit at $900/week and indicative gross rental yields sit at 11.8%.

Gladstone, Queensland
Gladstone is a central Queensland port located relatively close to Queensland Coal mines. There has been a recent announcement of plans for a large liquefied natural gas (LNG) project in the Gladstone region, geared towards capturing coal-seam methane gas. Gladstone is yet to really see the exceptional growth seen in other resource townships however, this project should assist. Over the last 10 years prices have grown at an average annual rate of 12.4%, the last five years has witnessed growth of 13.5% and over the last 12 months prices have fallen -3.9%. The median price currently sits at $370,000. In comparison to other major resource areas, Gladstone is still lagging well behind.

Rental rates in the Gladstone region have only increased by $5/week over the last year to $325/week and indicative gross rental yields sit at 4.6%.

With large scale LNG projects being undertaken in Gladstone and north-west WA, iron ore demand increasing and early signs of a recovery in coal prices and demand, the four areas detailed appear set for a strong future after varying degrees of strength during the last year.

Mount Isa, Queensland
"The Mount Isa region is home to one of the world’s most productive mines, it contains significant deposits of lead, copper, silver and zinc."’ Over the last 10 years median house prices have jumped 11.1% on an average annual basis, the last five years has seen average annual growth of 17.9% and the last 12 months has seen prices dip slightly by -2.4%. Growth in this market was very strong between 2005 and early 2008 the same time strong growth in non-rural commodities was witnessed. This is to be expected given that the mine is highly productive and includes a number of mineral deposits. Today the median price sits at $330,000 which is slightly below the $340,000 peak recorded in October 2008. With economies improving and slight improvements in demand for minerals in recent months, over time it is anticipated that Mount Isa will recover (although it never really slumped).