Construction of the lithium refinery in Kemerton could spark a housing boom which could benefit the entire South West, according to a Bunbury realtor.

Works at Albemarle’s lithium refinery is set to create 500 jobs from early next year and a further 500 jobs to operate the plant.

Mal Hancock, who owns and manages Hancock Real Estate with his wife Tanya, said the new employment opportunities had the potential to drive up house values and tighten the rental market in what has been a volatile market since the mining bust.

“The South West region was affected very badly by the mining downturn,” he said.

Mr Hancock said the region had not had investors since the mining boom began with the Worsley Alumina expansion between 2003 and 2006 which brought more than 3500 new families to the region, some of whom then shifted to FIFO work in the mining sector in the north of the State.

Mr Hancock said houses in the region were undervalued and the established home market was well below new home replacement cost, with a gap of up to $100,000.

Banks were lending to his clients at a rate of 4 per cent interest, but the low vacancy rate meant the rental return was between 5 and 7 per cent.

“People buying now could see a benefit of $70,000 to $100,000,” Mr Hancock said.

“It’s a smart time to buy.”