Prices fall and vacancies rise in “vulnerable” Gladstone market: Herron Todd White
The peak in the resources investment boom is impacting on the perennial Queensland hotspot location of Gladstone.
Valuers Herron Todd White report that the Gladstone residential market has remained “relatively subdued over recent months as major gas projects in the area are nearing peak construction workforces and demand for accommodation has eased significantly”.
“In a number of instances, values have returned to levels below what was reached at the height of the previous boom in late 2007.
“Vendors in the current market are being faced with an abundance of competition and are being forced to reduce prices to obtain a sale," says Herron Todd White in its latest May report.
These comments are echoed by Real Estate Institute of Queensland chief executive Anton Kardash, who says the Gladstone’s market has cooled down somewhat after several quarters of very strong results due to the resources boom.
The REIQ records a stagnant Gladstone market over the past year with a 0.3% rise in Gladstone house prices over the March 2013 quarter to $449,000 off 113 sales.
In comparison to Gladstone’s stagnation, Rockhampton recorded a 7.8% rise in median house prices off 270 sales to $339,000 while Mackay house prices rose 3.2% to $428,250.
Even the struggling Cairns housing market outperformed Gladstone over the quarter with values up 2.4% to a median of $358,500 off 324 sales.
Hotspotting.com.au’s Terry Ryder wrote in March that Gladstone had entered into a “correction phase, as bulk new supply floods into the market” with Mackay and Rockhampton identified by Ryder as the new rising stars.
In April, development group Crawford Property advertised a $20,000 discount on its Gladstone townhouse development with the price of a three-bedroom townhouse reduced from $549,000 to $529,000.
Herron Todd White also notes the recent sharp rise in the Gladstone vacancy rate from 2.1% in the December 2012 quarter to 5.9% in the March 2013 quarter as recorded by the REIQ.
A year ago the Gladstone vacancy rate was 1.4%.
“Mackay and Gladstone both recorded significant increases in vacancy rates as at the end of March due to less demand for rental properties from mining companies, and an element of increases in the supply of rental stock,” said the REIQ's Anton Kardash.
Herron Todd White calls the rise in the vacancy rate a “very significant recent statistic”.
“This statistic clearly indicates the vulnerability of the Gladstone accommodation market and consequently the residential property market.
“We still feel that the dwellings in Gladstone City area and immediate surrounding suburbs will prove to be the best medium to long term investments in the area due to the large number of house and land developments currently underway generally on the outskirts of Gladstone area.
Herron Todd White expects workforce numbers relating to the construction of LNG projects around Gladstone to peak in 2013.