MACKAY PROPERTY REPORT 2017 - MCCARTHY GROUP
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A Property Investor’s Guide | 2017
Mackay
Property Report
2017
A special report on...
Mackay
Introduction by By Colin Dwyer
Stephen McCarthy
CEO McCarthy Group Mackay is an industrious city with
some of the most affordable houses in
Welcome to our investor update on Mackay, Queensland and Australia. The city ranks in the top
the second in our 2017 series of research reports twenty-five largest cities in Australia and its population
specially commissioned for our investor clients. is expected to grow over the coming 20 years.
Similar to several other regional markets in
Queensland, Mackay was hard hit by the slowdown The announcement of the Adani Carmichael mine,
in Mining, which affected property prices and complementary rail line construction and other major
confidence. The positive news is that the tide seems projects is very positive news for Mackay’s property market,
to be turning and investors are starting to return to job creation, economy and confidence.
the market. Are better times just ahead?
We expect confidence in multiple projects, rising sugar
This report is authored by respected economist prices, subsequent direct and indirect job creation and
Colin Dwyer, to give you, our investors, an potential comparative price differential correction between
independent assessment on the short to medium Mackay and capital cities to eventually drive the Mackay
term outlook of key regional markets. Colin is property market into positive territory.
widely regarded as a leading economist and social
commentator by business, the media and the The Mackay property market can be described using
broader community. We hope it will give you a good production, population, potential growth and comparative
understanding of the factors currently in play and price information.
give you confidence in your investment decisions.
Find out more
Production
Mackay Statistical Division (SD) specialises in Mining, Interestingly on 4 November 2016, the Reserve Bank was
Mining Services, Transport, Construction and Agriculture. reported to have effectively called the end to the mining
It is widely recognised that Mackay’s economy is focused bust (ABC news website).
on Mining and Agriculture. With 4% of Queensland’s total
workforce, Mackay has 26% of the state’s Mining workforce Sugar is the other commodity that Mackay focuses on.
and 7% of the state’s Agricultural workforce. Australian Bureau of Agricultural and Resource Economics
recently forecast a 20% increase in sugar prices during
If we look to the recent past, Mackay (SD) produced almost 2017 due to significant depletion of world sugar stocks.
$15b in 2015 (Remplan). The Mackay region employed over Solid increases in farm incomes have led to increased
78,000 workers with 13,398 employed in Mining, almost investment in underperforming property in the Mackay
double any other industry’s employment contribution. and wider North Queensland economy.
Almost one third of Mackay’s economic output is from
Mining. The Mackay region is a commodity-based According to Remplan, the second largest employer
economy, specialising in coal mining and sugar growing industry in the larger Mackay region is Tourism. In 2015
and refining. Tourism provided 7,472 local Mackay jobs. With a lower
Australian dollar, it is cheaper for international tourists to
Current official forecasts indicate that most of the visit Mackay region while overseas travel becomes more
commodities that Mackay region specialises in will improve expensive for domestic tourists, encouraging domestic
in 2017. Metallurgical coal is expected to rise to $US182.20 tourists to visit Mackay and the Whitsundays.
a tonne in 2017, up from $US114.40 in 2016. That’s a rise
of 60% and we expect more direct and indirect jobs to be
created in the coming two years.
MACKAY STATISTICAL DIVISION JOBS BY INDUSTRY 2015
Mining 13,398
Retail Trade 7,443
Construction
Accommodation & Food Services
Manufacturing
Health Care & Social Assistance
Transport, Postal & Warehousing
Education & Training
Agriculture, Forestry & Fishing
Other Services
Professional, Scientific & Technical Services
Public Administration & Safety
Wholesale Trade
Administrative & Support Services
Rental, Hiring & Real Estate Services
Financial & Insurance Services
Electricity, Gas, Water & Waste Services
Information Media & Telecommunications
Arts & Recreation Services
0 3000 6000 9000 12000 15000
Source Remplan, ABS
2
Population
Mackay is the third largest city in North Queensland and MACKAY FORECAST POPULATION
the fourth largest in North Australia. Over the ten-year 2011 TO 2036
period from 2005 to 2015, Mackay LGA grew faster than 180000
the state and nation with average growth of 2.2%. The most 171,313
recent official population estimates indicate Mackay has 170000
123,724 residents.
160000
Official projections over the next 20 years suggest that
Mackay could achieve average growth of 1.6% per annum 150000
Population
leading to an expected population of 171,313. This is an
increase of almost 50,000 new residents. With an average 140000
of around 3 people per dwelling and given other factors
such as rental vacancy rates and balanced supply, we can 130000
expect around 17,000 new dwellings to be built in Mackay
120000
over the next twenty years.
110000
did you know... 100000
2011 2016 2021 2026 2031 2036
Mackay is recognised as the
Source QGS, ABS
gateway to the Bowen Basin
coal mining reserves of Central
Queensland, the largest coal
reserve in Australia.
3
Potential in Projects
Potential in Mackay property assets, at current prices, The projects range from multiple mining developments
is solid. If all the projects realise their full potential they (Adani maintenance workshops, drive in drive out (DIDO)
are likely to boost economic activity, boost confidence in mine workers, railway construction, Mackay’s ring road and
property, improve the vacancy rate, improve household transport workers) to a variety of lifestyle developments.
incomes and improve the ability to afford rental and
owner occupier homes.
MACKAY REGIONAL PROJECTS, VALUE AND JOB CREATION POTENTIAL 2017-2020
Project Location Product Start Value $m Workforce
Thalanga Mine Charters Towers Zinc 2017 17
Olive Downs Bowen Basin Coal 2020 1,250
Ravenswood Gold NW Mackay Gold 2017 258 380
Lorena Gold Cloncurry Gold 2017
Adani Mining
Mackay Mining 2018 400* 500
Services Workforce
Adani Railway Workshop Bowen Manufacturing 2017-18 150* 100
Mackay Ring Road Mackay Construction 2017 565 1000
1,390+* 3,230
Source QLD Government, Department of Infrastructure
Table 1: Mackay Regional Projects, Value and Job Creation Potential 2017-2020 *Estimated by DS Economics
Historical Trends
In the past 30 years Mackay’s median priced houses Over the medium term Mackay’s capital appreciation
have grown six fold with an average annual compound has been smaller than Sydney’s and Brisbane’s.
growth of 6.26%. Along the way there have been booms This comparative price difference in the past has proven to
and busts. There have been two booms in Mackay in the be an eventual positive for Mackay, as investors recognise
past 30 years, one occurring in the early 1990’s and the the potential for capital appreciation. Both property booms
other in the mid 2000’s. Each had a different intensity. mentioned above have been significantly influenced by this
On each occasion these booms have been influenced by comparative price differential between Sydney and Mackay.
mining upturns and job creation, but also the difference in
comparative property prices between larger cities. The current median house price differential ratio is high
(2.57) and rising, indicating comparative value in Mackay
After each of these booms there were economic especially given the Reserve Bank’s observation about the
downturns driven by slow demand for commodities such Mining bust ending, multiple local projects and
as coal. These downturns have been characterised by job creation.
higher vacancy rates, job losses, negative net migration
and recoveries. Mackay is a growing regional city with a great lifestyle that
encourages outdoor activities such as fishing, snorkeling
There is a strong link between Sydney house prices and diving on the reef, beachcombing and swimming in
and Mackay house prices, although the lag period can the popular Bluewater lagoon and walking trail. Housing is
be years. Currently the median house price difference considerably more affordable in Mackay than most other
is over $530,000. cities in Australia. According to Demographia, Mackay has
some of the most affordable houses in Queensland.
4
MACKAY MEDIAN HOUSE PRICE
1986-2016
$500,000
$450,000
$400,000
Median House Price
$350,000
$340,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Jan-86
May-87
Sep-88
Jan-90
May-91
Sep-92
Jan-94
May-95
Sep-96
Jan-98
May-99
Sep-00
Jan-02
May-03
Sep-04
Jan-06
May-07
Sep-08
Jan-10
May-11
Sep-12
Jan-14
May-15
Source Corelogic, DNRM
did you know...
The Mackay Region has
31 beaches for you to visit and
explore – one for every day of
the month.
5
Comparative Affordability
Mackay is a great place to live, has an industrious Mackay house prices are $186,000 cheaper than Brisbane’s,
reputation and comparatively affordable housing. half Melbourne’s and almost a third of the price of
Housing affordability data released by International Sydney’s houses.
researchers, Demographia, reveals that Mackay also
compares favourably within Queensland. Housing is considerably more affordable in Mackay than
our major capital cities, offering a distinct advantage when
Demographia’s annual international housing affordability attracting new workers. There are several leading economic
report 2016, which looks at median house prices and variables such as coal prices and comparative house
divides them by local median household incomes, reveals affordability that are providing confidence in the Mackay
that Mackay has the second most affordable housing in property market.
Queensland behind Gladstone.
did you know...
Mackay house prices are: Mackay was named after
Captain John Mackay, who was
the leader of an expedition to
$186k< 1/2< 2/3< the area in 1860. Captain
Brisbane Melbourne Sydney James Cook travelled through
the region on 1 June 1770.
6Houses Units
Last year’s Mackay house prices are underperforming The median price for units in Mackay is small with just 25
with a drop of 9.8% in the median value for the year to sales for the September quarter 2016. The annual average
September 2016. The downturn in coal prices over that performance of 14.3% reflected the historical economic,
time drove lower building approvals, lower population employment and confidence levels in Mackay. With several
growth and lower demand for houses. Mackay is currently key project announcements, significant comparative price
a buyers’ market. differences and potential significant job creation, we expect
median prices to steady and eventually rise in Mackay.
The number of houses sold in Andergrove, Beaconsfield
and South Mackay accounted for 26% of houses sold in
the September quarter 2016. The average price annual
performance in each of these suburbs was negative. Most
Land
of the data has been influenced by below trend coal prices, Land sales were flat in Mackay for the year to September
a general downturn in the mining sector and a downturn 2016 with a median value of $165,000.
in public and private investment, complemented with low
Rentals
confidence levels. However much has changed in Mackay’s
economic horizon and potential in the market is beginning
to emerge.
Recent data supports the notion that Mackay is a tightening
renters’ market. The vacancy rate is 6.9% and firming.
Average 3 bedroom houses achieve $280 per week and
did you know... are steady. Gross rental yields for houses are 4.6% and
units obtain 5.7%. This compares favourably to most other
regional centres in Queensland and outperforms Brisbane.
Mackay is nicknamed the
Sugar Capital, as the region
produces about one third of
Australia’s sugar.
Sources Core logic
REIQ Market Monitor September 2016 Demographia
ABS 3218.0 Remplan
Queensland Government Statisticians Office Regional Profiles Mackay LGA 7Conclusion
The announcement of the Adani Carmichael mine, rail line
Cairns
construction and other major projects is very positive news for
Mackay’s property market, economy and confidence. We expect
Townsville
confidence in multiple projects, subsequent direct and indirect
Queensland The Whitsundays
job creation and potential comparative price differential correction Mackay
between Mackay and capital cities to drive the Mackay property
market into positive territory in the medium term. Brisbane
Colin Dwyer, January 2017
Disclaimer
While we have made every attempt to ensure that the information contained in this report has been obtained from reliable sources, DS Economics or Colin Dwyer is not
responsible for any errors or omissions, or for the results obtained from the use of this information. All information in this site is provided “as is”, with no guarantee of
completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to
warranties of performance, merchantability and fitness for a particular purpose. In no event will DS Economics, its related partnerships or corporations, or the partners, agents or
employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this report or for any consequential, special or similar
damages, even if advised of the possibility of such damages.
What now? Any questions?
Email us at info@mccarthygroup.com.au
or call 1300 850 318
mccarthygroup.com.au
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