Confidence is high in Kalgoorlie’s residential property market, which is good for investors and home occupiers and bad for renters.
Confidence is high in Kalgoorlie’s residential property market, which is good for investors and home occupiers and bad for renters.
The market inevitably follows the ebb and flow of global commodities markets.
A strong gold and nickel price means increased production in mines surrounding Kalgoorlie, requiring more workers and more homes.
Close ties to mining brings other challenges, however, such as limits on land availability because of potential prospectivity of land.
Native Title is an added complication.
In Kalgoorlie, residential growth is limited to the north-west. Such constraints makes land expensive and it is still cheaper buy an established property in the city than build a home.
The north-west sector of the city will have to house as many as 30,000 extra residents if forecast population growth of 2 per cent a year is realised.
Confidence in the Kalgoorlie economy and in the city’s housing market surged last year, according to Gavin Gilmore, president of the Goldfields-Esperance branch of the Real Estate Institute of WA.
Mr Gilmore said property sales in Kalgoorlie for 2004 were double that of the year before.
But growth may be slowing.
REIWA quarterly data shows the median house price in Kalgoorlie in the December 2004 quarter was $169,000. It represents quarterly growth of 5.3 per cent, in line with rises in Perth, but behind 6.4 per cent growth in WA overall to which Bunbury and Geraldton both made double-digit contributions.
Over 12 months, median house prices in Kalgoorlie rose 10.1 per cent, just behind WA growth but two percentage points ahead of Perth.
Over five years, growth in Kalgoorlie was just 2.4 per cent. Such is the price of being tied to fluctuating metals prices.
“When the resources sector suffers so does capital gains in Kalgoorlie housing,” Mr Gilmore said.
Confidence in housing this time around is being also influenced by relative newcomers to the market – investors from the eastern states and WA’s southern regions.
Outside investors are not so interested in capital gain as the cashflow from rents, which at 8 per cent are more than twice as high in Kalgoorlie than in eastern states markets.
Investors have been flooding into Kalgoorlie in recent years, which has elevated housing prices.
Local owner-occupiers appear to have been infected with the confidence. Mr Gilmore said many Kalgoorlie homeowners were upgrading by buying more expensive houses or pouring money into renovations.
But the news has been poor for renters. Not only are investors demanding the expected return, Mr Gilmore said the market in Kalgoorlie had evolved and the quality of home required by renters had increased.
With few homes of the required quality available, rent on those that met standards had been pushed up.
In addition, a Shelter WA report on Kalgoorlie housing has identified that rental accommodation in some cases is plagued by low standards of maintenance, which results in disputes over tenant liability.
The report says there is a shortage of houses for large families and for one-person households.
Affordable land is also scarce, although Mr Gilmore says land in Kalgoorlie remains relatively cheap compared with Perth.
