john rolfe cquniversity

Modeling the future economic, population and housing impacts of

developments in Gladstone and Central Queensland

John Rolfe

CQUniversity

Focus of talk

Understand and 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

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

Extrapolation of previous models indicates that median house prices will increase by $35,000 per annum to about $660,000 in 2018

B. Extrapolate past relationship to future population growth

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

C. Price impacts ratio approach: Short term spikes

The Rio Tinto Yarwun Refinery located in Gladstone is identified as a similar project in terms of its nature and location

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?

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

Growth forecasts for Central Queensland

Qld Govt population growth forecasts are very strong

Currently more than 100 significant projects underway or planned in CQ

Predicting population changes - optimistic

Assumptions about workforce moving to local areas:

– Central Highlands: 50%– Barcaldine: 10%– Isaac: 30%– Gladstone: 80%

Assumptions about location of FIFO workers

– Rockhampton: 25%– Mackay: 25%– Bundaberg: 10%– Outside CQ: 40%

Summary of broad predictions

Annual Pop. increase

Annual change in median house prices

Gladstone 3,133 $34,922

Rockhampton 2,255 $31,738

Mackay 6,138 $60,883

• These predictions indicate that:

• Gladstone’s rate of population increase will be about double the previous decade (1,622 per year)

• Rockhampton’s population increase will be slightly higher than the previous decade (1,901 per year)

• Mackay’s population increase will be about double the previous decade (3,128 per year)

Conclusions

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