After slashing the price of three planned townhouses by a third in the coal-mining town of Moranbah in remote northeastern Australia, agent Ricardo Baggio still can’t find buyers.
“No one’s got confidence,” said Baggio from broker Ray White Group’s Townsville franchise, about 550 kilometers (341 miles) north of Moranbah in Queensland state. “There are a few mines around the town but they’re not hiring or they’re downsizing.”
Home prices in Australia’s isolated mining towns, which outpaced increases in the rest of the nation over the past decade, are falling as companies such as Glencore Xstrata PLC (GLEN) and Peabody Energy Corp. (BTU) delay projects and lay off workers amid a slowing resources boom. The percentage of homeowners more than 30 days behind on their mortgage payments in Gladstone, a Queensland coastal town near more than $60 billion of gas projects, was 0.94 percent in March, according to Fitch Ratings, a 71 percent increase in six months.
The Moranbah townhouses, which will be built on a flat, sparsely landscaped street about 1 kilometer from the center of town, are on the market for A$525,000 ($478,485) each, down from an initial price of A$750,000, said Baggio. The median price of a home in Brisbane, the state capital, is A$425,000.
Prices in mining regions could fall as much as 30 percent from a first-quarter peak, real estate-data company SQM Research Pty forecasts.
Demand for housing in central Queensland and Western Australia state’s arid Pilbara region, the nation’s two biggest mining areas, is waning as record investment in resources peaks even as property developers keep building more homes. About A$150 billion of mining and energy projects have been canceled in the past year as commodity prices declined, according to government figures.
Population Drops
“We expect we’ll see an abrupt dropoff in population flows in mining towns,” Sydney-based Matthew Hassan, senior economist at Westpac Banking Corp. (WBC), said in a telephone interview. “How that plays back to housing is extremely complex. But we know the direction: down.”
In Western Australia, while only 1.6 percent of borrowers were late on their home-loan payments in March, “vulnerability in the mining sector and associated projects could result in an increase in arrears during the year,” ratings company Standard & Poor’s said in a March 31 report.
Significant Fluctuations
In Queensland’s Isaac region, which includes Moranbah, home prices tumbled 43 percent in the year to April, and rents slumped 69 percent, according to Sydney-based Australian Property Monitors.
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