In the decade up to 2012, the small town of Karratha was hit by one of the largest mining booms Australia has ever experienced. As commodity prices boomed and mining activity surged, houses and apartments in the town were in short supply, and prices soared.

Karratha, which today has a population of 16,000, is located in Western Australia's Pilbara region, more than 1,000 kilometres north of Perth, and adjacent to the port of Dampier.

The town was established in 1968 as a base for  Hamersley Iron, and since then, mining has been Karratha's economic cornerstone, particularly the North West Shelf LNG venture and Rio Tinto's iron ore operations.

When mining investment stalled in Australia in 2012, property prices in the town collapsed, and Karratha has been struggling with the repercussions every since.

Rents stabilising

But in 2017 signs of stability are beginning to emerge.

"Rents have been stable since October last year," Rob Sleator, CEO of Pilbara Real Estate, told SCHWARTZWILLIAMS. 

Since the end of last year, Sleator's firm's monthly management income has remained stable, and the vacancy rate is sitting at a solid 3.4 per cent.

"Clients aren't asking for rent reductions when leases are renewed or when new leases are signed," he said, adding that in some cases rents are even rising.

Residential sales

For residential sales, Sleator said that at the low end of the market prices have improved 10 per cent. Interest levels among buyers are beginning to improve, said Sleator, noting that in recent months some properties have received multiple offers.

Source: reiwa.com.au, data as of 31 August 2017.

Today, around 90% of sales are from local buyers, said Sleator. But six years ago, during the mining boom, 70 per cent were absentee owners, with large mining companies, including Rio Tinto and Woodside, making up a large component of those owners.

Weekly rents, postcode 6714

Source: SQM Research.

Despite the improvements, property prices are still down down around 65 per cent since the peak of the mining boom, says Sleator. 

Weak market conditions are not the only difficulty Karratha real estate buyers are facing. Tightened bank lending means some banks require a 30 per cent deposit. Only the Commonwealth Bank and BankWest are lending in the Karratha postcode of 6714 with a 10 per cent deposit, said Sleator.

Read more about real estate in mining towns:

Rental market strong: SQM Research

Mining town Karratha has turned the corner

House prices in regional WA rise for second quarter in a row