South West country towns thriving, not fading away

Conspicuous Beach near Denmark in south-west WA.
Conspicuous Beach near Denmark in south-west WA.

Lots has been written recently about the upswing in Western Australia’s mining industry, which is great news on the jobs front.

The lithium mining sector is a strong driver and has seen jobs grow from 400 in 2014 to around 2600 today, with much of the growth being in the Greenbushes area.  A new lithium processing plant in Kemerton, is expected to create another 1000 new jobs in the South West.

So, what does that mean for housing? Well, we have found over the past few years that, despite the downturn in the building industry, areas such as Bridgetown, Narrogin, Denmark and Dunsborough have continued to grow, meaning country towns are not necessarily fading away, contrary to popular belief.

Building in WA country towns is now easier than ever before. Due to the strong availability of trades, building companies that service rural areas have the opportunity to source trades who are more than willing to travel to outlying areas where local trades are unavailable. Combine this with a growing network of trades who live in these towns and you have a trade base that will build the homes quickly and efficiently.

One of the most often asked questions I come across is “What are the hidden extras and pitfalls of building in the outlying towns in WA?” It is worth knowing these well before buying a block.

Bunbury Inner Harbour Port facility. Photo: Aaron Bunch/Fairfax Media.

Bunbury Inner Harbour Port facility. Photo: Aaron Bunch/Fairfax Media.

The biggest issues are often related to site works. Many of the regional towns around Bridgetown and Narrogin, for instance, have a heavy clay content in the soil so this adds significant costs. An $80,000 block is not so enticing if you need to spend $150,000 on getting the site ready to build on!

It’s really important to do your homework, talk to the builder, get some advice and decide to commit on the block after all of this is ticked off. Forewarned is forearmed.

Be aware of “Area Loading” too. It’s the fee that covers the extra cost of transporting materials to remote sites and trade travel.  Any builder worth their salt will have this readily available so you can tally up the true final costs quickly.

The bank will also need to value the property and country valuations can be hit and miss, as sales evidence is sometimes scarce or out of date.

Don’t overcapitalise with spending on a high specification that the bank will attribute no value to. Get the basics right, get the valuation set and then look at upgrading if the value of the property can hold it.

There are some tremendous investments available at the moment if you’re smart. You can get brand new 3 x 2 house and land packages for only $240,000 in towns like Waroona.

With increased mining investment in places like Boddington, this is not only a smart place to invest, but the proximity to Mandurah makes it a great place to think of living too.

Or why not think of some of the outlying areas of Bunbury – with the new lithium mine announced at Greenbushes, Australind and surrounds could be an excellent place to develop and build. House-and-land packages are available there from $358,000.

Right now, building to invest is a very viable option across regional WA and negative gearing is achievable for some new owners.

It also presents as a good option for young couples to get onto the housing ladder. Some house and land packages can get young couples into investment housing from just $16 a week. Just because you live in the city doesn’t mean you can’t invest in property in the regions.

Further south is also presenting great opportunities. The new international airport at Busselton might take several years to be completed, but tourism and travel is certainly going to increase as a result.

Country towns can offer both a great investment opportunity and a great lifestyle alternative. You can build in double clay brick or timber frame and create unique looks to match your personality.

With record harvests, mining jobs and low-cost land available, don’t be frightened to take the plunge. Values will increase as populations rise in these areas.

Tony Pritchett is CEO of Plunkett Group