It's no secret that the health of mining in Australia has taken a turn for the worse. Falling exports, dying investment, miners moving to greener pastures: The boom is well and truly fading by nearly all accounts. Many rural investors will be choosing to pack up and move on, perhaps even choosing to buy property in the capital cities instead.
However, there could be some big changes on the horizon for mining in WA, and it could well pay to hold off from signing on the dotted line just yet.
A switch in priorities
PwC recently released a report on the mining situation in Australia, and it isn't looking too peachy by any stretch of the imagination. The total investment in the top 40 mining companies has dropped by 37 per cent, while a 25 per cent year-on-year fall in commodity prices has forced these major companies to scrabble just to stay above water.
Many companies are so mired in debt that they are having to sell their commercial property via asset sales, losing their foothold on the future of the mining regions.
The property question
"The industry is in a marathon, not a sprint."
This drop in mining has resulted in a failure in property too. The fewer jobs there are, the less people want or are able to pay higher prices for property. Western Australia has been hit particularly hard in this regard, as falling demand in Perth has pushed median values down by a big 4.23 per cent according to CoreLogic RP Data.
This kind of falling demand might cause some investors to balk, but you may still want to hold steady for now. While the traditional mining commodities have certainly taken a hit, there has been growing need for new materials used in advanced technologies such as lithium in batteries. Western Australia is in a prime position to take advantage of the increasing demand, as solar panels, electric cars and other battery-based products continue to rise in popularity. In fact, we are even already seeing an uptick in employment in regional WA, according to Moody's Analytics.
As PwC Mining Leader Chris Dodd explains:
"The industry is in a marathon, not a sprint, and with the trend towards urbanisation set to continue in the future, the rewards will flow to those that are patient and take a long-term view."
The mining industry and the associated real estate market in rural Australia may well have taken a blow, but they are hardly out for the count just yet. If you are interested in investing in rural Australia, perhaps investigating your options in a hobby farm, make sure you get in touch with a local Australian real estate agent to discover a wide range of property available.