If you think Gladstone is a mining town, you'd be wrong. Over 95% of the population is employed outside of mining. The unemployment rate is 3.5%, well below the State average of 5.9%. Whilst there is no doubt that a price correction in housing has occurred, many desktop analysts fail to see Gladstone for what it really is, an industrial port city.
Perhaps one other interesting piece of information, the majority of Gladstone's real estate agents actually have vacancy rates for housing at less than 5.0%, a far cry from the 12.0% plus being listed by others
Gladstone appears to have stabilised, at least in the short term. There have been no real additions to the housing market since the middle of 2012 with most civil contractors having left the region as a result of not having enough work to do. This translates to limited supply being added and the market coming back to equilibrium sooner rather than later. The oversupply as a result is not the thousands that some would have you believe, but closer to 300, or around one year. Without any imminent new stages, good quality lots will continue to be negotiated to owner occupiers.
The decrease in the median weekly rent for 3 and 4 bedroom houses has led to an increase in the number of bonds lodged. However the increase for 4 bedroom houses has been much higher, rising from 173 in September 2008 to 454 in December 2013.
There is no denying that there has been a price correction in the market ranging from 9.5% to 14.3%. However all indications are that prices appear to have stabilised as a result of the owner occupiers now dominating the market. This is usually an indication that the locals again see value in the residential sector and that there is an expectation that they won’t take a capital loss.
Investors are very scarce in Gladstone at present. However with rents coming back to more sustainable levels and vacancy rates in housing declining, countercyclical purchases may make more sense now. However purchasers do need to be highly astute in where they invest. Too many spruikers will claim Calliope as part of Gladstone, and whilst technically it is true as it falls within the Gladstone Regional Council LGA, the services and amenity are far superior in the Clinton, Kirkwood, Telina and New Auckland areas.
Investment in the major projects has not stopped. Whilst the LNG plants on Curtis island are nearing completion, many of the Gladstone Ghosts will finish with them. Those ghosts are the drive in – drive out and fly in – fly out workers that have been housed on the island. Their contribution to the rental market has long been absorbed since the workers camps opened more than 12 months ago.
The reality is that the opportunities for Gladstone are far from finished. It remains one of the top 5 coal export ports in the world. This has the potential to increase even further should the projects around Alpha move from investigation through to construction and production. This is despite the majority of coal expected to leave through Bowen.
QER through its oil shale refining process has the potential to generate more than 1,000 jobs should it progress to Stage 2 now that the demonstration plant has proven to be successful. This would produce approximately 5,000 barrels of refined oil a day. If Stage 3 gains finance, then that number is probably closer to 50,000 barrels a day and Gladstone would become the energy provider for Central Queensland.
Should Boulder Steel become economically viable, the construction and ongoing production workforce would again number in the thousands. However this is being disrespectful to the existing major industrial groups such as Rio Tinto, Orica, NRG Gladstone Power Station (Queensland’s largest power provider), the Wiggins Island Consortium etc that all will continue to support and be supported by the local community. Gladstone’s central location and historical partnership with big industrial businesses does not stop because the construction of the LNG plants wind down. What will happen is the emergence of a localised support network of specialised businesses that will continue to play an important role in the maintenance, shut downs and upkeep of some of the biggest infrastructure projects Australia has ever seen.
If only those desktop experts would hop on a plane and kick the dirt, Gladstone may not be the popular whipping boy that it currently finds itself as. No one is denying that the market has corrected, but to lump it in with regional mining centres demonstrates a clear lack of understanding for what actually makes Gladstone tick.
The National Property Research Company
Level 1, 307 Queen Street
BRISBANE QLD 4000
Ph 07 3229 0111