I recently had the pleasure of delivering a keynote presentation for the Urban Development Institute of Australia.
However, upon accepting the UDIA’s request to address an audience at the industry event in Townsville, I was acutely conscious of the increasingly depressed local sentiment within a city that has had more than its fair share of bad luck over the last decade.
You see, it wasn’t that long ago that Townsville was the talk of the national property sector, with its median house price increasing by a whopping 174 per cent from 2000 to 2007 – just pipped at the post by its capital city, Brisbane, for the top Queensland performer.
Unfortunately, Townsville’s fortunes took a turn for the worse, due to a number of factors that happened in a short period of time, including the devastation that Cyclone Larry wrought in 2006, which resulted in more than $1 billion of damage in north Queensland.
The mining downturn also took its toll which, when coupled with the closure of its biggest employer – Queensland Nickel – saw its unemployment rate skyrocket.
Depending on your point of view, Townsville was definitely in the doldrums, but no location stays that way forever.
A Tale of Three Cities
The thing with property that many people forget about is that every city (capitals and regional locations) have periods of strong growth and lean periods. There are so many moving parts of each city’s unique property economy.
Couple that with events that you can’t control, like natural disasters, and sometimes economies take a hit that they never deserved.
It happened in Newcastle in the late ‘80s and early 1990s. First, an earthquake rattled the city, causing $4 billion in damage and killed 13 of its residents.
Not long after, Australia’s 1991-2 recession had a widespread impact. And then there was the closure of the BHP plant – Newcastle’s biggest employer at the time. By February 1993, Newcastle’s unemployment rate was 17 per cent – ouch!
Today, Newcastle’s unemployment rate is just 5 per cent and its median house price has increased by 48 per cent over the past five years. That’s a strong recovery!
The regional Victorian city of Geelong has a similar story of woe.
In 2013, Shell’s Geelong oil refinery closed – whack! In 2014, Alcoa closed its aluminium smelter – whack whack! In 2016, some thought the heart and soul of Geelong was finally destroyed when the Ford car manufacturing factory closed. Oh, and then retail giant, Target, moved its headquarters away from Geelong.
That’s a series of events that one wouldn’t wish on their worst enemy. But one should never underestimate the human race’s ability to overcome adversity.
These days Geelong has an unemployment rate of just 5.5 per cent. It’s property market right now is one of the strongest regional performers in Australia. The median house price has posted 40 per cent price growth over the past five years.
Last but not least, the central western regional city of Orange is another Australian city to overcome significant adversity.
Up until a few years ago, many households all over Australia had a fridge, a washing machine, or a clothes dryer that was manufactured in the Electrolux factory in Orange.
Contrary to some doomsday cries that the city wouldn’t survive, the community rallied together and has indeed thrived. In fact, I am on record as saying that Orange may be Australia’s most consistent property market with average annual growth of 6.6 per cent over the past 20 years, including 20 per cent in the past three.
So, as you can see, just because a location has periods of economic troubles doesn’t mean it will remain that way indefinitely.
The Tide Has Turned
As illustrated in the earlier chart, each of these markets have previously experienced lean periods and some significant booms. Townsville, for example, had an era of 8 prosperous years (ending 2007) wherein the median hose price increased by a staggering 174.8 per cent.
Today, Townsville’s median house price of $335,000 sits $30,000 below where it was a decade ago. But the view out the front windscreen is significantly brighter than the rear view mirror.
Townsville is home to Australia’s largest military precinct. Its existing infrastructure includes a major export port, an international airport, one of the largest hospitals in regional Australia, and a world-class university.
Close proximity to Asia and a ‘backyard’ which is full of rocks and crops (copper, zinc, silver, nickel, coal, beef, sugar, bananas and mangoes) puts Townsville (and others) in the box seat to take advantage of opportunities in the Asian Century, including free trade agreements.
Over the past few years, its market has progressively absorbed earlier years of excess housing supply.
One of the many positives that ‘The Ville’ has going for it is the demographics of its population. Not only does it have a median age lower than the state and national average, Townsville residents also earn more, while having lower house prices and rents.
In fact, Townsville is truly an affordable property location because while it ranks as Australia’s 14th largest city by population, its median house price is only the 82nd most expensive in the country.
What this all means is that Townsville has a populaton of young people who are earning decent salaries in an increasing number of jobs.
The human spirit is a powerful thing. Sometimes communities just require a bit of help with moving on from the challenges of the past and refocusing on the positives of future.
The parting words in my presentation to the UDIA audience in Townsville was to move beyond survival mode, to be bold with their forward thinking, and to “go for great”!
Propertyology is a Brisbane-based buyers agency and (national) property market research firm. Our multiple-award-winning business is currently helping everyday people to invest six locations across four different states. Like to know more? Contact us here.
