Port Hedland auction shocker - still unsold four months on
It was four months ago - the WA mining town auction that shocked the nation.
The ABC reported on a Port Hedland February auction where the fibro cottage was passed in at auction for $360,000 unsold - its highest offer reflecting 2006 price levels.
Immediately after the auction came its declared $600,000 asking price, then $590,000 in March.
It had last traded four years ago for $1.3 million, and before that at $870,000 in 2009 and at $350,000 nine years ago in 2006.
It is now for sale at $470,000 after yet another price adjustment.
The three bedroom, one bathroom 1960s house sits in the heart of the Western Australian mining town. It is within the business and commercial district, opposite developments and not far from the boat ramp, Marapikarrinya Park, and fishing wharf.
Real estate agent Barry Walsh at Jan Ford Real Estate told the ABC the top bid was a sign the mining boom's construction phase had tapered off.
Negotiations continue for the sale of the cottage with 145 square space on its 600 square metre block.
It was initially listed for private treaty sale in June 2013 at $1.42 million.
Property Observer understands its most recent rental asking price was $800 a week in mid-2014, having been in excess of $2000 a week in 2008 and 2011, when it was last sold.
ABC reported that the fibro cottage passed in at auction at $360,000, with the highest offer reflecting 2006 price levels.
In February the listing agent, Barry Walsh at Jan Ford Real Estate, told Property Observer that at the peak of the mining boom, property prices in the Port Hedland and South Hedland regions were unsustainable.
"It was totally unsustainable where it was, and now that it's stabilising, it will bottom out, and is in the throes of doing that," says Walsh. He says 18 Edgar Street was advertised to rent at $2,400 per week at the market's peak," said Walsh.
"And now, you wouldn't rent it for $500 per week. That's a reflection of the rental market."
According to Walsh, the market was now in the process of returning to its fundamental value.
"The stabilisation of the market is a very good thing for Port/South Hedland and the Pilbura region," he says.
"It was unfortunate that the market went where it did, to unsustainable and disproportionate price levels."
He attributes some of the price escalation to the inability to release a sufficient amount of land for development to cope with the influx of residents who were attracted to the area's mining economy. The infrastructure required to house the expected 30,000 to 50,000 residents – everything from hospitals and schools to sewers and roads – wasn't available to facilitate the expansion of the region, making tenants compete for the existing properties.
"The rents got to about $2,800 a week – some of the dearest in the world."
He says 18 Edgar Street is currently advertised for $600,000 through private treaty, with a couple of potential buyers engaged. He says the property, as it exists now, would only be worth around $250,000 to investors as a residential building.
"Everyone up here would want at least 10% gross return", Walsh explained.
