While Moranbah was once hailed as a hotspot that saw substantial capital growth and offered phenomenal yields, many investors in the suburb are now struggling with their investments.
Positive Real Estate’s Sam Saggers told Smart Property Investment that Moranbah is currently a poor investment destination as the market is now in a free fall and is surrounded by uncertainties.
“Right now the market’s sliding, and I don’t know how far it’s going to fall,” Mr Saggers said. “You’ve got an ever increasing vacancy rate, and rental returns are really coming back.”
Houses that were once renting for $3,000 would only be only achieving $600 or $700 a week, which he attributes to the mining company’s decision to build their own private housing, and an increasing number of fly-in fly-out workers.
Compared to two years ago, where a new house was on the market for $700,000, investors can now buy a new three-bedroom house on a small lot for under $400,000.
“The market has really come back a long way, which is quite scary,” he continued.
While Moranbah once saw impressive rental returns, Mr Saggers explained that the figures were abnormal and were pushed up by landlords and the commitments from mining companies such as BHP Billiton Mitsubishi Alliance to rent a lot of the properties.
He believes that Moranbah is seeing market capitulation, where some investors may be locked into their investments.
“What this means is banks are really reluctant to lend money there,” he said, adding that his research shows that investors can only obtain a 70 per cent loan in the area.
“People can’t necessarily sell the asset because the next person can’t actually borrow money to buy that asset.
“Virtually all the market loans will halt because nothing really can get traded, and it’s a very terrifying situation because a lot of people would want to sell and get out of the asset and make a loss. But right now, they can’t even sell because they don’t own enough of the property based on how much the property market has come back.”
While some investors who bought early in the property cycle in Moranbah will have a better ability to sell, Mr Saggers believes it is a challenging time for investors who may need to “bunker down” in the meantime.
However, LJ Hooker Mackay's principal, Michael Rossiter, believes the Moranbah market will come back, especially with mining companies spending on major infrastructure projects in the area.
"[The mining companies] wouldn't be spending that money on infrastructure if they didn't think the mineral industry was going to bounce back," Mr Rossiter said.
"At the end of the quarter or early next quarter, you'll see a remarkable increase, a remarkable recovery."