Spring is so beautiful in the Hunter Valley, the birds are singing and the flowers blooming, the grape vines have sprung to life and are green and luscious and the hills and bush are green and thriving.
Is it the same for the property market in this region? Well, yes and no. I have found spring – that is September, October and November 2012 – to deliver two extremes in the Hunter Region of NSW.
If we look at the rental market, it was at full bloom by September, however just two months later we have seen the market start to dry up. Traditionally, spring is a strong rental period as tenants look to settle into new homes before Christmas. However, in the towns Property Bloom is developing predominately, Muswellbrook, Maitland and Cessnock, finally the reduction in coal price, coupled with ongoing uncertainty in financial markets, has started to impact employment levels, particularly in Muswellbrook. The availability of capital within the mining industry has put some projects on ice.
However, Adam Harris, manager of mining recruitment ads at Robert Walters, says: "There are signs the industry will recover in early 2013. Although the general media is reporting ‘the death of coal and mining’, the industry is cyclical and will rebound. Project professionals who were made redundant will be rehired, as will many of the contractors who were let go from their site-based roles. Confidence will return, and we expect a good recovery."
I know it’s certainly not “the death of coal and mining”, but there is a general tightening of belts in the mines, which flows through to the community. The general mood is to save and be conservative with spending until the wash-up of European events and China’s demand is really known. Rumour has it the mines are letting contracts expire and will use this as cost-cutting measure, rehiring the contractors at lower rates. As uncertainty prevails, people budget and renters look for less expensive rental properties. So within the period of spring, we have seen a drastic change in rental demand.
Admittedly, we have been riding a massive wave of rents. Only in August we heard the Hunter Valley Research Foundation warn of a rental crisis gripping Upper Hunter mining communities. A Hunter Valley researcher is warning a rental crisis gripping Upper Hunter mining communities will likely worsen over the next year.
"We're starting to see rent increasing by about 15% per annum, and my concern is that they're really going to step up over the next 12 months," says the foundation's director of research, Simon Deeming.
Although I must point out Maitland and Cessnock have a more diverse economy – tourism, wine growing, retail and manufacturing being major employers – and these towns are not so reliant on the mining industry. We have also seen many contractors being employed on the $1.7 billion Hunter Expressway, which is well under construction and due for completion late 2013. This project will continue to be a source of employment for the next 12 months or so.