Trying to sell in Gladstone - zero interest. Will it be better post election?

I'm trying to sell a property in Gladstone and I'm getting zero interest.

The area is a severe downturn with vacancy around 10%. It's a terrible time to sell, but I decided should take the hit and offload in order to move forward.

The property has been on the market for 6 weeks with 2 huge price reductions ($425k -> $398k -> '$370k+'). It's barely getting any interest, I've probably had 3 people through in that time.

I'm trying to decide if I should simply rent it out again and wait for better times, or continue the sales campaign. The average time on market is around 100 days, it's been for sale for about 42 days.

Will things be better post election or am I better off renting it out and trying to sell again in another 12 months (the property cost me $8k to hold for 12 months).

Here is the property - 25 Saxonvale Court New Auckland Qld 4680 - House for Sale #122755262 - realestate.com.au


David.

 

Sorry to hear this, we had a similar post on Gladstone.

How quickly will this market turn, it will take years as the mining boom is over and it will take another cycle.

What are expected losses?
What are similar properties selling for? and how long is it taking to sell?

MTR

 

Can you let it again...if so will the rent cover the costs?

 

Perhaps just keep it on the sales market... like my sister has her Wagga one, very slow selling in that area 100+ days.
She bought it $170k about 5 years ago and has it on the market for sale currently at $179k... at least the rental situation there is not dire.

 

No, unfortunately not. Due to the drop in rents the property will cost me around $8,000 pa to hold. So if I decide to sell a year later, I'd have to sell for at least another $8k just to break even.

 

If you can offload without too much pain, sell. However, I fear the issue will be "how can you go", because most will be wanting to do the same and buyers will take advantage of this scenario.

MTR

 

What are the chances of that happening?

 

It's really hard to say... surely this is the very bottom (although that's what we thoughts back in Dec 2015). My best guess is it is the bottom and in 12 months time things will be the same or better.

I have decided to continue trying to sell for another few weeks. Thanks for your help!

 

I'm not sure I was much help...

Appart from some sort of religous belief in property what makes you think this is the very bottom? When will there be any increase in rents or prices? I suspect at least a decade.

I know ***** all about miner details of Gladstone. But here's my take...

Big anticipation of mining riches for ever. Over, over built. While heaps of workers were in town the sun shined.

• The miners all left.
• No demand for rentals or owners.

You need natural/normal growth to absorb the overbuild. That will take a long time.

 

I agree. Overall, the area still does have good population growth (actual and forecast), but there is a lot of stock to soak up first.

The other big issue was the crash in the oil prices that made all these gas projects uneconomical. Once the oil price goes back up (I believe it's artificially suppressed by the West to screw over Russia, but that's another story!) then there should be renewed interested in GLNG, new projects and then more demand for housing.

The conclusion I (and my adviser) came up with was that it was just too unpredictable to know when this will happen, so we decided to sell 1x and hold 1x for better times (I unfortunately bought 2x up there).

 

How about putting both on the market and if either of them sell, you can start feeling some positivity?

 

Good question. Originally I had thought the cost of two empty properties would be too much (which it is!), but it just so happens the other one is empty also (and has been for 80+ days... ) so I've been taking the double hit for 3 months anyway!

I was planning on retaining the other one as it's the better one to sell in better times, but it would probably sell easier in this down market where everybody is being very picky about the few minor flaws in the first property.

I will discuss this with my advisers.

 

Did your advisors advise on buying into this area too?

 

No. I bought into this area off a Hotspotting report.

 

I would put the other on the market too then....
No tenants --> its just costing you money

 

There you have it.

 

Hi David, sorry to hear you've been caught in the post-boom predicament. I'm a former Gladstone local, my family still lives there. I've also worked in resources construction for a time so I've seen the boom-town effect... I'm also a first-time poster in this forum and apologise in advance for what might become a lengthy post..

I don't presume to be wise enough to advise whether you keep the properties or cut and run, but I can probably offer some insight to Gladstone in general. Hopefully it will help in your decision making.

1. Don't count on any new resources investment to boost prices/rentals by much. Even if another new refinery was to be built, there are some pretty huge worker accommodation camps built now that will likely house any influx of construction workers. e.g. Decmil built and now own a 1400-room facility in Calliope. I think that with temp worker accom on Curtis island they maxed out at about 8000 rooms.

The recent events in Gladstone were something of a phenomena that I think we're unlikely to see again. You had 3 massive LNG facilities being built simultaneously, plus the new Wiggins Coal Terminal, plus all the infrastructure to support them, plus the town infrastructure to support the influx of people. Normally, you'd be lucky to see just one of those facilities being built at any one time.

2. New jobs created by the LNG industry are minimal. The new plants need very few people to run and maintain them. (compared to the 1,000's required to build them)

3. Take population growth forecasts with a BIG grain of salt. In 1976 Gladstone became a city and the population was just over 18,000. 40 years later the population has barely doubled, despite new industries coming to town (new aluminium smelter, multiple alumina refinery upgrades, new alumina refinery, new explosives and fertilizer plants, powerstation upgrades plus all recent stuff). Note that the current population statistics for the Gladstone region (~65k) includes a massive area, much larger than Gladstone itself, since local councils were amalgamated. Gladstone City's actual population is probably somewhere between 32-36,000.

4. Whatever you decide to do, it's probably going to require drastic price cuts.. You've got a lot of competition either way. About 900 houses for sale in the immediate region (gladstone, tannum and calliope) and about 700 for rent.

Best of luck. I hope you can find an acceptable resolution.

 

What is the real population growth ?

What is the source, and, what is the actual growth for last 2 years ?

Just curious.

 

Hi all, good thread here on Gladstone and just what I've been looking for. DavidMc I feel your pain mate as I too have a property in Gladstone and have fully seen the decrease in house prices and rent. We had to lower ours from $400 to $150 per week just to get a sniff! luckily we got ahead of everyone else and managed to get a tenant in. I suppose it's better than nothing however we're losing roughly $9K per year to hold it and waiting for the market to get better. We've talked to a lot of people in regards to this and aside from changing the ownership to myself for tax cuts (haven't executed on this - waiting for advise from accountant) it looks like we just need to pay it down as fast as possible. We have another property in Brisbane which is breaking even, however there is no growth or expected boom to hit meaning that we can't sell it to pay off Gladstone. So yeah - we're stuck and have to dig ourselves out of it.
Oh if anyone is wondering why we bought there, well Positive Real Estate who we paid money too for a mentoring program recommended at as a good deal. Pruph..... obviously not! If anyone has dealt with these guys I would love to know what you think of them.
Thanks.

 

Wow sorry to hear, there's been a lot of people burnt! Well done getting those tenants in, better than nothing.
I spoke with an agent today there are 1200 properties for sale and 900 for rent!

There's another thread on them i think. Feel free to throw some mud!