Despite speculation that the worst is over for mining town property markets, one location is yet to hit the very bottom, facing a further softening of house values and rents.
A report recently released by property valuation company Herron Todd White revealed that the property market in Queensland’s Gladstone remains volatile, with the short-term direction of the market a subject of “significant uncertainty”.
“With very little sales and leasing activity in 2015 and no signs to indicate a bottoming out of the market, it is likely that value and rental levels may continue to soften,” the report said.
The report forecasted a continued decline in investor interest in the Gladstone market.
“We consider that most activity during 2016 is likely to be dominated by the owner-occupier market for lower price point properties, largely driven by the continued low interest rates,” the report said.
The report detailed similar activity in neighbouring suburb Calliope, which expanded rapidly during the boom due to the overflow of accommodation demand from Gladstone.
The town, however, saw continued development well past the peak of the market, resulting in significant oversupply, as in Gladstone.
Oversupply has been highlighted as the key factor behind the condition of the market, with supply heavily outweighing demand.
“Most of the oversupply is of modern housing in new estates and there are also significant vacant land stocks available,” the report said.
Meanwhile, the town was recently reported as the sixth-fastest growing suburb in Queensland, according to CoreLogic RP Data’s quarterly price growth figures.
Over the first quarter of 2016, Gladstone Central grew 20.95 per cent, based on a median house price of $320,000.
Speaking to Smart Property Investment, Simon Pressley, managing director of buyer’s agency Propertyology, said he places no value on changes in monthly or quarterly median values for suburbs.
“When there’s such a small number of recorded transactions, the variances of up and down aren’t an accurate measure of actually what’s occurring,” he said.
“Gladstone’s had its troubles from oversupply over the last couple of years, [but] we’d like to think it’s got a floor under it now.
“Interestingly, the latest population figures showed that Gladstone’s population is still well in excess of the national average – higher than Brisbane, higher than Queensland, so Gladstone’s property market is a reflection of over-building.”