CQ property market is stabilising to pre-mining boom levels

THE property market throughout Central Queensland is stabilising with sales volumes and prices returning to pre-mining boom levels.

The boom triggered significant price rises in housing and apartments throughout the region, including out west to the mining towns of Moranbah, Emerald, Dysart and Blackwater.

The economies of these towns have struggled since the boom ended about 2012, with rising unemployment and limited opportunities for economic diversification.

However, for Mackay, Rockhampton and Gladstone, traditional economic bulwarks of tourism, sugar, beef, export and education are helping to stabilise the economy.

Many experienced property observers agree, property sales volumes and values are now finding their new normal.

Mackay has fared the worst of the three major centres, with the annual median sale price continuing to sink, now sitting at $365,000, down 10.1% on a year ago and 8.8% lower than five years ago.

Even though Rockhampton has a lower median house price, now sitting at $294,500, it’s only 5.4% below a year ago, and down just 1.8% on five years ago.

This indicates a more stable market and the REIQ is confident that the bottom has been reached.

http://www.dailymercury.com.au/news/CQ-property-market-is-stablising-to-pre-mining-boo/2900031/

The announcement that gave hope to property investors in mining towns

An announcement this week gave hope to all those investors who own properties in mining centres.

Indian mining company Adani started advertising the thousands of jobs that will come with its $16 billion Carmichael coal mine in Central Queensland.

It’s a further indication that Adani is keen to move ahead quickly with its project, which will include the mine, plus rail links and export port facilities.

Every day I receive emails from people who own investment properties in places like Moranbah, Emerald, Blackwater, Mudgee and the towns of the Hunter Valley.

These places have lots in common. They’re all towns where property markets boomed when coal mining was thriving, with rents and property values rising strongly. Then two things happened: the coal sector turned south just as developers were heading north. Demand fell just as supply was rising.

Big vacancies caused rents to fall and property values followed. If you bought in any of these places two years ago, you will be feeling lots of financial pain.

Moranbah’s median price has dropped 40% in the past 12 months and rents are about one-third of their peak levels.

The common dilemma expressed in so many of those emails is this: should I cut my losses and sell, or should I hold on and hope it improves? One correspondent this week suggested things might be turning around in Moranbah but asked: “Is it just wishful thinking?”

The Adani announcement that expressions of interest are open for jobs on its Carmichael mine suggests that hope is not unreasonable.

Adani, which has state and federal approvals for its Galilee Basin mine, is planning to employ up to 5,000 people during the construction phase and 4,000 more during the mine’s operation.

A key beneficiary will be Emerald, a regional centre which sits amid the Galilee Basin to the west and the Bowen Basin to the east. Lots of coal, lots of big plans, but not much action at present.

I’ve often said to people: it will only require one of the half dozen proposed mega projects in the Galilee Basin to go ahead, for Emerald’s market to come storming back. I’ve always thought the Carmichael mine was the most likely to go first, because Adani wants the coal to provide for its own needs (its Indian power stations) rather than to supply the depressed global market.

The problem for investors sitting on empty rental properties is that these huge projects are slow-moving events. You need lots of patience and nerves of steel.

But this is life in mining towns. It’s not a new phenomenon. This is not the first time Moranbah has fallen into a trough (althought this one is deeper than any of the previous). It’s not the first time a boom in Gladstone has been followed by a bust.

Gladstone’s market experienced a major peak in 2008, followed by a couple of years of declining values, before rising to another peak in 2012, followed the another period of decline.

Mudgee in New South Wales had a peak in 2007, falling prices in 2008 and 2009, another peak in 2010, decline in 2001, another peak in 2013 and now another decline. The price graph for Mudgee looks like a mountain range.

Ditto Muswellbrook: since 2006 it’s been minor peak, minor trough, minor peak, mknor trough, major peak (2012), major trough (now).

When prices rise strongly in markets like this, the market always “give some back” before moving into the next up-cycle. Usually the market gives back less than it gained earlier, so the overall trend is upwards.

If you don’t have the temperament to deal with this kind of volatility, it’s best to stay out of resources-related markets.

 

http://www.propertyobserver.com.au/forward-planning/advice-and-hot-topics/34994-the-announcement-that-gave-hope-to-property-investors-in-mining-towns.html

Emerald valuer blames mine camps for residential market blow

“AS camp rooms came in, the average value of existing houses went down the shoot.”

This is the message Emerald real estate valuer Pat Lyons delivered at the CHDC business breakfast last week.

Mr Lyons used Moranbah as an example, and said the real estate market was drastically affected after the introduction of mining camps.

“The completion of a couple of new workers’ accommodations in the past few years has significantly impacted on the demand for rental and motel accommodation in a number of towns,” he said.

There is good news for Emerald residents though.

“The reason you will probably note that the house prices in Emerald have not come down as much as other places is that we don’t have a lot of camps,” Mr Lyons said.

“We haven’t seen the same downturn as compared to Moranbah which has a significant number of camp rooms.”

 

Mr Lyons said the impact of camps on real estate markets in the Central Highlands was evident and had been felt elsewhere.

“I’ve had a talk to some of my colleagues in Gladstone and in Gladstone exactly the same thing happened,” he said.

The hotel and motel industry in Emerald had seen the positive of a lack of mining camps during the construction of Kestrel’s mine expansion, but it has since died off.

“We don’t have a lot of temp accommodation,” Mr Lyons said.

“The motel industry in Emerald has been significantly impacted by the downturn in the mining industry.

“The rate of motel rooms in Emerald has fallen significantly since the completion of KME – it has fallen by about 30%.”

Mr Lyons said housing factors had historically been affected by increased production at mines and the cost of coal.

“House values are affected by two factors – there is increasing production and there is increasin coal prices,” he said.

Now, there are camps as well.

Resources boom – and Emerald property price rises – just beginning: Terry Ryder

Rumours of the death of the resources boom have been greatly exaggerated. But media chatter to that effect has penetrated the psyche of some investors who have started to fret and delay decisions.

A message that “the boom is over because China is slowing down” is typical of the simplistic twaddle peddled by economists suffering from limelight-deficit syndrome and repeated by lazy journalists.

One lukewarm press announcement by BHP Billiton and suddenly the chooks are running around clucking about the end to the good times.

In reality the resources boom is only just starting. Brisbane property adviser (and national buyers’ agent of the year) Simon Pressley says we should be calling it “the resources revolution”, and I agree. The global change inspired by new growth nations like India and China will extend decades into the future, as will Australia’s role in the process – though not without hiccups along the way.

Rio Tinto says it sees no slowdown in overseas demand and is full steam ahead with its iron ore expansion plans. Ditto Fortescue Metals, Hancock Prospecting and the companies that are advancing the mega gas projects.

Hancock, headed by Gina Rinehart, who has been branded our wealthiest individual, has strongly advanced its two biggest ventures in the past week or so. The $7 billion Roy Hill iron ore mine in Western Australia has won the right to import skilled workers from overseas, and the $6.4 billion Alpha coal project in Queensland has won state government approval.

Apparently Rinehart hasn’t been informed the party is over.

The job of property investors is to tune out all the background static from the chattering economists and grandstanding politicians and focus on the end game, with a long-term perspective.

Ignore all the “white noise” in the media, look at what’s really happening and try to see where the opportunities lie.

The Alpha coal project has won government approval. It involves a major coal mine and a 495-kilometre rail link to the Abbot Point export facility. It will create 3,500 jobs. It is one of three multi-billion-dollar projects focused on the Galilee Basin, which is shaping as the nation’s new boom mining province. Rail links are planned by each of these entities, plus new export facilities.

Where lie the investment opportunities? Is it the tiny town of Alpha, the nearest settlement to the mining action? Is it Bowen, where Rinehart’s rail link will join up with the Abbot Point export terminal, which is rapidly expanding? Is it Mackay, a key regional centre with export facilities (also to be expanded) a little to the south?

Or is it Emerald, one of the most fortunately located towns in regional Australia?

Emerald is a regional centre of almost 20,000 that services agriculture and mining. The well-established Bowen Basin coal-mining province lies to the east and north-east, while the new Galilee Basin is to the west.

Emerald already has a very busy airport, with lots of fly-in-fly-out traffic, even before the mega mines of the Galilee Basin crank up. Residential vacancies are miniscule and the median house price rose 12% in the March Quarter alone.

Its long-term capital growth rate is 13% a year and rental yields above 7% can be found.

It sounds like a place of opportunity – unless you’re hooked into the boom-is-over mentality.

Terry Ryder is the founder of hotspotting.com.au and can be followed on Twitter.