Feb 08, 2021

Secret for real estate recovery

Secret for real estate recovery

Carmichael Mine has been a big factor in helping dig at least two Queensland regional centres out of a real estate rut.

But the catalyst for significantly increased residential market activity is owed to government incentives say North Queensland property specialists, Knight Frank.

The mine is recording 1,600 movements a month through Rockhampton airport where vacancy rates in the city are below one per cent. 

Vacancy rates are below two per cent in other major regional centres.

Senior partner Craig Stack says demand generated by the Bravus investment along with the maturing of other projects is fast filling capacity.

These include the Singapore defence agreement in Shoalwater Bay and Townsville Field Training Area . 

Sugar hit for new home construction

However, the sugar hit to regional markets has been the government incentives for new home construction.

Mr Stack says more than $200 million in extra economic activity has been created from Cairns to Rockhampton as a result of the federal government’s housing building incentive introduced as a reaction to COVID-19.

Knight Frank senior partner Craig Stack.

“The region that has responded most enthusiastically has been the Townsville region with 350 more approvals year-to-date than at the same point last year,” he says.  “Cairns is close to 200 approvals extra, while Mackay and the Rockhampton region each have nearly 100 more approvals.

“What’s happening with this building incentive is that the local construction industries are experiencing very strong demand, giving our local businesses a lot more confidence, extending beyond the carpenter and the concreter and the roofer. 

“It flows into those people who lay turf, those people who build fences, sell carpets and install windows. 

“It really is a penetrative investment through a regional economy, because most of the people supplying the product to go into a new house are based in their local areas. 

“It’s one of those really good catalysts for flow of money in the local areas, where the extra housing has been created.”

Building approvals up in key centres

Building approvals are up by nearly 100 per cent in Townsville, more than 60 per cent in Cairns closely followed by Mackay and Rockhampton, says Mr Stack.

More than 700 extra new dwellings were approved between Cairns and Rockhampton in the July to January period than at the same point last (financial) year Mr Stack says.

“With an average construction cost per dwelling of approximately $275,000, nearly $200 million in extra economic activity has been created from the incentives,” he says. 

“The most comforting present circumstance for maintaining demand for new homes and activity for the wider construction industry are the very high residential occupancy rates in most of North Queensland and Central Queensland. 

While the impact of the incentives is expected to gradually wane after next month Mr Stack says consistently strong employment demand in the regions, increasing rents and low borrowing costs are likely to motivate new dwelling construction through 2021.