It’s been nearly three months since mining giant BMA imposed its controversial ban on signing new rental leases in Moranbah, the central Queensland boom town arguably at odds with its own success.
The BHP-Mitsubishi Alliance put its very large foot down after rents in Moranbah went ballistic over Christmas. January is always busy for rental markets, but prices in Moranbah really were hard to believe: decidedly unglamorous three bedroom shacks jumped up to as much as $2,200 per week. Anything nicer was rented in a heartbeat for over $3,000 per week, and investors everywhere drooled over the thought of returns around 15%.
But by March, BMA had had enough, and refused to sign any new leases for its staff. The company might not be re-entering the rental market in a big way in the short-term either: it’s about to hand over the keys to 100 brand new homes it built itself, for its own employees – and there are another 280 homes underway in Moranbah, Dysart and Blackwater.
So what impact has the action of one big miner had on the Moranbah market?
Nikki Oldfield, the Principal of Vision Real Estate in Moranbah, says the freeze by BMA quite simply drove rents down by a few hundred dollars per week across the board.
Now there’s an ‘oversupply’, with over 150 properties for rent this week, compared to ‘next to nothing’ available over the peak Christmas/New Year period.
“A basic new home was fetching $2,800 per week – now that’s dropped back to around $2,200 or less,” she says.
Older homes – many of which are fibro shacks – have dropped even more substantially to around $1,000 per week, with some as low as $850. Tellingly, many ads on the internet now say ‘negotiable’, so rents may well drop further.
“It has been quiet, but things are picking up again. Other companies are still taking leases, and I think prices have stabilised,” she says.
Oldfield says the action by BMA also affected sales of investment properties, with more houses coming on the market and prices heading south for the first time in quite a while.
“You get a few rentals come on the market, so people get scared and prices come down. Yields are still high though – 10% is a good yield, but we’re not seeing the 13% yields that we had over Christmas,” says Oldfield.
The sudden oversupply has stunned the Principal of Moranbah Real Estate, Bella Exposito.
“I own two houses myself and I haven’t had an empty house for 25 years. The vacancy rate right now is shocking to me, it’s very, very quiet – but I do believe it will bounce back,” says Exposito.
“It went crazy (over Christmas), we didn’t have any properties for rent – so anything that did come on the market was rented for $1,800 or more. Now it’s coming back to reality. Prices went really high, which is great for investors, but $900 per week is still a very good return on an older house here. You wouldn’t get that rent anywhere in the city for the same purchase price,” she says.
In fact, now just might be a better time to buy, if you’re confident rents won’t drop further.
Exposito says property prices have dropped substantially in just a couple of months; older homes that were selling for around $700,000 are now going under contract for $550,000.
“It’s all about supply and demand in Moranbah, and the demand will come back,” she says.