Hotspots: Broome market turning around

The property market in one of Australia’s most remote towns appears to be turning around, if you believe figures put out by the Real Estate Institute of Western Australia. 

The institute says the median house price in Broome, 2,200 kilometres north of Perth, increased by 6% over the June quarter of 2011. 

In comparison, Perth house prices fell 3% over the quarter, the fifth consecutive quarterly contraction. Houses are now selling at the pre-GFC level of about $475,000, a fall of 6% from the March 2010 peak of $505,000. 

Broome’s performance in the June quarter not only stands out in stark contrast to Perth, but is a significant turnaround on the regional market’s performance earlier this year. 

In the March quarter, Broome house prices fell by 9.1% and were down 11.8% compared with a year prior, according to Real Estate Institute of Australia figures, with houses selling in a wide range between $533,000 and $700,000. 

More recent data compiled by Australian Property Investor shows Broome house prices down 8.1% for the three months to April 2011 and 15.4% over the 12-month period, with a median house price of $533,000, median weekly rent of $565 and a yield of 4.5%. 

Broome is most famous for its pearls, the white sands of 22-kilometre long cable beach and as a tourist destination. It has a resident population of about 15,000. 

Despite its remoteness, Broome can be reached by air from most capital cities and is connected by road via the Great Northern Highway and the North West Coastal Highway. 

Graham McGinn of Hutchinson Real Estate says prices in Broome are showing some signs of firming, with the rental market still very strong. 

“There is some upward pressure on rents,” he says.

McGinn says that in the past Broome has been very attractive due to its rental return, but investors are now conspicuous by their absence. 

“Most buyers are owner-occupiers,” he says. 

“We still get sea changers coming to Broome. People who are travelling around Australia stop and have a look around. If they like it, some come back and buy.” 

“They come for the beach lifestyle, though it gets pretty hot during the wet season which runs from November to March,” he says. 

He describes the most recent wet season as “fantastic”, which may have played a factor in the recent uptick in Broome prices over the quarter. 

McGinn says vendors currently have to discount their properties anywhere between 4% and 8% of the asking price. 

Recently, gas giant Woodside received state approval for its controversial $30 billion Kimberley LNG hub at James Price Point. 

McGinn says it the project will have some impact. 

Allan Griffiths, principal at First National Real Estate Broome, is also hopeful the project will give a boost to Broome property prices. 

He questions the latest REIWA figures and says the market is “fairly flat”. 

“The increase is coming from low base of turnover,” he says, adding that the median price might have been given a boost by the recent sale of a house at Sunset Park near Cable Beach for around $1.35 million. 

“The market is very selective. We won’t list properties that are overpriced.” 

“There is ample supply and limited demand. There have been no investors in the market for some time,” he says. 

State government land developer LandCorp has recently released a large quantity of land into the market. 

Two key developments include Broome North, which will ultimately be home to up to 13,000 people, and the 35-hectare Januburu Six Seasons estate, which will eventually accommodate 345 homes across single residential and group housing lots.