Moranbah rents collapse as mining giants freeze leases
Moranbah is in the grip of a rental standoff led by a number of mining companies unwilling to pay up to $3000 a week to accomodate workers, Smart Property Investment can today reveal.
The Moranbah property market is one
SPI reveals rental standoff in Moranbahof the favoured investment hotspots in the country with investors averaging yields of between 10 to 15 per cent.
But with mining companies refusing to rent any more properties in the area, according to some sources, investors could see a quick contraction of their yields and a sharp increase in vacancies.
“Moranbah is in the grip of rental crisis right now,” LJ Hooker Moranbah’s Craig Aitcheson told Smart Property Investment.
“The town is in the early stages of a rental freeze imposed by coal miner BHP Billiton-Mitsubishi Alliance (BMA) as well as other mining groups in an attempt to bring the market back under control,” Mr Aitcheson said.
“Basically what it means is that for three months no long term leases can be signed by the company,” he said.
As a result of this action, property investment mentoring group Real Wealth Australia, which was previously advising its clients to invest in the mining town, is now urging them to avoid the Moranbah market entirely.
“Our recommendation is not to buy in Moranbah at this point in time,” Real Wealth Australia chief executive Ed Kogtevs told Smart Property Investment.
According to RP Data, the weekly median advertised rent for houses in Moranbah is $1500.
However Mr Kogtevs said prices reached $3000 towards the end of 2011.
“By the end of the year they were running at $2000, sometimes high quality houses on better blocks were fetching $3000 a week,” Mr Kogtevs said.
“BMA, in collusion with other miners saw this rental increase happening and they didn’t like it, so they decided that they wouldn’t rent anything, so for the last three months they have hardly rented a property in Moranbah,” he said.
“Rents have started to drop and there are not many properties being sold as we speak, which is driving the prices down.
“If you have already bought a place and it’s still conditional, then we would suggest to our clients that they either pull out of the deal or they reduce the price that they purchased by negotiation.”
Other educational groups, such as Positive Real Estate and NextHotSpot, have been warning investors of the risks associated with purchasing in a mining town where the local economy is ultimately supported by a single industry.
“Investing in Moranbah and in Port and South Hedland is the crack cocaine for property investors, lured by the idea of endless growth and cash flow,” Positive Real Estate director Sam Saggers said.
“Investors seem to be only buying off other investors whom themselves decide to get off this drug, and have checked out of what can only be called the greatest Ponzi scheme in Australia today,” Mr Saggers said.
“When will the bubble just burst?”
BMA was unable to comment at the time Smart Property Investment went to press.