The figures, contained in CBRE’s Australian ViewPoint: Volatile pricing in mining towns, show that homes in Queensland and Western Australia have been hit by massive decreases in price over recent years.
“The boom period for Queensland’s mining town house prices is over, and as investment spending continues to slow, demand for property has contracted significantly, resulting in substantial price volatility in these markets,” CBRE senior research manager Sam Reilly said.
“Rental demand, previously fuelled by resource employment has now fallen and plunging rental returns have seen capital values contract by more than 70% in some areas,” he said.
According to CBRE, the Isaacs region in Queensland has been one of the worst hit.
In the town of Dysart, sales have reflected price falls of 73.4% over the last three years, while in Moranbah homes have sold for 70.6% less than what they were worth three years ago.
Scott Northcott, director of Queensland based Real Property Advice, said his firm is currently dealing with a number of investors who have been caught out by the slowdown.
"For a lot of people it's too late now, but they're coming to us looking for help and they're either going to have to sell and bite the loss or see if there's any chance they can restructure their finances," Northcott said.
"The problem is house prices were being set based on rental yields, which were around 10%. So if a house was rented for $1,000 a week you were paying $500,000 or $600,000 if it was rented for $1,200 a week and people were getting in over their heads," he said.
Northcott said the majority of investors he sees struggling in those areas tend to be inexperienced ones.
"If a lot of these people had come to us three years ago and said we want to buy into those areas we would have said no.
"For a lot of them this was either their first, second or third property.
"What the situation in these towns does show is that you need an investment plan that ties in with your overall financial situation. A lot of the people caught out at the moment were in the mining services as well and they've been hit with a double whammy as their jobs are hit as well."
In Western Australia, Karratha has been the worst hit area, with homes in the local government area recording a 44% fall in prices since 2012 – including a 31% dive in the past year.
Reilly agrees that there is little chance investors who still own property in those areas will see their fortunes turn around anytime soon.
“$65 billion in mining projects across Australia have been completed over the past two years and have now transitioned to the export phase, which is far less labour intensive,” he said.
“With commodity prices down 40% from 2012 levels, the chances of a rapid rebound in new resource projects is low, therefore, the residential markets in Australia’s mining towns are unlikely to enter a new growth cycle over at least the medium term.”
