Boom towns ready for slow death?
Sky-high property prices and the grim quality of life in many of Queensland’s mining towns have forced a change in the way mining companies accommodate their workers, with disastrous consequences for investors
Fridays are “fight night” at Moranbah pubs. That’s according to many of the local residents of this mining community in the Queensland outback, who complain that their town has become something of a haven for singlet-wearing blokes on the turps.
With men outnumbering women almost three to one, it’s no surprise that the town isn’t everyone’s idea of the perfect place to live. Summer temperatures hover around the 40-degree mark, and the local population is one of Australia’s most itinerant. Some residents report enjoying life in the bush, but just as many have a three- or five-year plan to make a shedload of money and leave.
But perhaps the biggest complaint from residents has been – at least until recently – Moranbah’s high property prices, which were fuelled by a severe shortage of land brought about by the mining boom. Last year, the median price of a house was $724,000, double what it was five years before that. The average rent was also a cool $1,800 a week – more expensive than any capital city suburb.
Today, that landscape has changed. The latest RP Data figures show that Moranbah properties are considerably cheaper than they used to be. The median house price is now just $513,000, and rents have slid to the much more reasonable average weekly figure of $650.
Nearby mining town Dysart hasn’t fared any better. The average rent crashed from $1,400 a week in August last year to $450 a week in August this year. It’s been the same in mining locale Blackwater, where the figure for median weekly rent was $900 last year but is $523 this year.
The cause One could put the sharp drops down to an oversupply of houses on the market – there has certainly been a lot of building activity in these areas – but, according to Hotspotting director Terry Ryder, the real culprit is the mining companies.
Ryder says that many of the big mining houses have been in cost-cutting mode and have turned to a growing pool of fly-in, fly- out (FIFO) workers and drive-in, drive-out workers. These workers are choosing to bypass the towns that surround the mines they work in, commuting from another location they deem more ‘desirable’ to live in.
Mining companies have also warmed to the concept of mining camps – areas where they provide nearby, temporary houses for their staff who work the mines.
“FIFO and miners’ camps were once the exception. Now they’re the norm,” says Ryder. “We’re moving towards a situation where everyone working on a new mine will be on a FIFO roster and no one will live in the local town.”
A spokesman from mining conglomerate BHP Billiton confirms that FIFO represents a growing component of their workforce. “The reality is that, for many people, working remotely suits their lifestyle or personal circumstances. We often have requests for FIFO as an employment option – it is a personal choice,” she says.
She adds that a FIFO approach has been born out of necessity. There has been a growing awareness that some of the local towns surrounding mines do not have the amenities their workers crave.
“Many of BHP’s operations are remotely located and do not have a nearby regional centre with the population, services or infrastructure sufficient to attract the numbers of people required. This means it is not practical to have a residential-based workforce for these operations.”
The town that could have been A sign of changing times has perhaps been best illustrated in Alpha – a hamlet in the Galilee Basin that’s roughly 100km west of Emerald
and in a patch of outback most would consider the middle of nowhere.
Five mining companies recently turned up in the town, eager to exploit its thermal coal reserves; but evidence that Alpha is unlikely to be the next boom town is that all five have indicated they will operate FIFO crews and accommodate their workers within on-site camps. The town’s airstrip is to be upgraded, but mining activity will completely bypass the town.
Terry Ryder comments in Hotspotting’s Ryder Report that the way local residents have responded may become something of a theme for mining areas. “Locals have got over their early euphoria,” he says. “Otherwise it looks like business as usual for the town.”
Spotlight on: biggest regional movers
The rumours are true. After years of speculative talk about the Toowoomba housing market being poised for a boom, Queensland’s biggest inland city has finally had lift-off. In the 12 months to August, the median unit price has soared 47% in the Toowoomba CBD, starting from $224,000 in August last year and growing to become $330,000 a year later.
The Gold Coast has also had something of a resurrection. After being in a slump since the GFC, prices were falling rapidly just a year ago, but now the likes of Coomera and Coolangatta
have seen massive upward momentum in prices.
Coolangatta’s median price for detached houses is now 34% up on its August 2012 figure and, considering that prices are still 5% down on 2008 levels, there could be plenty of upswing to come. For Coomera, the unit market has been the recipient of large-scale growth. The median price has swung up 38% over the same period.
Suburb To Watch
An established neighbourhood, built up mostly in the 1950s and 1960s, Salisbury is home to diverse housing that attracts a diverse crowd. Some 12km south of the Brisbane CBD, the suburb is undergoing something of a modernisation process as it moves away from its industrial and commercial roots.
Place Estate Agents Annerley’s Braco Dracic says that a lot of young couples are moving into the area, encouraged by affordable prices and the opportunity to renovate. “It’s a great area that’s really starting to grow,” he says.
Key attractions for renters and owner-occupiers include major parklands to the north of the suburb, as well as a large range of shops, aged-care facilities, schools and sports facilities. Bus routes keep the suburb well connected to the rest of the city and there is also a train station.
Another attractive feature is Salisbury’s location on the western boundary of Griffith
University’s Nathan campus and a research centre for the University of Queensland. This gives the suburb appeal for students and young professionals.
Recent price movements have seen prices fall by 9% over the 12 months to August, but Salisbury’s strong fundamentals should insulate it from further drops in value. In fact, recent price movements could be a positive for those looking to get into the market. Listed properties tend to be older detached houses on large blocks, and for investors looking for renovation opportunities it could be a good price window for entering the market.