The recent signing of the Oakajee Deepwater Port project between the State Governemnt and Oakajee Port and Rail is a very significant step in the future of the region, and specifically the impact it will have on local property markets. Some suggest that there has been immediate impact in residential market segments, and there is no doubt that activity levels are showing buoyant signs not seen for some 9 - 12 months. However, the port project is a medium term development whereby the real fruits of such a large scale infrastructure development will be seen as the project heads closer towards 'physical' commencement. We must not lose sight of the project and its context within the broad state of the world economy. After all, the port will largely be used to transport our valuable resources offshore, but there must also be demand from the importing nations.
Geraldton and the Mid West property market face challenges over the coming year, all on the back of a rather turbulent and shaky 2008. Tight economic conditions on a global level are starting to filter their way to offshore markets, and Australia being a major resources supplier to developing nations is very much in the thick of falling demand for its assests.
In real estate markets specifically, Government -bases incentives by way of first home buyers's grants and assistance has widely assisted a market which lacks the activity and confidence seen throughout periods up to the end of 2006. While the Government incentives are due to expire shortly, together with stamp duty concessions, extension of these initiatives will no doubt have a positive influence on market activity.
In assessing a potential future for our local property markets, a very significant point of interest is both local and State unemployment - that which has eventuated over the latter part of 2008, the current unemployment position, and most importantly the level of unemployment that is yet to eventuate over the duration of 2009.
Put very simply, unemployment reduces (and sometimes eliminates) the ability to service household debt, and this may paint a troublesome picutre for those who cannot meet their financial obligations. Bank foreclosures have been on the rise since mid 2008.
A recent land auction held on the northern fringe of Geraldton (Sunset Beach) provided a positive indication the local real estate market sentiment. A crowd of approximately 150 people witnessed active bidding and the successful purchase of all 11 lots on offer, prices ranging between $102,000 to $136,000. While we predicted these price levels, the end result still indicates a softening in market conditions (values) witnessed in comparison to 2006 and early 2007.
Our prediction for the remainder of this year is for a stabilising local economy, and this having a similar impact on the local real estate markets. Any expectation of high growth experienced from 2003 - 2006 is completely misguided, and we expect that capital growth to be marginal at best. Not withstanding this prediction, it is our view that the value of Mid West real estate as a whole is very well placed for a future strong market.