“It will free up a lot of rentals, which will bring the rental market down, which in turn will bring house prices down."
Mine closure expected to bring down rents and prices in Dysart, Queensland: Agents
Real estate agents selling and leasing properties in Dysart, a small town in Queensland’s Isaac region, expect some reduction in house prices and rents following BHP Billiton’s decision last week to shut down the nearby Norwich Park coal mine indefinitely.
The mine is about 15 kilometres south of Dysart and according to BHP has been losing money for “several months”.
The closure of the mine will directly affect 490 mine employees and up to 1,000 people when including contractors.
However the mining company has said that it will aim redeploy as many employees to the Saraji Mine, about 26 kilometres north of Dysart “to enable, where possible, those employees and families to remain living in Dysart”.
The town has a population of about 3,100 people, according to the Isaac Regional Council.
Julie Williamson from Julie Williamson Real Estate told Property Observer she expects a “huge impact on the market” as a result of the mine closure.
“It will free up a lot of rentals, which will bring the rental market down, which in turn will bring house prices down.
“I believe this will last for a few months, but we know there is still a lot of future employment throughout the other mines. Hopefully, in the not-so-distant future the market will start to rise again,” she says.
Another local agent pointed out that no miners had lost their jobs and that the mine was relocating people to the Saraji Mine.
“It’s not as bad as the media are beating it up. It’s business as usual. The shops are full – there are no vacant shops,” the agent says.
“People like Lawsie (John Laws) are talking about people losing their job, when no one has lost their jobs yet,” says the agent.
However, she accepts that rents and prices are likely to fall back a little.
“They’ll only crash if people start panicking.”
“The market has been strong up until now… It will only plateau out.”
Hotspotting.com.au director Terry Ryder says it is as yet unclear whether BHP is serious about closing the mine, “or merely using the threat as a negotiating weapon with the unions, who have been making life difficult there for the past 18 months”.
“They are doing the same with rents in Moranbah, refusing to sign up for any more house tenancies until landlords drop their rents.
“But it all emphasises the high risks involving in investing in mining towns – the growth rates and rental returns can be enticing, but the risks are high in markets based on a single industry and often a single powerful employer, like BHP,” says Ryder.
Rents in Dysart start from around $800 per week for a three-bedroom house to as much as $1,800 per week for four-bedroom houses providing double-digit rental yields for investors.
Figures compiled by RP Data show that nine houses in Dysart have been sold since the start of the year, with prices ranging from $374,000 to $695,000.
Among the nine properties to sell this year was this five-bedroom house at 44 Beardmore Crescent (pictured below), which was sold for $695,000 to a Sydney investor from Mona Vale in January.
The property was listed for rent by Vision Real Estate Consultants Mackay asking $2,500 per week.
It was rented out last week at a slighter reduced rent of $2,400 – equating to a yield of almost 18%.
A five-bedroom house on Brock Crescent (pictured below) which sold to a local Dysart buyer for $579,000 is currently available for rent at $1,600 per week (a yield of 14%), with the listing also held by Vision Real Estate Consultants Mackay.
According to RP Data, Dysart house prices rose 13.6% in 2011 following strong gains in 2008 and 2009.
RP Data puts the Dysart median house price at $680,000, compared with $437,000 in March 2011 with growth of 13.6% recorded.
Facilities in the town include a $5 million sports complex including an Olympic-sized swimming pool, a shopping mall, a nine-hole golf course and bowls club, and a Community Civic Centre owned and maintained by Isaac Regional Council.