Miles, Queensland: The limping Surat Basin hotspot

Miles, which is often considered together with Chinchilla, is a small town in the Surat Basin Western Downs area in Queensland.

It recently fell onto Property Observer’s radar again due to its status as the highest yielding suburb in Queensland for houses, at 11.17%,  according to RP Data.

Half an hour west of Chinchilla and about an hour and a half east of Roma, Chinchilla, Miles, Roma and Dalby are regularly mentioned in the same breath. However, Chinchilla offers a 5.88% rental yield, while Roma boasts 7.09% and Dalby's yield is recorded at 5.52%. Not quite the striking on-paper statistics seen in Miles.

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Originally known as Dogwood Crossing when established in the 1800s, Miles is a country town with over 20 historically important buildings and with a strong agricultural background.

Today, it also has a significant mining influence.

According to RP Data, the median weekly advertised rent is $750, with a median price house being $349,000, providing this strong rental yield figure.

However, while this may instantly put the area on some peoples’ hotspot lists, it may be worth taking a closer look.

Over the past three months, the median price movement was down 9.94%, with figure down 8.16% over 12 months. Over the past three years, the median price has increased by 39.60%, representing an average annual growth of 16.92%.

With a seven year average hold period, even with the 102 days on market average, it’s not looking too bad for the long-term property owners in Miles.

In fact, Matusik Property Insights, writing a report about Miles a couple of years ago, pointed to the fact that almost 10% of Queensland’s manufacturing gross domestic product is produced within the Western Downs region, with the energy resources sector boasting the potential to more than triple their gross regional product in the years ahead.

“Recently there have been a number of gas fired power stations built with others being proposed. There are both solar generated power and wind generated power projects being proposed in the Western Downs,” their report noted.

“However, the Surat Basin is not dependent on any one industry or commodity, with coal, gas, power generation, solar energy, coal seam gas, water projects, rail infrastructure, farming and supporting businesses all present in the area. This means the area’s economy is protected from downturn if one industry sector endures a bad period. In fact, there are over 4,500 businesses in the Western Downs Regional Council according to official figures from the Australian Bureau of Statistics (ABS).”

They noted that a large number of new workers were expected for Chinchilla, Miles and Roma, with an expected figure of more than 42,000 workers required to service the new projects in the Surat Basin (you can see a list of those near Miles over the page).

The number of transient miners in the area was expected to increase from 4,000 to 16,000 by 2015.

“To this end, it should be noted that during 2010, the Western Downs Regional Council recorded a 57% increase in residential dwelling approvals compared with the previous year.

This reflects the high demand that exists in the area for additional housing arising from the region’s strong levels of economic activity and job creation.”

In July 2012, Surat Basin Property Group’s chief operating officer Jason van Hooft told Property Observer that the opportunities for investors in the Surat Basin are “unique in Australia”, pointing to the fact they’d already built and sold 200 house and land packages in Chinchilla.

“For a start, we are not that isolated, being only 3.5 hours' drive from Brisbane, and secondly the towns of Chinchilla and Miles are long established country communities with existing infrastructure, existing thriving communities and broad-based economies," van Hooft said.

“If you like, the resources boom is the icing on the cake for these centres,” he said.

Last year, approval was given for a 3,000 bed mining camp for Miles. Interestingly, NextHotSpot pointed to the limitations on capacity in Miles and Chinchilla when picking their hotspot of Toowoomba for this year.

“With major job creation in the Surat Basin on the way (perhaps 27,000 jobs over the next 3 years) and the small towns of Dalby, Chinchilla and Miles unable to accommodate other than in mining camps, Toowoomba becomes a natural capture point for much of the overflow,” they explain.

Looking at house sales that have occurred over this year, there have been remarkably few in Miles.

It seems that this past year has been slow, if not backwards, but that investors holding on for the long term have done well with very few currently selling out to realise losses.

Many property owners purchased at the beginning of the 2000s for $100,000 and below. These investors have seen their properties doubling, or more, on sale price.

However, gains have been slower since 2010. Two properties purchased in 2011, for $290,000 and $140,000, sold for a $25,000 gain and a $35,000 gain respectively.

A March 2012 buyer, who purchased a large home for $750,000 and was noted in the listing as “motivated”, took a $100,000 drop to sell in June this year.

Another property, on Daisy Street, sat on the market for 497 days, initially listed at $240,000 in November 2012. It finally achieved $225,000 in April 2014.

Perhaps capital gains are not as forthcoming this year.

But what about that double figure rental yield that remained elusive for our runner up town of Mount Morgan yesterday?

Rising rents have been an interesting experience in Miles. The Residential Tenancies Authority of Queensland in 2012 noted an increase in Miles  from $300 to $550 per week for a  three bedroom house, as well as in Chinchilla from $320 to $375, over the year to the December quarter 2012. Looking at their more recent data (based on bonds lodged), it seems that four bedroom homes are rented at a median $450 per week and three bedrooms at $375. Last year, this was $550 and $700 respectively. There was weak or no data for townhouses or apartments.

The major thorn in the side for Miles is the scary figure that emerges when looking at the vacancy rate. With a 28.2% vacancy rate recorded by SQM Research, managing director Louis Christopher told Property Observer when vacancy rates get that high, it’s worth looking a little deeper and being suspicious of the figures.

Looking for new developments, Surat Basin Homes’ The Pines Miles ‘Parkland Living’, with House and Land packages from $447,346 has recently seen Stage one and two completely sold, with 135 residences to be sold across the estate. They are particularly aimed towards property investors.

Considering that in the 2011 Census a total of 1,854 people were counted, any development of this size has the capacity to have a big effect on the local property market.

Hotspotting.com.au’s Terry Ryder told us that the towns of the Surat Basin, including our focus of Miles, have been afflicted by the same problems seen in Gladstone and Mackay.

“The demand forces are still strong but developers have piled in and oversupplied the markets in that area, including also Chinchilla,” said Ryder.

“Miles has had exceptional price growth in the past five years, but in the past 12 months the median price has dropped 27%. Average time to sell a house in Miles is now six months and discounting is close to 20%.

“The number of house sales in Miles in the past five quarters have been 17, 10, seven, three and zero,” he said.

“Developers have an incredible capacity to destroy boom markets and Miles is yet another example.”

When searching the rental listings, it’s clear that an abundance of new properties do exist. Looking for houses only, and not including surrounding suburbs or office-homes, approximately 78 rentals remain. Rent per week ranges from as low as $200 per week for a two bedroom, one bathroom “tidy” home to $1,200 per week for a five bedroom, six bathroom family offering.

One of the listings was undisclosed.

The rest currently available fall into these brackets:

$700 or more: 4

$600 to $699: 7

$500 to $599: 14

$400 to $499: 25

$300 to $399: 19

$200 to $299: 7

Assuming we owned a home that we were aiming to rent for the upper brackets, it appears that the standards are quite high if you’re aiming for a quick tenant – particularly with that amount of competition on the market.

Property Observer looked at the current rentals and found that 41 were advertised as fully furnished, 14 were brand new with a further 12 mentioning they were close to new or in a ‘new estate’. Another 19 advertised the property as renovated.

Of all the listings, eight offered rental incentives, such as free rent, or the ability to negotiate with the landlord on the price.

All in all, it seems that the investors who did the best in Miles did so some years ago, although this situation may change with a number of projects coming up.

Photo of Miles main street courtesy of Mattinbgn/CC BY-SA 3.0.

See over page for a list from Advance Western Downs in 2012 for projects planned in Miles.

According to Advance Western Downs, a number of projects are planned, completed or underway in Miles and close by locations as of 2012.

Here are the projects:

Australia Pacific LNG - coal seam gas to LNG project (Construction)

Columboola South Transmission Network - part of power supply project (Construction)

Columboola Substation - part of power link project (Construction)

Columboola to Wandoan South Transmission Project - transmission line and substation (Construction)

Queensland Curtis LNG - Coal seam gas development (Construction)

Arrow Surat Pipeline - Connected Surat Basin coal seam gam with LNG facility in Gladstone (Planning)

Cameby Downs Expansion Project - Increase mine rate (Planning)

Columboola Project - Mining operation JV between MetroCoal and SinoCoal (Planning)

Nathan Dam and Pipeline - Water supply for mining, power, urban, agriculture operations (Planning)

Surat Gas Project - Coal seam gas exploration expansion (Planning)

Cameby Downs Mine Project - Coal mine (Operation)

Condamine Power Station - Coal seam gas power station (Operation)

Kenya to Chinchilla Weir Pipeline - water supply during coal seam gas project (Proposal)

Columboola Creek Crossing - coal mine (Proposal)

Davies Road - coal mine (Proposal)

Rywung - coal mine (Proposal)

Surat Project - exploration project (Proposal)