Riding the mining boom

As we pointed out recently, across Australia capital city property values have grown by 9.9% for houses and 8.1% for units during the ‘noughties’ decade. Certain council areas have well and truly outperformed the nation during this period.

The best performing council area during the last decade was Isaac where median house prices recorded average annual growth of 43.1%. Importantly, house prices came from an extremely low base a decade ago of just $10,901. Isaac itself is a mining region within Queensland’s Bowen Basin which includes well-known mining towns such as Dysart and Moranbah.

Many mining and resource regions have performed particularly well during the last 10 years and they occupy the first six entries on the list. This result highlights the strength of the booming mining and resources sector during the last decade, as well of the inability of new supply to keep pace with the increasing demand in many of these regions.

When looking across the whole list of top 50 council areas you can see that in all instances price escalation over the last decade has been very strong. Of the top 50 listed the Fremantle council area had the most expensive median price 10 years ago at $140,000 for units while less than 7% of council areas nationally have a current median price for either houses or unit which sits below $140,00. Today median unit prices within Fremantle are recorded at $555,000. The most affordable council area 10 years ago was also the nation’s best performer, Isaac.

At the end of the decade Roebourne, the mining and resource region of Western Australia, recorded the greatest median price of all council areas on the list at $840,000.

Looking at the performance across individual states, Western Australia has well and truly been the standout with half of the 50 best performing council areas situated in the state. South Australia is the next best performer with seven council areas followed by: New South Wales and Queensland (both six), Tasmania (three), Northern Territory (two) and Victoria (one).

The standout performers have generally been situated outside of capital cities. Only 15 of the 50 best performing council areas were located in capital city markets. Of this 15, 10 were found within the Greater Perth region, highlighting the cities superior performance during the last decade.

Prices of houses have tended to record the greatest level of median price growth during the last year; 29 of the 50 areas detailed were recording strong growth in median house prices rather than unit prices.

While the regional areas have generally seen stronger price growth during the last 10 years thanks to mining and resource booms and the fact that their prices have come from a very low base, the next 10 years could be vastly different.

There are very few locations left around Australia which have a ‘low’ median price. Given this fact we would expect that during the coming decade the level of average annual price growth is likely to be lower than that recorded during the last decade.

The mining and resources boom looks set to continue so we would expect that many of the existing areas, plus new ones which will undoubtedly evolve, will continue to have a solid representation.

In 10 years time we’d also expect that given our growing population which is heavily centralised, areas closer to major capital cities will probably fare much better in terms of price growth than they have during the last decade.

Tim Lawless is the Director of Property Research at RP Data.