The end of the resource boom saw some prices collapse by more than 70% in some areas of regional Queensland, however a recent slowdown in price declines have some thinking the larger regional centres may be ready to stage at least a small comeback.
While it is only the one quarter, the Real Estate Institute of Queensland (REIQ) believes the fact that house price falls in regional centres such as Gladstone (1.4%), Mackay (1.9%) and Toowoomba (1.6%) were relatively small over the first three months of the year may indicate those markets have reached the bottom of their cycles.
REIQ chief executive officer, Antonia Mercorella, said there was no doubt the regional markets in Queensland had suffered recently, but she said the time might be right for some cautious optimism.
"The regional markets in Queensland are pretty patchy. Since the resources downturn we’ve really seen rising rental vacancy rates, property prices move downward and quite high levels of stock on the market,” Mercorella told Your Investment Property.
“It’s always a difficult prediction and again you have to be careful not to draw too many conclusions from one quarter, but we’d really like to think we’ve hit the bottom and we’ll slowly start to see stabilisation and improvement in those markets,” she said.
Over the longer term, the picture isn’t quite as good with house prices in Mackay and Gladstone down by double figures in the year to March, but Scott Northcott, director of Queensland based Real Property Advice, also said they may be tentative signs that the worst is over.
“From chats I’ve had with local agents in those sorts of areas I wouldn’t say that they’ve had a massive turnaround in the market, but they have begun to have more interest, a little bit from investors and a little bit from home buyers,” Northcott told Your Investment Property.
“There’s probably a reason to believe that they have hit the bottom at the moment,” he said.
While Northcott said there are signs the larger regional centres may have bottomed out that doesn’t mean a growth cycle is set to take off.
“I would hope they would see steady growth, and I think the areas that have a few industries might return to being balanced markets,” Northcott said.
“Your ones that have a bit more of a variety like a Toowoomba, Rockhampton, Gladstone or Mackay where it’s not all just one type of mining will generally recover faster.
“Somewhere like Mackay, where there are a few things like tourism and the beef industry is going to recover quicker and be a bit more stable than somewhere that is completely hinged on one or two industries.”
While the volatility seen in areas such as regional Queensland may seem like a perfect example of the danger that is inherently present in investing in markets such as mining towns, Northcott said there is no doubt that that the next boom, no matter the industry, will see people make bad decisions.
“In general it’s been my experience that people will always chase the dollar. The next boom could be a tech one in Sydney or Adelaide and you’ll get a lot of people chasing that.
“Have people learnt from the mining and resource boom about chasing the golden egg? Possibly the ones who actually did get burnt but in general humans are always going to chase the next dollar."
