Mark Beath over at Loose Change has written a very interesting piece on the trends for rental rates in some major QLD centres.
While his commentary focuses on the changes in Cairns, and makes mention of the potential Aquis-effect on future rentals, it is also interesting to see the impact on rental rates in Gladstone and Mackay as the mining investment boom unwinds. Gladstone in particular appears to have seen declines of some 30% since the highs of mid-2012 and now sits at, or below, the level seen in Cairns.
While we would not expect the Aquis construction to have these scale of impacts in the Cairns region, it is certainly true that over the period of construction (in fact 2 periods of construction) there is likely to be strong upward pressure on rental rates in the Northern Beaches.
This is part of what the Aquis EIS had to say about the impact on housing and rents (my emphasis)..
“During the first stage of construction, it is the shorter term accommodation market that will be most impacted. As many workers relocate for specific tasks of the Aquis project construction, their contracts are relatively brief, lasting between a few months up to two years. The price impacts will depend on the capacity of the Cairns tourism accommodation and private rental markets to absorb a larger number of tenants.”
“Current indicators suggest that capacity in this market may be an issue. ABS data shows that vacancy
rates for apartments in Cairns averaged around 2.1% towards the end of 2013. This would also impact other residents involved in the local rental and serviced apartment market. Without an increase in the number of dwellings available by the peak of project construction, Aquis workers may crowd out the ability of existing or new Yorkeys Knob/Smithfield residents to reside in the area.”
“While it is inevitable that there will be some price impacts in local property and accommodation markets, it is difficult to ascertain the magnitude, or the net redistribution of wealth. There are a number of years before the Aquis project reaches peak construction and even longer until peak operations. It is possible for almost full market adjustments to occur in this time. This will largely depend on the CRC’s response to the Aquis project and the rate at which land is released and development applications are approved. This would also apply to other local councils surrounding Cairns. Lag times for releasing land are not unusual, with such processes usually planned years in advance to concord to long term population and settlement trends. Renters may face higher costs before supply responses; this is only one side of the coin. Other market segments, namely landlords and asset holders, would see an appreciation in their wealth. The net effect of these two countervailing impacts on incomes is also unknown.”