Modeling the future economic population and housing impacts

Modeling the future economic, population and housing impacts of developments in Gladstone and Central Queensland John Rolfe CQUniversity

Focus of talk l l l Understand model the key drivers for population growth in Gladstone Model the potential impacts on housing markets Extend the analysis to central Queensland

Predicting impacts on housing prices l l Looked at housing price changes in three main ways A. Extrapolated price trends over past decade into the future B. Related past price changes to population growth and extrapolated to future C. Related past price change to growth shock

A. Extrapolating previous trends Median house price l Extrapolation of previous models indicates that median house prices will increase by $35, 000 per annum to about $660, 000 in 2018 $700, 000 $600, 000 $500, 000 $400, 000 $300, 000 $200, 000 $100, 000 $0 2011 2012 2013 2014 2015 2016 2017 2018

B. Extrapolate past relationship to future population growth l l Regressed change in house prices against population growth over past decade Extrapolation to new population growth suggests price growth by 2018 to >$800, 000 for Scenario C Annual change in house prices House price change (1 yr lag) 70000 60000 50000 R 2 = 0. 2732 40000 30000 20000 10000 0 0 500 1000 1500 Annual population increase 2000 2500 Median house price $900, 000 $800, 000 $700, 000 $600, 000 $500, 000 $400, 000 $300, 000 $200, 000 $100, 000 $0 2011 2012 2013 2014 2015 2016 2017 2018

C. Price impacts ratio approach: Short term spikes l The Rio Tinto Yarwun Refinery located in Gladstone is identified as a similar project in terms of its nature and location l l l The refinery was commissioned in late 2004, with the first full year of operation in 2006. The project employed 431 permanent operational staff with the majority housed in Gladstone during its first year of operation The impact the Yarwun refinery had on property values in Gladstone will be used in this analysis to estimate the likely impact on property values of the major projects

Are predicted price increases modest or high? l l l Models predict prices will double in 8 years – and there may be shorter term price spikes Consistent with pattern in past decade Predicted increases are large enough to cause pain and impacts But are not at the scale that mining towns in the Bowen Basin are experiencing And trends consistent with growth in past decade

Housing prices in central Queensland – up by 2. 8 times in 8 years $400, 000 $350, 000 $300, 000 $250, 000 $200, 000 $150, 000 $100, 000 $50, 000 $0 2002 2003 2004 Detached houses 2005 Units 2006 and townhouses 2007 2008 2009 2010

Growth forecasts for Central Queensland 900, 000 High Growth 850, 000 Qld Govt population growth forecasts are very strong Low Growth 800, 000 750, 000 Population l Medium Growth 700, 000 650, 000 600, 000 550, 000 500, 000 2011 2016 2021 Year 2026 2031

Currently more than 100 significant projects underway or planned in CQ

Predicting population changes - optimistic 200000 l 150000 Assumptions about workforce moving to local areas: – – l Central Highlands: 50% Barcaldine: 10% Isaac: 30% Gladstone: 80% Assumptions about location of FIFO workers – – Rockhampton: 25% Mackay: 25% Bundaberg: 10% Outside CQ: 40% 100000 50000 0 2011 2012 2013 2014 2015 2016 2017 Mackay residents Rockhampton residents Gladstone residents Central Highlands residents Bundaberg residents Whitsunday residents Isaac residents Banana residents Barcaldine residents North Burnett residents FIFO/DIDO 2018

Summary of broad predictions • These predictions indicate that: Annual change in Annual median Pop. house increase prices • Gladstone’s rate of population increase will be about double the previous decade (1, 622 per year) Gladstone • Rockhampton’s population increase Rockhampto n will be slightly higher than the previous decade (1, 901 per year) Mackay • Mackay’s population increase will be about double the previous decade (3, 128 per year) 3, 133 $34, 922 2, 255 $31, 738 6, 138 $60, 883

Conclusions l l Rapid growth in Central Qld is generating employment, with subsequent population and housing effects Simple models used to make broad forecasts – but will be inaccurate • • • Gladstone population predicted to increase between 10, 000 and 25, 000 by 2018, depending on scale of industry development Gladstone median house prices predicted to increase to between $604, 000 and $928, 000 Higher price increases predicted in Mackay, and lower increases in Rockhampton