$79K house could be Australia’s best bargain
With the constant focus on the weakening property sector, the many areas across the country experiencing high price growth are often dismissed.
City and state markets, particularly Sydney and Melbourne, have lost significant value over the last 18 months.
On Tuesday, Australian Bureau of Statistics figures revealed all capital cities fell in the three months to March, slicing off more than $170 billion from the total value of the country's dwellings.
Average prices across the eight capitals dropped 3 per cent in the quarter and 7.4 per cent in the year, according to the bureau's Residential Property Price Index.
But stronger commodity prices have led to a number of mining towns dramatically increasing in value.
Two Queensland coal towns Blackwater and Dysart jumped 57 per cent to $133,750 and 46 per cent to $95,000 respectively in the 12 months to the end of May, according to realestate.com.au figures.
Dysart homes are currently selling for as low as $79,000.
South Australia's Whyalla has significant ongoing steelworks projects, and property owners are cashing in.
Its median house price rose 33 per cent to $260,000.
The areas of high growth aren't limited to remote mining towns with a mixture of higher and lower end metropolitan suburbs rising by 20 per cent or more over the year.
Palm Beach on Sydney's northern beaches is one of the more prestigious suburbs in the country and it avoided the national property downturn.
Its houses jumped 24 per cent in value to a cool $3.4 million.
Highbury in Adelaide's north was the best performing Australian metro suburb over the year, gaining 26 per cent to $587,500.
The South Australian capital had another two suburbs at either end of the price spectrum in the top five - North Adelaide rose 22 per cent to just over a $1 million while Smithfield Plains was up 20 per cent to $212,500.
"Adelaide has definitely seen some pretty incredible price growth," realestate.com.au chief economist Nerida Conisbee told news.com.au.
"If you have a look at Adelaide's suburbs in the $1 million-plus range, we have seen some pretty incredible price growth over the last couple of years.
"At one stage, almost all of its $1 million suburbs had seen over 10 per cent price growth."
Ms Conisbee said the metro areas which have gained significant value over the last 12 months were unlikely to continue rising.
She suggested investors avoid these spots and look for neighbouring suburbs with similar attributes but haven't yet had the same growth.
"Often there's a ripple effect, so if you have a look at somewhere that has seen strong price growth and you go to the next suburb out then it's often one of the next top growth suburbs," she said.
"Typically people fear that they've missed out so they look for the next best suburb in the area."
Property prices in remote towns shot to dramatic levels between 2003 and 2012, fuelled by the mining boom in the resource sector.
As those projects began to wind up by 2013, a lot of the temporary jobs disappeared and the residents vacated, said SQM Research chief executive and property analyst Louis Christopher.
Residential vacancy rates rose and the value of those properties plummeted.
The median house price in the Western Australian iron ore town Karratha rose to more than $1 million during the boom but has now fallen to about $300,000.
But higher commodity prices has led to an upswing in the markets exposed to new mining projects.
"There's certainly a recovery occurring, it's been occurring for some time now," Mr Christopher told news.com.au.
"Especially in those mining towns that have an exposure to iron ore."
SO IS INVESTING IN A MINING TOWN A GOOD IDEA?
Mr Christopher said the collapsing property markets through the mining downturn less than a decade ago should serve as a "massive cautionary tale" for those wanting to invest.
"Mining towns, in terms of property investment, is not for the novice investor," he said.
"I would only suggest it for experienced property investors who would potentially buy only one property in what would be a diversified portfolio to begin with.
"You would not want to put all your eggs in one basket for mining towns at all."