Real estate in Gladstone, QLD: More than 80 per cent of homes selling at a loss

FIVE years ago, investors from all over Australia were scrambling to snap up a property in this idyllic city. But now it’ll cost you to leave.

Gladstone in central Queensland is suffering a major housing downturn. Picture: Discover Queensland

SITTING at the southern tip of the Great Barrier Reef, and famed for being one of the nation’s industrial powerhouses, is the central Queensland city of Gladstone.

Four decades ago, Gladstone was a tiny port town best known for its fishing industry and boasting easy access to the southern reaches of the reef.

Then, in 1963 Queensland Alumina established its refinery in the coastal town, turning it into one of the nation’s industrial hot spots. Not long after, the city’s port facilities were expanded and to this day, the Port of Gladstone is the fifth largest multi-commodity port in Australia, the largest in Queensland and is the world’s fourth largest coal exporting terminal.

By the 21st century, the decision to build a liquefied natural gas plant was made — encouraging thousands of construction workers to fly into the already prosperous town in an attempt to score a piece of the plant pie.

It landed Gladstone on every property investor’s wishlist and young families saw the booming town as an opportunity to finally buy a piece of affordable real estate they could eventually profit from.

Gladstone’s Liquefied Natural Gas project landed the Queensland city on every property investor’s wishlist — but the dream turned sour. Taken October 2015

But by 2012, the LNG plant was built, the construction workers were getting laid off and the city started to experience a severe downturn.

Six years later and things are no better.

In the last December quarter, more than 80 per cent of Gladstone homes sold at a loss, according to new data released by CoreLogic. That rate is the highest in Queensland and second highest in Australia, based on the average home price more than halving in the past five years.

Most of the places in the top 20 are linked to the mining resources sector in Queensland and Western Australia. Pegs Creek in Western Australia is the only suburb to beat West Gladstone, with 92.3 per cent of its properties selling at a loss.

In January 2013, houses in the centre of Gladstone were selling for an average of $595,000 but by January 2017, the average was down to $330,000.

Median prices for Gladstone homes. Picture: CoreLogic

In 2016, the LNG plant started to export supplies and the company no longer required construction workers.

The downturn affected the entire city including small businesses, investors and their rental properties and the families who bought up big years ago and now can’t pay their mortgage.

The downturn in the housing market has also affected the city’s real estate agents — most of whom have doubled their working hours to provide the same service to clients.

Kerry Connor, the principal licensee from Gladstone Real Estate, said her normal working week is 60-70 hours. Her sales staff generally work around 80 hours.

In 2012, when the city was still on a construction high, Ms Connor said working as a real estate agent was exciting. “People came from all over the world to try and buy a Gladstone property. We’d advertise on realestate.com.au and in a few days, the property would be sold.

“It was the most amazing time to be a real estate agent and it was mad — everything was happening very, very fast.

“We had a lot of people coming to town for employment, investors were purchasing, retired people were moving on from Gladstone to something further south with plenty of money in their pockets,” Ms Connor said.

The property boom and the high number of fly-in construction workers meant a rental shortage in town.

The rents were driven sky high, attracting more investors and encouraging more housing to be built.

“When the construction was completed and the workforce was dramatically reduced, there was this big downturn. The first thing to change was the rental market because the properties weren’t yielding good return for landlords anymore. Rental prices tumbled so then property prices tumbled as a direct result,” Ms Connor said.

The first shipment of LNG left the Curtis Island facility in January 2016.

Ms Connor, who was born and raised in Gladstone, said her income has halved since the downturn started.

“Our income stream has change but our workload doesn’t. A lot of agencies had to restructure and our staff have become multiskilled so they can cover different parts of the business now. We’ve had to change the way in general we do business,” she said.

Gladstone is also one of the top 10 postcodes in Australia for people behind on their mortgage payments, according to S&P Global Data.

Ms Connor confirmed this figure, admitting most of Gladstone real estate’s sales are repossessed homes — most of which were bought by investors in the 2011-2012 boom. “A very high percentage of sales in Gladstone are repossessions. It’s quite scary actually,” she said.

Of their last 20 sales, 12 of them had been mortgage or repossession sales. she added. Real estate agents across the city thought things were looking up recently but Ms Connor said from early February onwards, repossession sales have risen — a figure that isn’t helping housing prices rise.

“That trend is across all real estate agents here,” she said. “Those properties are being sold at auctions and the prices they go for direct the market.

“It makes it very hard for locals to sell their properties because everything is down.”

Despite Gladstone struggling for the past few years, Ms Connor said things are looking up.

“We have seen so many highs and lows for Gladstone, we’ve had quite a few. It’s a very resilient town and we know it always bounces back — even though this one is taking us a bit longer,” she said.

They’ve started to notice vacancies fall as things begin to stabilise. For the first time in three years, Ms Connor and the company’s agents have actually been able to discuss rent increases — after telling owners for years they need to be dropping rent.

“It was terrible. Landlords and owners would call you and you’d have to give them the truth, regardless of how bad it is.”

While admitting Gladstone and its real estate market has hit “rock bottom”, Ms Connor said that means there’s only one way to go. “We’ve hit the bottom and yes the properties have lost so much money but now we can work our way up and stop going backwards.

“Gladstone is a wonderful city. We have a big port here, the coal mine, power station, alumina plant here — we’ll bounce back.

“We fight very hard for our town. It’s such an amazing part of central Queensland so it’s such a shame to see Gladstone portrayed in such a bad light across Australia.

“We have so much to offer and we’ll definitely be one of the hot spots in the next couple of years again.”