Local real estate agents are confident GFG’s decision to buy Arrium will significantly boost Whyalla’s struggling real estate market.
Arrium, which runs the steelworks in Whyalla, went into voluntary administration in April 2016, owing more than $4 billion to creditors.
The 15 months Whyalla has spent in limbo has had catastrophic effects on the housing market there.
In February this year, Whyalla and nearby suburbs Whyalla Norrie, Whyalla Jenkins, Cultana and Iron Knob were among the suburbs that MyState banned for off-the-plan borrowers in SA.
Data from Realestate.com.au shows that median house prices in Whyalla have tumbled in the last year. In August 2016, the median house price in Whyalla was $285,000, and by July of this year, it had dropped to just $190,000.
With Arrium’s future previously uncertain, demand had fallen greatly in Whyalla. Supply and demand figures from July 2016 – June 2017 show that Whyalla dwellings were receiving 53 visits per property, which is less than 10% of the state average of 657 visits per property.
But now it’s a new day in Whyalla.
Writing in the The Advertiser, Whyalla major Lynn Breuer noted that
The Whyalla Council has developed a strategic plan that involves working with local businesses, and the state and federal governments to get Whyalla back on track.
“I am confident that the retail industry, and the real estate market, both of which have suffered greatly in this, will pick up,” she added.
Breuer’s observation that the housing market will pick up is being enthusiastically echoed by agents throughout the area.
Leah Kirk from Ray White Whyalla, told SA Real Estate News via email that although it is too early to give a prediction on price rise, she had already seen a decrease in rental vacancy rates, which is always a positive sign.
Kirk said that the Arrium sale was wonderful news for the Whyalla and Regional SA, and added that as well as the Arrium deal, other projects such as army training facilities and green energy plants were also in the works.
“We are currently receiving interest from investors at this time, and as the percentage rates with the banks are at an all-time low it is a great time to look at securing a property in Whyalla,” she wrote.
Whyalla Century 21 principal Wayne Foran told ABC News about some of the difficulties real estate had faced.
“House prices have certainly fallen a fair way. The rental prices have dropped as tenants see the opportunity to move from one house to another and pay a lower rent,” he said. “Banks have been very reluctant to lend here for home loans in Whyalla, and I guess you can’t blame them with the major employer in town under administration with a huge cloud hanging over its head,” he said.
Blights Real Estate principal Fiona Quinn told The Advertiser that news of the deal would help boost house prices that had decreased in value over the past 15 months.
“This was the announcement the town had been waiting for,” she said. “People have been looking at places but said ‘I won’t make a decision until I know that an Arrium announcement has been made’.”
Although Quinn also did not give a number on the price increase, she did say that the news would have a “positive effect” on prices.
London-based GFG edged out a Korean consortium and signed a binding agreement to purchase Arrium this week.
In May 2016, a Flinders University Australian Industrial Transformation Institute report explored what would have happened if Arrium had not been brought back from the brink.
According to the report, the economy of Whyalla would have shrunk by around $500 million in gross regional product and suffered a loss of employment of around 40% (roughly 4000 jobs). At a state level, as many 5,000 jobs would have been lost, further costing the South Australian economy.