Only way is up for regional Qld real estate as it shakes off post-mining boom hangover
PARTS of regional Queensland are on the cusp of a major real estate revival as they shake off the shackles of the post-mining boom hangover. SEE WHERE THE BOOM COULD HIT
PARTS of regional Queensland are on the cusp of a major real estate revival as they shake off the shackles of the post-mining boom hangover.
Property prices have risen as much as 40 per cent in just 12 months in some areas, while towns like Emerald have bottomed and now join Mackay, Cairns, Townsville and Gladstone in the recovery phase of their market cycle, according to valuer Herron Todd White.
Some of the hardest hit mining regions are showing signs of life, driven by surging coal prices, capital works projects and renewed optimism.
In the coastal city of Mackay, jobs are going begging and the rental market is tightening rapidly as growing confidence replaces the gloom of the past seven years.
The average house price in Clermont, southwest of Mackay, has risen more than 42 per cent in the past year to $270,000 — albeit from a very low base.
House prices in Moranbah, in Mackay’s hinterland, have jumped nearly 15 per cent in the past year.
Real Estate Institute of Queensland chief executive Antonia Mercorella said Mackay was one of the strongest growing regions in the state, with its median house price growing 2.5 per cent to $335,000 over the year to June.
“This market is benefiting from a jobs boom in the region and currently has the lowest unemployment rate in the state,” Ms Mercorella said.
“Jobs are bringing people back to Mackay and as a result, the rental market is also tight, at just 1.9 per cent.”
In North Mackay, a modern three-bedroom, two-bathroom townhouse at 2/28 Malcomson Street recently fetched $305,000.
The latest Herron Todd White national property report shows that buyers who bought distressed properties 12 or 24 months ago in a town such as Emerald are in a position to benefit.
“Those who purchased during the last boom mostly still owe more than their house is worth, or haven’t quite got back to a position of building equity, however the market is on the rise and there is light at the end of the tunnel for these owners,” the report said.
The pattern is being repeated in other towns, such as Gladstone.
“For so many years, renovating your property in Gladstone was a pointless exercise as any money spent would be lost as the market continued to decline,” the report said.
“Now that the market has turned the corner, we have started to see more renovation work taking place.
“Most of this work appears to be on properties that were purchased in the past 18 months at bottom of the market pricing.”
In Beecher, near Gladstone, a contemporary three-bedroom house on an elevated 2.4ha block at 61 Surveyor Place recently sold for $430,000.
Herron Todd White valuers believe Rockhampton is at the bottom of the market.
And it does seem the only way is up for the city, with the average house price rising more than 37 per cent in the past year, as confidence builds on the back of a new coking coal mine being built in the Bowen Basin.
The median house price is only $180,000.
A three-bedroom, two-bathroom house with a pool at 13 Pillich St, Kawana, in Rockhampton sold last month for only $367,000.
According to the REIQ, Townsville’s house price fell 3.3 per cent over the year to June to an annual median of $324,000, but local agents are reporting considerable activity with transfers coming into town.
Some suburbs experienced exceptional house price growth over the year, including Thuringowa Central (up 28 per cent), Idalia (up 21.3 per cent), Rasmussen (up 19.9 per cent), North Ward (up 15 per cent) and Railway Estate (up 10.1 per cent).
A four-bedroom, two-bathroom family home at 1 Santa Fe Way, Kirwan, in Townsville has just sold for only $275,000, while in the suburb of Douglas, a four-bedroom house with a pool at 219 Freshwater Drive fetched $415,000.
Angelique and Jeffrey Susdorf are selling their five-bedroom family home in Mackay to relocate to Brisbane for work.
The couple, and their four children, paid $385,000 for the property at 8 Jennifer Court, Bucasia, two years ago, but have listed it for just $360,000.
“Even though the market is picking up, we’re still selling at a loss,” Mrs Susdorf said.
“We did have it on the market for $400,000, but we weren't getting any inquiries.
“That ($360,000) is where the market is sitting at the moment in our area.”
The house is near new, a two-minute walk from the beach, close to shops and include a 4x6m powered shed.
Marketing agent Trevor Tippett of Ray White - Mackay City said the price of houses in the $200,000 to $350,000 range had increased between 8 and 15 per cent in the past six to nine months.
“There’s very little under $300,000 now,” Mr Tippett said.
“There’s stronger confidence in the market, the mining sector is picking up, more businesses are opening up in town and people are moving back to Mackay.
His team recently sold six houses to Sydney buyers.
“People are relocating here because they’re sick of Sydney,” he said.
Ben Chick, director of Explore Property in Mackay, is also seeing demand for housing improve.
“We haven’t seen a huge price jump just yet, but a greater volume of properties are selling,” Mr Chick said.
“I think there are a lot more positives now than even in the boom for longevity in the property market.
“People are making appointments to look at houses who had left the area and people from down south are starting to look up here from a work perspective.
“The only thing probably holding us back is people being worried about what happened four years ago, but I think we’re in a better position now for steady growth rather than another boom.”
Paul Bryan, director of Mackay real estate agent Penny Wood Lane, said it wasn’t uncommon a year ago for landlords to struggle to find a tenant within eight months, but now he was fielding multiple applications for rental properties and significant jumps in rent.
“I definitely think the market’s transitioning,” Mr Bryan said.
“But buyers, in my opinion, are still anchored to the prices at the bottom of the market, which I think we’ve passed now.
“Locals are still hovering over the ‘go’ button and if they see a good deal they’ll jump on it.”
Mr Bryan said days on market for certain properties were reducing and there were more savvy buyers in the market.
“This is the first spring where we’ve seen a lot more confidence … since 2012,” he said.
“Prices are still quite low — there’s some really affordable property in Mackay, especially in the unit sector.”
But Mr Bryan said buyers still needed to be cautious.
“Going back eight years ago, you could buy four walls and a roof anywhere and you’d do well,” he said.
“Now, you’ve got to be a bit careful.
“I think that’s why people are hovering over the ‘go’ button, but I think next year will be the year.”
CoreLogic head of research Tim Lawless said property prices had been hit hard by the mining downturn, but he said the recovery in the mining sector would prompt a turnaround in home values.
“Coming into 2019, markets like Mackay should start to see some growth, we expect Toowoomba to move back into positive growth and Cairns to see a bounce higher,” Mr Lawless said.
“Many of these mining towns have seen values fall 30 to 50 per cent, so it’s overdue that we see values rising again.
“Anyone who owns property in those areas will be very happy with this recovery — especially if they bought in the peak around 2014.”
Ms Mercorella said the state government needed to do more to support the recovery in regional housing markets.
“The REIQ has lobbied the government long and hard for the first-home buyers grant to be broadened to existing properties in regional Queensland,” she said.
“It is our strong conviction that this would give some of those house markets a much-needed boost as young people and first time buyers, who are struggling to save a deposit, are given that important leg up to home ownership.
Importantly, these markets do not need additional supply. You can already buy an established house in these areas for less than it costs to build.”
But some industry experts, such as SQM Research managing director Louis Christopher, are urging caution.
“Investors should always keep in mind that regional towns can be far more volatile in terms of prices, so timing is paramount,” Mr Christopher said.
He suggested buyers look to the mining regions only to diversify their property portfolios.
“Don’t put all your eggs in one basket,” he said.
“Don’t make it your first investment; make it your fourth or fifth.”
RiskWise Property Research chief executive Doron Peleg said the risks associated with investing in mining towns was too high.
Mr Peleg attributed that view to lending restrictions, weak employment markets and the likelihood of the Labor Party winning the next federal and state elections and potentially making changes to negative gearing and capital gains tax.
5 RECENT HOUSE SALES IN QLD’S MINING REGIONS
Region Address Sale price Sale date
1. Townsville 1 Santa Fe Way, Kirwan $275,000 Oct, 2018
2. Gladstone 61 Surveyor Plc, Beecher $430,000 Sept, 2018
3. Townsville 219 Freshwater Dr, Douglas $415,000 Sept, 2018
4. Rockhampton 13 Pillich St, Kawana $367,000 Sept, 2018
5. Mackay 2/28 Malcomson St, North Mackay $305,000 Sept, 2018
(Source: Realestate.com.au)
TOP 10 MINING REGIONS FOR HOME PRICE GROWTH
Region Property type Median house price Growth in 12 mths
1. Clermont House $270,000 42.1%
2. Rockhampton City House $180,000 37.4%
3. Mooroobool Unit $274,000 34.3%
4. Mirani House $337,000 18.2%
5. South Mackay Unit $210,000 15.7%
6. Moranbah House $185,000 14.6%
7. The Range House $383,000 13.9%
8. Armstrong Beach House $304,000 13%
9. Seaforth House $361,000 12.8%
10. Kirkwood House $353,500 10.5%
(Source: CoreLogic)
Originally published as Only way is up for regional Qld real estate as it shakes off post-mining boom hangover
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