Queensland mining hamlet Wandoan records 30% house price growth in one year: Residex
House prices grew spectacularly in the rural Queensland town of Wandoan on the back of mining activity in the area with yields as high as 22.2% being touted, but recent reports suggest the biggest project in the area may not go ahead.
Wandoan, 300 kilometres northwest of Brisbane in the Surat Basin, had the highest price growth of any rural suburb in Australia, according to Residex’s February data. It says the median house price grew 29.95% for the year ending February.
Mining company Xstrata was due to develop the biggest coal mine in the southern hemisphere just west of Wandoan, but a proposed merger with commodities company Glencore has put those plans in jeopardy.
Glencore is in negotiations with the Chinese government to approve its $35 billion acquisition of Xstrata. If it goes ahead it will make it the world’s fourth largest diversified mining company and the largest commodities trader.
Glencore chief executive Ivan Glasenberg recently told investors the merged company would be avoiding greenfield projects.
“Greenfields are risky. Greenfields do have capital overruns. Greenfields do have delays which kill the NPV (net present value) on those projects,'' he told investors in London.
That means the $7 billion Wandoan thermal coal mine now hangs in the balance.
It has been on the cards since 2007 but has faced numerous setbacks including pressure from local landowner disputes. It has yet to receive final approval.
If developed, the mine is expected to produce 30 million tonnes of coal a year.
According to RP Data, the median house price in Wandoan is $365,000, increasing 15.9% over the last year. The median asking rent is $600 per week, giving an indicative gross yield of 8.5%.
According to ABS census data, the suburb has a population of 655 people with 450 private dwellings, 35% of which are unoccupied. Most dwellings are three or four-bedroom houses.
Listings on online real estate portals for properties in Wandoan reveal 51 properties up for sale, made up primarily of residential land and houses.
A fairly basic three-bedroom property on 857 square metres at 9 Hoffman Street is listed for sale at more than $300,000. The property is marketed as “mining accommodation” and has an advertised rental return of $500 to $600 per week, giving a potential gross yield of 10.4%.
A three-bedroom timber home on 809 square metres at 24 Weldon Street (pictured below) is listed at $380,000. According to RP Data the asking price has dropped from $420,000 in January. It was last listed for rent at $450 per week in 2010.
And a three-bedroom house marketed with potential as accommodation for work crews at 16 Hoffman Street is listed at $350,000. According to RP Data the 809 square metre property last traded for $68,000 in 2005.
A 602-square-metre block of residential land is listed at $242,000 or $402 per square metre.
And a 500-square-metre block (pictured below) on the same lane is listed at $250,000 or $500 per square metre.
LJ Hooker agent Mark Robinson, based in Brisbane, has a number of properties in the area listed for sale including two big mining accommodation developments.
He says prices are going up in the town, driven by a massive undersupply of accommodation.
Accommodation is taken up by workers from a number of projects in the area, particularly the $1.4 billion water pipeline to Dalby.
Robinson says big companies are winning contracts in the area but are unable to house workers in the town which has driven rents up massively.
“The problem is Wandoan is there’s not enough accommodation. That’s basically it,” Robinson says.
He says even if the Xstrata project doesn’t come online there is still strong demand from other projects.
“It’s on the border of the Surat Basin. The whole thing up there is getting driven by coal-seam gas which gets piped to Gladstone,” Robinson says.
“Xstrata have merged but coal prices are still good. You’ve got Gina Rinehart up there. You’ve got a lot of action around the area. You’ve only got to look at Mooloomba to see what happens to a town that needs accommodation.”
One of the developments Robinson is selling is a series of new five-bedroom houses built specifically to house miners.
The six properties sell for $820,000 each and Robinson says each property could earn a staggering $3,500 per week for short-term tenants. That’s a potential gross rental yield of 22.2%.
“It’s a changing space up in these mining places. It’s a work in progress. I don’t think anyone has estimated how many people will come in if everything comes online,” Robinson says.
“I think it’s definitely an investment hotspot.”