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.


Australia’s Waning Boom Saps Mining Area Home Demand: Mortgages

After slashing the price of three planned townhouses by a third in the coal-mining town of Moranbah in remote northeastern Australia, agent Ricardo Baggio still can’t find buyers.

“No one’s got confidence,” said Baggio from broker Ray White Group’s Townsville franchise, about 550 kilometers (341 miles) north of Moranbah in Queensland state. “There are a few mines around the town but they’re not hiring or they’re downsizing.”

Home prices in Australia’s isolated mining towns, which outpaced increases in the rest of the nation over the past decade, are falling as companies such as Glencore Xstrata PLC (GLEN) and Peabody Energy Corp. delay projects and lay off workers amid a slowing resources boom. The percentage of homeowners more than 30 days behind on their mortgage payments in Gladstone, a Queensland coastal town near more than $60 billion of gas projects, was 0.94 percent in March, according to Fitch Ratings, a 71 percent increase in six months.

The Moranbah townhouses, which will be built on a flat, sparsely landscaped street about 1 kilometer from the center of town, are on the market for A$525,000 ($478,485) each, down from an initial price of A$750,000, said Baggio. The median price of a home in Brisbane, the state capital, is A$425,000.

Prices in mining regions could fall as much as 30 percent from a first-quarter peak, real estate-data company SQM Research Pty forecasts.

Demand for housing in central Queensland and Western Australia state’s arid Pilbara region, the nation’s two biggest mining areas, is waning as record investment in resources peaks even as property developers keep building more homes. About A$150 billion of mining and energy projects have been canceled in the past year as commodity prices declined, according to government figures.

Population Drops

“We expect we’ll see an abrupt dropoff in population flows in mining towns,” Sydney-based Matthew Hassan, senior economist at Westpac Banking Corp. (WBC), said in a telephone interview. “How that plays back to housing is extremely complex. But we know the direction: down.”

In Western Australia, while only 1.6 percent of borrowers were late on their home-loan payments in March, “vulnerability in the mining sector and associated projects could result in an increase in arrears during the year,” ratings company Standard& Poor’s said in a March 31 report.

Significant Fluctuations

In Queensland’s Isaac region, which includes Moranbah, home prices tumbled 43 percent in the year to April, and rents slumped 69 percent, according to Sydney-based Australian Property Monitors.

Moranbah, about 1,000 kilometers inland northwest of Brisbane and home to more than 8,000 people, is near coal projects owned by BHP Billiton Ltd. (BHP), Anglo American Plc (AAL) and Rio Tinto Ltd. (RIO) BHP last year closed part of its Gregory coal mine, south of the town, and in February said it wants to sell the mine. Anglo American Chief Executive Officer Mark Cutifani said June 26 that the outlook for coal mining is “grim.” An index of hard-coking coal has more than halved since January 2011, when it peaked at $365.83 a metric ton, according to data from Energy Publishing Inc. compiled by Bloomberg.

Mining towns “are prone to significant fluctuations in property valuations, often driven by a combination of changes in the resource market and the shifting need for accommodation for mining workers,” Michael Savery, chief risk officer at QBE Insurance Group Ltd.’s Lenders Mortgage Insurance unit, said in an e-mail. They “require monitoring at either end of the property market cycle.”

Rockhampton Value

In Gladstone, about 500 kilometers north of Brisbane, property prices are falling as buyers find better value elsewhere. The median home price has fallen 4.6 percent in the year through April to A$450,500, while in Rockhampton, 116 kilometers further north in a region that is dominated by livestock grazing, it has risen 5.4 percent over the past year to A$350,000, APM said.

Housing markets in mining towns “have gotten ahead of themselves in terms of fundamentals and we’ve had a speculative market,” said Andrew Wilson, senior economist at APM. “A lot of potential buyers, especially those employed in the region, are looking at less expensive markets, like Rockhampton.”

House and apartment prices across Australia’s major cities rose 3.8 percent in June from a year earlier, according to the RP Data-Rismark home value index, after the Reserve Bank of Australia lowered its key interest rate by 2 percentage points between late 2011 and May to a record low 2.75 percent.

Pilbara Weakness

Australia had 73 committed mining projects under development in April, 14 less than in October, according to a May report by the Bureau of Research and Energy Economics. The number of people employed in Australia’s mining industry was 6 percent lower in May from a year earlier, government data shows.

Glencore Xstrata, the world’s biggest shipper of coal, halted work on the Balaclava Island export terminal, about 40 kilometers north of Gladstone, in May and cut 450 coal mining jobs in June. It said this month it will suspend production at its magnetite iron ore operation near Cloncurry, about 1,300 kilometers west of Gladstone in inland Queensland.

Across the country, more than 5,000 kilometers west by road from Gladstone, in the Western Australian shire of Roebourne, rents have plunged 22 percent in the 12 months to April, while the median house price has slipped 3.5 percent to A$796,000, APM figures showed.

Roebourne includes Karratha, the biggest town in the Pilbara, a 193,000-square-mile area in Australia’s northwest that is the world’s largest iron ore exporting region.

The recent home price declines in the Pilbara follow average annual gains of almost 20 percent for the past 10 years in the two coastal towns of Karratha and Port Hedland, according to data from the Real Estate Institute of Western Australia.

Aspen Group

Aspen Group Ltd. (APZ), a Perth-based property investment company, said July 5 in a regulatory filing that it reduced by 13 percent the valuation of its 180-unit Karratha Village accommodation facility to A$50 million in December, reflecting“a reduced demand for workforce participation.”

Shares in Aspen are 22 percent lower this year and closed at 17.5 Australian cents on July 19.

The price of iron ore fell 31 percent from a 16-month high in February to a low of A$110.40 on May 31.

Pilbara Cities

The Western Australian government introduced the Pilbara Cities initiative in November 2009 to boost supply of land, housing and infrastructure in the region. It seeks to build Karratha and Port Hedland into cities of 50,000 people by 2035. That compares with the 2011 census that recorded 16,475 people in Karratha and 13,772 in Port Hedland.

As part of the initiative, Mirvac Group (MGR), Australia’s third-largest diversified property trust, is proposing to build the Mulataga community in Karratha, containing 2,000 homes.

“We look at Karratha as a sustainable city and the growth of that city over time as a permanent city,” said John Carfi, head of residential at Sydney-based Mirvac, which is working with the state’s land developer Landcorp on Mulataga.

The Mulataga plan received approval from the Shire of Roebourne in May and is awaiting state planning commission approval.

The number of homes for sale in Karratha rose to 265 in May from 219 a year earlier, SQM said.

Further Declines

“We haven’t hit the bottom of the market yet,” said David Hipworth, principal of broker LJ Hooker Corp. in Karratha. “If we keep going the same way we have so far, in 12 months, I expect another 25 percent drop in rents and 10 percent in prices.”

The April median home price in Port Hedland was A$1.1 million, APM data show. That compares with 448,443 pounds ($677,508) in the greater London area in April, according to LSL Property Services Plc and $346,300 in New York City in May, figures from real estate data provider Zillow Inc. show.

“We like to see these prices fall,” said Ken King, chief executive officer of the Pilbara Development Commission, which is responsible for implementing the Pilbara Cities plan. “And we’d like to see the trend continue, even though this doesn’t sit well with a lot of recent investors.”

About 240 kilometers north along the coast from Karratha, rental vacancies in Port Hedland jumped to 4.6 percent in May from 0.9 percent a year earlier, compared with a national vacancy rate that rose to 2.1 percent from 1.8 percent a year ago, according to SQM.

BHP shelved a A$22 billion harbor expansion plan for Port Hedland in August in favor of a low capital-cost program of improving port and rail operations. CEO Andrew Mackenzie in May said the company plans to cut capital spending 18 percent to $18 billion in fiscal year 2014 and said about 80 percent of construction on its major projects will be completed in the same time frame.

Apartment Buildings

Australia’s resources industry directly employed 261,000 people in May, 2.2 percent of the nation’s total workforce, compared with 12 percent in health care and 11 percent in retail services — the two largest industries by employment, government figures showed.

Outstanding loans in Australia’s mining areas represent about 1.5 percent of all mortgages underlying residential mortgage-backed securities, S&P said in a report in September.

Perth-based developer Finbar Group Ltd. (FRI) is building Karratha’s first high-rise apartment development, Pelago, in the center of town. All but 15 units in the 114-apartment first phase, which was finished about a year ago, have been sold, Robin Schneider of McGees Property, the exclusive selling agent for the project, said in a telephone interview. In the second phase, 81 of the 174 units that are expected to be completed next year were pre-sold as of June 2, he said.

“Obviously the resources sector is getting a lot of attention, which will no doubt have a flow-on effect to confidence and market sentiment,” Darren Pateman, managing director of Finbar, said in an e-mail.

To contact the reporter on this story: Nichola Saminather in Sydney at nsaminather1@bloomberg.net

To contact the editors responsible for this story: Andreea Papuc at apapuc1@bloomberg.net; Rob Urban at robprag@bloomberg.net


Mackay, Rockhampton and Gladstone median house prices

MACKAY, Rockhampton and Gladstone median house prices from the Real Estate Institute of Queensland.


Region Median Sale 12mths Mar13 Median Sale 12mths Mar12 1yr change
MACKAY (LGA)  $ 424,750  $ 418,000 1.6%
MACKAY (LGA) ^  $ 512,500  $ 485,000 5.7%
ANDERGROVE $415,000 $410,000 1.2%
BEACONSFIELD $431,000 $410,000 5.1%
BLACKS BEACH $464,000 $477,500 -2.8%
BUCASIA $455,000 $442,500 2.8%
EAST MACKAY $422,000 $410,000 2.9%
EIMEO $472,600 $450,000 5.0%
GLENELLA $530,000 $530,000 0.0%
MACKAY $399,000 $380,000 5.0%
MARIAN $465,000 $453,500 2.5%
NORTH MACKAY $379,000 $350,000 8.3%
OORALEA $482,000 $490,000 -1.6%
RURAL VIEW $497,000 $490,000 1.4%
SARINA $335,000 $339,000 -1.2%
SARINA ^ $479,000 $477,500 0.3%
SLADE POINT $373,250 $379,000 -1.5%
SOUTH MACKAY $386,000 $365,000 5.8%
WALKERSTON $435,000 $434,000 0.2%
WEST MACKAY $391,000 $366,000 6.8%
ISAAC (LGA)  $ 463,000  $ 545,000 -15.1%
CLERMONT $345,000 $257,500 34.0%
DYSART $530,000 $500,000 6.0%
MORANBAH $677,000 $675,250 0.3%
WHITSUNDAY (LGA)  $ 360,275  $ 325,000 10.9%
WHITSUNDAY (LGA) ^  $ 486,000  $ 475,000 2.3%
BOWEN $345,000 $345,000 0.0%
COLLINSVILLE $250,000 $200,000 25.0%
JUBILEE POCKET $420,000 $420,000 0.0%
PROSERPINE $307,500 $290,500 5.9%
Region Median Sale 12mths Mar13 Median Sale 12mths Mar12 1yr change
ROCKHAMPTON (LGA)  $ 320,000  $ 317,700 0.7%
ROCKHAMPTON (LGA) ^  $ 460,000  $ 465,000 -1.1%
ALLENSTOWN $286,750 $279,500 2.6%
BARMARYEE ^ N/A $635,000 N/A
BERSERKER $246,000 $238,000 3.4%
COOEE BAY $384,000 $323,000 18.9%
EMU PARK $325,000 $355,000 -8.5%
FRENCHVILLE $338,750 $338,000 0.2%
GRACEMERE $338,600 $340,000 -0.4%
GRACEMERE ^ $479,000 $527,500 -9.2%
KAWANA $311,000 $310,000 0.3%
KOONGAL $282,000 $250,000 12.8%
LAMMERMOOR $456,000 $410,000 11.2%
MOUNT MORGAN $148,000 $121,750 21.6%
NORMAN GARDENS $400,000 $420,000 -4.8%
PARK AVENUE $267,500 $260,000 2.9%
ROCKHAMPTON CITY $200,000 $205,000 -2.4%
TARANGANBA $377,500 $377,500 0.0%
THE RANGE $370,500 $327,500 13.1%
WANDAL $295,000 $290,000 1.7%
WEST ROCKHAMPTON $263,500 $260,000 1.4%
YEPPOON $386,500 $385,000 0.4%
ZILZIE $380,000 $371,250 2.4%
CENTRAL HIGHLANDS (LGA)  $ 445,000  $ 390,000 14.1%
CENTRAL HIGHLANDS (LGA) ^  $ 555,000  $ 615,000 -9.8%
BLACKWATER $473,000 $372,500 27.0%
EMERALD $455,000 $425,000 7.1%
EMERALD ^ $660,000 $640,000 3.1%
Region Median Sale 12mths Mar13 Median Sale 12mths Mar12 1yr change
GLADSTONE (LGA)  $ 459,000  $ 455,750 0.7%
GLADSTONE (LGA) ^  $ 511,250  $ 500,000 2.3%
AGNES WATER ^ $363,000 $348,500 4.2%
BOYNE ISLAND $482,500 $482,000 0.1%
CALLIOPE $450,000 $450,000 0.0%
CLINTON $448,750 $472,500 -5.0%
GLEN EDEN $540,000 $473,000 14.2%
KIN KORA $429,500 $455,750 -5.8%
NEW AUCKLAND $475,000 $472,500 0.5%
SOUTH GLADSTONE $435,000 $431,250 0.9%
SUN VALLEY $430,000 $422,500 1.8%
TANNUM SANDS $517,500 $505,000 2.5%
TELINA $467,000 $479,500 -2.6%
WEST GLADSTONE $432,500 $420,000 3.0%
BANANA SHIRE (LGA)  $ 260,000  $ 265,000 -1.9%
BANANA SHIRE (LGA) ^  $ 400,000  $ 290,000 37.9%
BILOELA $280,000 $282,000 -0.7%



Median Price: The middle sale price when arranged in ascending order, ie where half of the sales recorded were less and half were higher than the median
All figures are preliminary and are subject to further revision. Only suburbs to record sufficient sales numbers have been included.
N/A No preliminary estimate available due to insufficient sales numbers
^ Denotes acreage sales – on land size greater than 2,400m2. All other house and land sale statistics are based on land size under 2,400m2
(LGA) Local Government Area
Brisbane (SD)- Brisbane Statistical Division which includes the LGA’s of Brisbane City, Ipswich City, Logan City, Moreton Bay Regional and Redland City.

Charleville, Rockhampton, Mackay and Mount Isa only Queensland regional areas with rising house prices over past year: Residex

Charleville, Rockhampton, Mackay and Mount Isa were the only regional areas in Queensland where median house prices rose over the year ending March 2012, according to Residex data.

Mackay has consistently been the best-performing area in Queensland, with 4.96% growth in the last quarter to $408,500, 5.45% growth in the year to March 2012, and an average yearly growth rate of 12.39% over the past decade.

Median house prices dropped in the seven other regional areas surveyed, with Noosa and Cairns recording the biggest decreases of 8.08% to $416,000 and 5.65% to $314,000 respectively.

Noosa has had the lowest average yearly growth over the past 10 years at 6.84%, closely followed by Cairns at 6.9%.

In the recent past Mackay has been performing the strongest with median prices up 3.82% in the last month and 4.96% in the last quarter.

Cairns has recorded the biggest decreases over the last month, dropping 2.43% to $314,000.