Booming housing markets, dying communities: mining led population growth in regional Australia

Steven Rowley

ERES from European Real Estate Society (ERES)

Abstract: The mining sector was credited for saving Australia from the worst of the Global Financial Crisis. However, the wealth generated by mining does not come without cost. Much of the mining activity is concentrated in remote areas of Australia with regional towns experiencing dramatic changes resulting from new mining activity or an expansion of existing exploitations. Such areas have limited resources when it comes to preparing for what can be a very rapid population expansion. For example, local planning departments in remote towns are often understaffed and lack the skills and resources to plan for large scale land release on the back of unknown population growth. In order to deal with population growth of perhaps 5% per annum, not to mention the transient worker population housed in workers camps, towns need new land and housing supply as quickly as possible to avoid rapid house price and rent growth. Remote towns do not have surrounding housing markets to absorb new demand as often there are no neighbouring housing markets within hundreds of kilometres. As a result, demand shocks are translated directly into price and rent rises. Where there are small satellite towns, prices ripple outwards as residents on low incomes are forced out of private rental accommodation in the main town and seek affordable accommodation elsewhere. This paper uses a number of case study examples to illustrate how mining activity has had a dramatic impact on local housing markets and the communities within the towns, for example population displacement, non-mining sector business closures and social issues such as alcohol abuse. Conversely, many residents have benefited from massive price rises and net rental returns in double figures. This paper also documents State government responses and how lessons have still not been learnt from past mistakes.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2012-01-01
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