Renowned for letting resources like coal do the heavy lifting for its economy, Queensland’s finances are becoming increasingly helped by other sources. Can they help secure its long term future?
Move over Clive Palmer. There has been a decline in mining investment in the Sunshine State and increasingly it looks like other growth drivers are essential.
In particular, the coal sector is doing it tough and unless the market conditions for coal improve (which isn’t something that’s forecasted) then Queensland will face a round of coal closures, according to the latest Deloitte Access Economics Business Outlook report.
However, economic conditions in other non-mining related sectors are now showing “tentative signs of improvement”, says David Cannington, ANZ senior property Analyst.
“In particular, improved economic conditions and a lower AUD have provided a boost to Queensland’s tourism industry, with international tourism arrivals increasing in recent months,” he says.
“Housing market conditions have also broadly improved, although remain divergent across the state, with upbeat conditions in Brisbane and south-east Queensland, while regions exposed to the mining and resources sectors are underperforming.”
It is also important to note that struggles in the coal industry are being somewhat offset by a series of mega gas-related projects, says the Deloitte Access Economics Business Outlook report. Furthermore, its project pipeline in recent years is relatively steady.
“That leaves Queensland less at risk of a pothole in activity between most resource-related construction projects finishing on the one hand, and most resource export volumes picking up on the other hand,” says the report.
These projects include:
- Origin’s $24.7 billion Australia Pacific LNG project off the coast of Gladstone
- The $19.6 billion Curtin LNG project
- Santos’ $16.2 billion coal seam facility at Gladstone
All these projects will support a high level of activity in the next couple of years.
Brisbane bites back
The Queensland capital in particular is showing strong sales figures for this time of year, according to data compiled by the Real Estate Institute of Queensland (REIQ).
“Traditionally this is one of Brisbane’s quieter selling periods, but there has been a reversal of this trend over the last two years, as buyers grow more confident,” says Antonia Mercorella, REIQ Acting CEO.
Brisbane is also experiencing solid price growth, with house prices up by 6.8% according to the RP Data-Rismark Daily Home Value Index.
“Despite this growth, Brisbane has a very significant affordability edge over Sydney, Melbourne and Perth, where median prices remain much higher.
“With interest rates still at record lows, the outlook for Brisbane real estate is very positive and buyers can expect the market to continue performing strongly,” says Mercorella.
Cairns: a quiet achiever?
Over the last five years the Cairns property market has not exactly had investors lining up at the local real estate agents. But recently things have been picking up and may even go much further.
For starters, the Australian dollar is predicted to drop in the medium term which will be a welcome relief for this tourism focused economy, says the latest Deloitte Access Economics Investment Monitor report.
Additionally, Queensland’s tourism sector and savvy investors are getting excited about plans for the $4.2 billion Aquis resort complex at Cairns’ Northern Beaches. This would include nine luxury hotels, a 25,000 seat stadium, an 18-hole golf course and a casino.
Despite not being finalised, it’s generating market activity and upping prices in its immediate vicinity, according to the latest Herron Todd White report.
Recent ABS data also shows good news. Building approvals in Far North Queensland have shown a 38.8% positive change over the last 12 months, jumping from 752 approvals in the year to June 2013 to 1044 in the year to last month.
Before July 2013, it would have been hard to spend $500,000 on a new apartment due to a noticeable lack of unit construction, but times have changed. Demand has been rising since that date, with stock that was previously unsalable now starting to move, says the Herron Todd White report.
“Our prognosis is for the market to continue its consolidation and for the recovery to become more widespread, as the market continues its progression from a buyer’s market to a balance of power between buyers and sellers.
“For this reason the potential is there at present for astute investment into the Cairns market,” says the report.
Suburb to watch
Wishart: Government spending to boost growth
Families love Wishart and it’s easy to see why. This Brisbane suburb is well-known for its wide range of fantastic amenities, including local shopping centres, well-respected schools, a nearby university, health services, sports venues and eateries. Wishart is located 14km south-east of the Brisbane CBD and the excellent bus network can get you there within 10 minutes. It is also close to the Gateway Motorway which provides easy access to the airport.
There is also a $140 million state and federal government investment which includes upgrading the Gateway Motorway at Wishart to meet future travel demand associated with population and economic growth.
The average hold period for houses in Wishart is 13 years, which indicates that home owners are happy holding in this suburb and believe it has plenty of potential to come. And competition is heating up to buy houses there, as they spend just 38 days on the market on average.
In particular, houses on Martense St and Tapscott St are very appealing to families and young couples. Two and three bedroom houses here are may be slightly above the median price of the suburb, but they are worth it. Nearby is the big Westfield Garden City Shopping Centre and the popular Newnham Hotel is a light stroll away. Public transport is just around the corner on Delavan St and for those that prefer to drive there is simple access to the Pacific Highway.
But investors should take note: no matter where you are looking at in this suburb it’s best to buy away from Mount Gravatt–Capalaba Rd in order to avoid the traffic noise.
