Updated January 30, 2013 17:13:09
It’s no secret the town dubbed ‘the engine room of Australia’ is one of the most expensive places to live in the country.
Karratha, in WA’s Pilbara region, has a population of about 20,000 people and is expected to grow rapidly in the next decade.
The State Government is pouring about a billion dollars into its Pilbara Cities initiative in order to transform Karratha and Port Hedland into liveable cities of 50,000 residents each by 2035.
It is hoping the changes will attract people to live in the region.
The Chamber of Minerals and Energy is, however, predicting fly-in, fly-out workers will make up more than 80 per cent of the Pilbara’s resource sector workforce in 2020; a year in which 51,600 workers will be required.
Mining companies find it cheaper to fly workers in rather than pay the high rents.
About six months before Woodside’s Pluto Liquid Natural Gas project came online in early 2012, the average cost of renting a house in Karratha peaked at $1,800 a week.
Recently, those prices dipped to a three and half year low after steadily declining for the past six months but it is a different story in Newman.
In the smaller East Pilbara town, rents have reached record highs with tenants paying on average about $2,200 a week.
A Newman business owner, Callam, says he’s struggled with the cost.
“I’ve heard of houses being shared by six or seven different people all working for the same company,” he said.
Callam’s company owns two houses with one staff member and their family in each.
He says he has no choice but to provide housing for his employees as they wouldn’t be able to pay their own rents.
“There wouldn’t be a business in town that isn’t in the same boat as us,” he said.
“We’d prefer to own no houses and be in a situation like in Perth where people rent or buy their own places and rock up to work.
“But up here, it is too expensive for people to be able to do that.”
The Pilbara Regional Council chairwoman, Lynne Craigie, says the high cost of living has deterred new businesses and services from opening in the town, despite a steady population growth over the past few years.
“Certainly we have lost some shops,” she said.
“Newman’s growing, it’s growing at a huge rate, but we’re not seeing new services coming to town.
“There hasn’t been a new shop open for quite a while.
“If you look at the retail sector, we could probably use more shops but they’re just not coming because there’s just nowhere for people to live.”
Australian Bureau of Statistics figures show the number of people living in the Newman region has nearly doubled to 12,000 people in the past six years, ranking as the fastest growing area in the country.
Ms Craigie says she’s concerned for those who work in the essential retail and service industries.
“Obviously you just couldn’t afford a rent to house for a family if you’re only on retail wages,” she said.
“The exorbitant rents are being met by corporations and companies that have workers to house.”
The Government plans to stabilise the property market through the Pilbara Cities initiative but it will take some doing according to experts.
“That will require prices to come down to a level where people can afford them,” says Perth property commentator, Gavin Hegney, of Hegney Property Group.
“Probably what we’re faced with is Karratha prices stabilising at probably 20 to 30 percent above Perth prices which, in effect, means you’re probably looking at a drop of about 20 to 30 percent in the value of houses to get to that level.”
The average cost of buying a home in Karratha is $823,000, the lowest since December 2009.
Mr Hegney says while that may be good news for locals, it’s bad news for investors.
“The concern is investors are going in and borrowing everything expecting it’s a hot spot and they’re going to make a fortune,” he said.
“I would be cautious on that.
“I’ve seen investors buying from all around Australia and most of the buying is coming from outside Western Australia.
“If they’re borrowing lots of money to do it, they might be out of pocket, disappointed, and in financial difficulty as a result.”
The Karratha Chamber of Commerce and Industry says generally the market is looking healthy.
Its president Robin Vandenburg says residents have more property options than ever before.
“There are nearly a couple hundred properties for rent,” he said.
“So people have got a great choice, not just in price, but also what sort of property they want.”
Ms Craigie says the key to stabilising rental costs is to release more land to meet the demand.
“Over the 13 towns across the Pilbara, there’s roughly 28 blocks of land for sale,” she said.
“We’re never going to get an equal supply or demand unless we have a lot more land made available.”
The State Government recently released 38 residential lots in Newman for people who have lived in town for more than a year.
Ms Craigie says she doesn’t think that will make a difference.
“My understanding is there are over 50 expressions of interest gone in those 38 blocks so no, I don’t think that’s going to ease it at all,” she said.
However, the Pilbara Development Commission says there are about 1,900 land parcels in development or in approval processes in Newman.
A spokesman says the market will ease as the land becomes available.
Mr Hegney it’s unclear what the market will do looking forward.
“Every town has its own unique set of characteristics that drive prices,” he said.
“Probably, Karratha’s going to [have] an adequate supply of property moving forward, more so than other markets, so that’s the one you’ll see a continual softening in price.”
Mr Vandenburg says Karratha needs to establish industries away from the resource sector so the community is not so reliant on it.
“It’s going to be interesting to see how far rent prices do drop,” he said.
“We only really need one project to kickstart it again.
“Say, for instance, if Woodside said they’re going to do another train or two out at Pluto, then you pretty well would see most of that taken back up again.”
He is confident Karratha will never again have such a major rental price crisis.
“If they can keep those housing developments going and people keep buying the land, I don’t think we’ll ever again have the same sort of problems as we did during the Pluto phase,” he said.
While conditions have eased in Karratha, it may be some time before the rental squeeze ends in the town of Newman. Topics:
mining-industry, housing-industry, karratha-6714 First posted January 30, 2013 17:10:19