The time has come for Gladstone and 2019 is shaping up to be the year of sustainable growth and recovery.
A question I am often asked by clients is why I believe the market will improve. There are no right or wrong answers, however, we can look to data and trends to assist with a view on price. It is always important for a client to assess the information, understand it and develop their own belief around the market data. I would caution any client who takes the opinion of an agent as gospel.
The simple answer is that Gladstone has always had a macro influence and the market here behaves very differently to our sisters north and south in Rockhampton and Bundaberg respectively. With the State Development Area gaining traction and a return of confidence to our market, Gladstone does have a silver lining out of the less than satisfactory performance over the last six years.
Data & Trends
One of my go to sources is the resources and commodities sector, especially the coal price. It is important here to not only look at the last few months but also the comparative period trends per year, including a five year comparison. Gladstone isn’t a mining town, we are a port city with a naturally deep harbour offering plenty of opportunity and potential for future development in various sectors. The development of the inland rail network as well as the duplication of the shipping channel are vital components to the untapped potential of our port.
Projects & Economic Development
If you haven’t already done so, I encourage you to familiarise yourself with the Gladstone Ports Corporation’s (GPCL) 50 Year Strategic Plan. The Gladstone Development Board also has a part to play here attracting significant manufacturing, tourism and agricultural opportunities within our local region, including the State Development Area. The local Gladstone Chamber of Commerce (GCCI), Gladstone Engineering Alliance (GEA), Gladstone Area and Development Board Limited (GAPDL)as well as the Gladstone Industry Leadership Group (GILG) are also making headway through collaboration and economic development and tourism for the local region.
Gladstone has enjoyed good news recently with the Energy and Ammonia plant set to commence construction in 2020 as well as the high tech abattoir. Although this means jobs for our area, we aren’t expecting a spike in property prices but instead long term capital growth. The continuation of shut down work for each of the operational facilities within Gladstone as well as work within the nearby mining towns will also be a large employer of local residents as it has done for many years prior.
Capital Growth & Rental Yield
I can appreciate it has been a difficult time over the last 6 years given the changes in our market and the loss of rental return as well as property value.
Going forward it is my view that the market will continue to improve on a slow and steady basis. This is due to a recovering/improving resources and commodities sector, in particular coal as previously mentioned. We also have established workers camps and accommodation houses locally which have capacity to accommodate large influxes of workers if and when the time comes, without having a significant impact on our local property market. Worth noting is the removal of the Fringe Benefits Tax (FBT) exemption for the camp at Homeground Calliope which was a welcome change by other providers to allow for a fairer competition in the market.
I believe November 2017 is the turning point for Gladstone as we witnessed abnormal buyer activity in a period which historically slows down in the lead up to Christmas. This was followed by another 12 months of abnormalities with pricing, buyer activity and enquiries in our market.
At this stage I anticipate rental prices to continue to improve by around $20 – $30 per week on average every 6 to 12 months. This is driven by demand in our area. We aren’t seeing a lot of building activity either so at some point, when the mortgagee stock is absorbed, and people aren’t forced to sell financially, Gladstone will see a cross over of demand outstripping supply (the changing point between a buyers market to a sellers market). We are already seeing signs of this at a grass roots level, but there is a disparity in the market too while the mortgagee stock is still available. Furthermore there are grounds to believe that property values will also mirror rental growth with expected capital gains of between $20,000 and $30,000 on average per property too, all things remaining equal. The REIQ also issues their ‘Quarterly Market Monitor’ (QMM) which is also available to the public. This takes into account the entire Queensland property market and is worth reading to get a wider view on what the state’s property sector is up to.
Can you Afford to Sell?
It sounds silly or rude but this is one of the first questions an agent should as their client before signing the dotted line to market the property. In simple terms, you should know:
- is there a loan against the property
- is it cross-collateralise with any other properties and
- will you have a residual debt if you sell it with consideration given to agent’s fees, marketing and other accrued holding and selling costs.
If you are unsure it’s best you speak to your financial adviser or preferred bank/broker to ascertain your financial position. In some instances the residual debt can be refinanced as a personal loan but this is a very general assumption. It is important that these avenues are clarified upfront because you don’t want to get into a situation where you may be in breach of contract at settlement where the bank won’t let you settle due to an outstanding debt. There is also the option for a clause to be added to your sale contract for mortgagee consent. This should be confirmed by your solicitor and bank prior to sale.
Get in Touch
If you would like further information about the Gladstone property market including Calliope, Boyne Island or Tannum Sands, please get in touch. We would welcome the opportunity to discuss this with you. As always we suggest you also speak with your preferred financial advisers to obtain independent advice specific to your individual position.