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Boomtown house prices 'could stagnate for years'

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  • Boomtown house prices 'could stagnate for years'

    Boomtown house prices 'could stagnate for years'

    Bridget Carter and Debbie Guest | December 18, 2008

    Article from: The Australian
    HOUSE prices in cities with high exposure to mining, manufacturing and the car industry are expected to stay flat for up to a decade, according to a leading property researcher.
    Residex chief executive John Edwards said Perth property prices would stagnate after more than doubling in the past six years. The city would revert to being the country's fourth-most expensive behind Sydney, Melbourne and Brisbane after taking second place during the mining boom.
    In the West Australian mining town of Kalgoorlie, real estate agents were already reporting significant price falls.
    Ron Hunter, from Elders Kalgoorlie, said there had in some cases been a 25 per cent drop in property prices over the past six months, which was due to a combination of nickel mine workers being retrenched and the global financial crisis. But a strong gold price continued to underlie a relatively buoyant local economy.
    John Matthew and Sons agent Allan Pendal said there were signs the Kalgoorlie market had reached a plateau. "There are instances where properties are being placed on the market at prices lower than they would have been this time last year," he said.
    In the Pilbara town of Karratha, the mining slowdown had not yet dramatically affected home sales, but rental properties were becoming available for the first time in several years.
    "Our vacancy rate is about 0.6per cent," Lindsay Gibson from Ray White Real Estate said.
    "It's been a couple of years since we've had anything vacancy-wise on the board."
    According to Mr Edwards, other cities expected to decline were Melbourne, where much of the country's manufacturing industry was located, and Adelaide, where GM Holden is based and which last month announced it would halve production next year.
    Last month, Sydney's median house price was $565,000, the figures showed. Melbourne, the Australian Capital Territory and Brisbane's median house prices were all above $445,000.
    "Brisbane is such a diversified economy, and the resource towns are scattered up and down the coast of Queensland," Mr Edwards said. Darwin's house prices gained 2.76 per cent for the quarter, bucking the national trend. He said rent yields in Darwin were still high and would continue as long as the city was not suddenly oversupplied.
    The figures also showed that the price of units was down 0.72per cent, suggesting lower interest rates and government home-buyer incentives were having little impact.
    There were declines for unit prices of more than 4.2 per cent for rural Queensland and WA, suggesting a slowdown in the rural sector could be hurting the economy of regional centres dependent on the resources sector.
    The country's average rent, however, is $340 a week, up from $300 in November last year.

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