What's happening in Gladstone, Rockhampton and Toowoomba?

There are highs and lows in any industry – especially property. No sooner do things go up than they come down.

Take the port city of Gladstone in Queensland, for instance. Elders Real Estate’s property manager, Nikki Nation, said increasing industrial activity over the past few years had caused rentals to rise sharply - but they are now dropping back sharply.

"It all depends on the property, of course, but we are now offering brand new four-bedroom houses for $50-$100 a week less than previously, with a property that was $550 now $500; a self-contained townhouse that was $850 now $550 a week."

Gladstone, with a population of around 32,000, is 550 kilometres north of Brisbane. Settled in 1853 it is the state’s largest commodity port. The local commerce is primarily industrial-based and includes large-scale alumina refineries, aluminium smelting, heavy chemicals and shale oil. And therein lies the reason for the rental declines.

An oversupply of rental properties was caused when a large dredging company’s contract ended recently and it quit the town. This resulted in the company handing back 200 properties formerly used by its fly-in-fly-out workforce, flooding the market. Elders had exposure to 75 of these properties. "Of course this has driven rents down," Nation said. "However, we are still managing to rent out 50-70 properties each month."

Resource companies – and their FIFO workers - are still moving into the district with a LNG project just getting off the ground at nearby Curtis Island, the Wiggins Island coal export terminal development and the establishment of a shale oil plant being explored. Workers at these projects will still require housing.

"The drop in rents has affected us,’’ Ms Nation said. ‘’But lots of families are coming here.’’

‘’There are still healthy returns, just probably not as high. I’m told that lots of investors are getting 6% to 8% returns.’’

Elders is renting 4/12 Leonard Street South Gladstone (pictured below) for $450 per week. The house has three bedrooms, two bathrooms and a double garage. The townhouse is one of seven in the complex.

{yoogallery src=[images/stories/2013/10/22/glad]}

 

Having developed into a prosperous regional centre for business and government services, Toowoomba is attractive for renters working in its broad-based economy.

The south-east Queensland city is 127 kilometres west of Brisbane in the Darling Downs with an estimated district population of 157,023. Settled in the 1840s it is Australia's second most populous inland city and the most populous non-capital inland city, according to ABS statistics.

Fastrack Property Managers’ Grant Beveridge said present rental vacancy rates were only 1%-1.5% - much lower than the usual 3% - with demand for property strong all year. ‘’This is a region that lives with its own hub. So, for investors, we are not greatly affected by what happens in the rest of the country.’’

With a strong industrial base, such as mining in the Surat Basin two hours to the west, and the nearby Acland coal mine, workers are being drawn from the Toowoomba region and strengthening demand for rentals. As a further sign of confidence, the long established Wagner concrete company is planning to build a $100 million airport at nearby Charlton next year to import and export its products.

Beveridge said this was expected to provide 2000 jobs in the initial stages - and obviously boost demand for rental accommodation. The airport is expected to generate up to $318 million yearly in economic output.

"All these projects are making it good to invest in the west side of town. If you haven’t invested in Glenvale, Harristown or Kearneys Springs in the next six-to-12 months, you might be too late," Beveridge said. "Prices will skyrocket as banks free up lending."

The establishment of a $300 million shopping centre in the centre of town, and adventurous plans to combine it with two existing shopping centres - Garden Town and Grand Centre, by the end of next year, will also be a catalyst for higher rental prices.

Beveridge said renters were typically chasing four bedroom, two bathroom houses with two car spaces and paying $380-$420 per week. He said increasing prices meant landlords were achieving higher yields, often as high as 5.5%-6%.

"These properties make up 65%-70% of our stock as we are a management agency only – we don’t sell property," he said.

"Rentals depend on location and there are some good yields being achieved at Kearneys Springs and Harristown. Investors paying in the 'high two’s to low three’s' for property there were receiving $330-$340 a week in rent," he said.

Fastrack is renting 7 Candlebark Court, Glenvale (pictured below) from November 6, for $320 per week. The three bedroom brick house has one bathroom and a single car space.

 

Rockhampton, never a boom-or-bust town, is having a 'bit of a hiccup' now as mining slows in nearby regional cities Gladstone and Mackay and reduces demand for local rentals. As a result, vacancy rates in ‘Rocky’ are the highest they’ve been for a while at 3.6%, instead of their customary 1%-1.5%.

Rebecca Trott, property department manager at Pat O’Driscoll Real Estate, said: "During the 18 months that our vacancy rate was under 1% we saw an increase in rent of around $20 per week to $40 per week. It’s now stabilised with less demand and increased vacancy rates."

But that’s now changed with a lot of people who had moved into the area over the past few years to work in the mines now moving onto green pastures. "Things are a bit different here now," she said, with people moving out – and not in – to the town, which has fewer FIFO (fly in fly out) workers than, say Gladstone, which is 100 kilometres away.

Rockhampton, settled in 1858, is 640 kilometres north of Brisbane on the Fitzroy River. It has a population of around 70,000 and is about a 30-minute drive from the coast.

All is not doom and gloom in the town which prides itself on its sunny climate. "I can certainly see it picking up because Rockhampton has a broad range of industries and usually rises steadily," Trott said.

"Construction work at the public hospital will create more employment opportunities in the near future, as well as many high-rise developments currently under construction and new estates being established in the Rockhampton area."

The most popular rental properties are units or townhouses, with the average weekly rent for units at $280-$300 a week. Average rental prices, which include houses, is around $350 a week. Good news for prospective tenants is that the high vacancy rates have ensured there is "plenty of everything" available at the moment.

The usual tenants are families or professional couples who have arranged employment before arriving in the town.

"Yes there’s been a bit of a hiccup at the moment but things will improve as Rockhampton is a great place to live."

Pat O’Driscoll Real Estate is seeking tenants for 10 Bolton Street, The Range (pictured below), at $320 per week. The high-set weatherboard has two bedrooms, sleep-out, bathroom and single carport. There’s an updated kitchen, polished floors, fans throughout, deck at the front, plus a carport at the rear. Trees behind the front fence add privacy.