Property Point

Someone sold a house in Sydney last week for $9 million less than they bought it for four or five years ago.

The sellers had bought the property in Sydney’s eastern suburbs for $29 million and sold it for $20 million in a sale forced by their bank.

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I imagine the sellers are a little disappointed by the government’s decisions on negative gearing and capital gains tax and feeling pretty hurt by the increased interest rates.

Australia’s interest rates are on the rise and are now sitting at levels not seen since 2011.

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Increased cost of living is hurting people around the country and interest rates are playing into that.

But the impact of interest rates is not felt evenly around the country. The far-higher property prices mean people in the major cities suffer much more than regional areas with the rates increase.

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That is certainly not to say people in Mackay are unaffected by the cost of living; it’s just that the impact of interest rates increase on a $400,000 mortgage is much less than the impact on a $1m mortgage.

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There are other Mackay-specific factors that are in play when discussing the current housing market.

The big factor is the role of coal in our economy. Most of the coal extracted and exported from our region is coking coal, which is used to make steel.

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The price of coking coal is around $280 a tonne, which is about 50 per cent up.

Good activity in the coal market translates to good news for the Mackay economy, as it is an economic engine that other cities and regions just don’t have.

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Good activity in Bowen Basin flows throughout the Mackay economy; Paget workshops, transport, suppliers and related businesses all benefit. But so do other, non-mining-related businesses as they benefit from the general confidence and spending that goes on.  

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The strong mining activity also means mines need to keep their staff levels up and that means more people moving to Mackay.

Of course, Mackay is much more than a coal mining town but if the coal sector is going well those other areas definitely benefit.

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It is a confidence boost for Mackay people looking to get into the housing market and those wanting to upgrade or downsize.

It also means continuing strong demand from people wanting to rent a property and it will be interesting to see what sort of activity that creates from investors.

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Investors have walked away from the big-city markets because they can no longer use negative gearing on established properties that do not have a sufficient yield to be positively geared.

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Negative gearing has never been a big thing in Mackay because our prices are lower and rental returns continue to be strong so many investors have a positively geared property.

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Around the country everyone is nervous about the state of play and the probability of more interest rate rises. But strong coal prices and an economy that is performing well mean Mackay might just be presenting an opportunity for buyers and sellers that doesn’t exist in other parts.

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I remember when national confidence was flying high and Mackay prices were going up significantly that many buyers were saying “I wish we had bought a while ago when the market wasn’t so hot”.

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I’m not armed with a crystal ball so I’m not here to tell you what is going to happen but I suspect there is a very good buying window right now for those looking for an opportunity.

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