‘Doom and gloom' attitude killing Gladstone real estate
A SYDNEY-based property developer says Gladstone's "doom and gloom" attitude is killing the local real estate market and putting us on track for another housing shortage.
With rent at its lowest in six years and minimal movement in the sales market, there's little motivation for developers to build new homes.
It takes between 12 to 18 months to build a house, and property experts say the current supply will only last for another 19 months - so there's already cause for some concern.
Ben Smith, who has built a number of properties in Gladstone since 2008 including 30 townhouses at Harvey Rd, says "doom and gloom" is all that is emanating from our town, and further south investors aren't even giving us a look-in.
That's a problem for a town where there are about 2000 homes for sale with owners who are desperate to sell.
Rent has officially dropped below pre-boom levels by more than $70 and Mr Smith said the sliding rent was fuelling the negativity.
New data released by SMQ this week shows the average cost of renting a three-bedroom home has dropped 5.5% in just four weeks.
Average rent is down to $260 a week compared with $330 in 2009.
It seems like revenge for renters who may have felt gouged by property owners who jacked prices as high as $700 in 2012, but according to Mr Smith there are real -term consequences to depressed rents.
He says we could be headed for the same steep bust and boom cycle and renters could quickly find the shoe on the other foot again.
"Low rents make it unviable to build," Mr Smith said.
"Gladstone is close to the time when new homes should be starting to be built, so there isn't another supply crisis as demand increases, but there is no appetite for it.
"All I hear about Gladstone is the doom and gloom; that's not good motivation to invest. I have a block of land that I could start building on. It would take me two years to deliver that product.
"Would I want to? Or could I, with the negativity surrounding the current market? Probably the answer to both is no.
"While the rents stay down new properties won't get built."
Agents and owners are desperately trying to fill the 900 or more vacant homes in Gladstone. Our vacancy rate is sitting at 7.1%.
But in Mackay, which has experienced a similar boom followed by a similar downturn, the vacancy rate is 9.1%, yet average rents are holding at $350, and have even risen by 0.8% in the past month.
Alicia Williams from Gladstone Location's Property Agents said if owners stopped panicking and accept the short-term pain, they'll be fine.
"If everyone is talking the market down we're never going to get anywhere," Ms Williams said.
"The problem with low rents is that it becomes a snowball effect and the onus needs to be on landlords and real estate agents to give the market the stability it deserves.
"I'm very positive about our market at the moment even though people are negative. Long term, Gladstone is a great place to invest.
"There are a lot of things to be positive about with record low interest rates, lenders offering 95% loans. It's a really good opportunity."