Home > Our Publications > Australian Outlook> 2005 > August

Booming Mandurah has best of both worlds

WESTERN Australia looks like becoming the star performer for its economic strength and buoyant housing market.

In Western Australia, Mandurah has already shown strong residential price growth, with a burst of population expected to push prices even higher.

Although its current growth rate of 5.4 per cent is expected to slow in the longer term (to about 3 per cent in the decade between 2020 to 2030), the coastal city has all the characteristics of the Sunshine Coast in Queensland, which has proved, so popular with investors, retirees and seachangers.

Mandurah is one hour's drive south of Perth and its population is expected to increase by 117,000 to 188,000 by 2031.

The growth is underpinned by its proximity to Perth, its economic base, which includes Alcoa's smelter at Pinjarra, and new infrastructure - road and rail links - expected to be finished by 2010.

Valuation firm Hegney Property Group has said it expects Mandurah's coastal lifestyle will continue to attract buyers.

As the new freeway, proposed railway and Mandurah bypass road progress, buyer interest is also expected to increase.

The area has a diversity of population and types of housing. Lower-priced housing between $150,000 to $170,000 can be found, but just five minutes away are $1.5 million to $2 million canal properties.

Paul Timms, from Hegney's Mandurah office, said anything near the water would continue to show growth.

"The coastal water aspects, estuaries and canals are always popular and have had really strong sales," he said.

A lot of the canal sales are now in the $1 million to $2 million range with land blocks around $600,000, although the highest-priced recent sale has been $1 million for a block.

At a recent auction, a basic holiday home with ocean frontage at Silver Sands, a suburb just north of Mandurah, sold for $815,000.

Within Mandurah itself, Mr Timms said the area around the Mandurah ocean marina would continue to be popular with lifestyle buyers. Apartments, including the Seashells development, had sold well, he said.

Mr Timms said there had been cases of those who bought apartments off-the-plan for $500,000 reselling for $1 million.

However, Mr Timms pointed out that these increases were not set in concrete because buyers were yet to settle. Buyers have only paid 10 per cent deposits with building completion due soon.

There aren't a lot of areas left that are undervalued, but there are still some spots that represent reasonably good buying, he said.

In the lower-price bracket, he said some coastal suburbs between Rockingham and Mandurah, such as Madora Bay and Golden Bay, present opportunities for investors.

"In these types of areas you can buy relatively close to the water, say four or five streets back, for $235,000 to $300,000," Mr Timms said.

While these areas may not have the infrastructure of central Mandurah, there were some who preferred a degree of isolation.

"As you move closer to the water, prices in these areas rise to around $600,000," he said.

Cheaper areas offer investors opportunities because building costs are rising quickly and skilled tradespeople are becoming hard to find.

Mr Timms said many investors were already buying blocks in cheaper subdivisions, speculatively building homes and selling.

Building costs would continue to become more expensive, so some buyers were happy to get a new completed house they could move straight into, he said.

For investors who buy a block with a view to building, it may cost about $300,000 to buy the land and build a project home, and they may sell for between $30,000 and $50,000 profit.