Queensland mining town records 30% growth

The Queensland town of Wandoan has recorded a 30 per cent increase in house price growth over the last year.

The growth comes on the back of increased mining activity in the area with yields as high as 22.2 per cent being touted, Property Observer reported.

But recent reports allude to the areas biggest project not going ahead.

Located 300 kilometres north west of Brisbane, Wandoan is a rural township in the Surat Basin.

According to Residex’s February data the town had the highest price growth of any rural suburb in Australia.

The median house price grew 29.95 per cent for the year ending February.

To the west is Xstrata’s proposed Wandoan thermal coal mine which when it is up and running is reported to be the biggest coal mine in the southern hemisphere.

But the increasing cost of producing coal in Australia, coupled with a drop in commodity prices and a strong Australian dollar has hit the country’s coal industry hard.

Xstrata is attempting to merge with commodities company Glencore, if the merger is finalised it will make the conglomerate the world’s fourth largest diversified mining company and the largest commodities trader.

Glencore chief executive Ivan Glasenberg recently told investors the merged company would be avoiding greenfield projects.

“Greenfields are risky. Greenfields do have capital overruns. Greenfields do have delays which kill the NPV (net present value) on those projects,'' he said.

The $7 billion Wandoan operation is by definition a greenfields project which has been in the works since 2007 but has faced numerous setbacks including disputes from local landowner disputes.

The operation is yet to receive final approval from the Queensland government.

Xstrata anticipates 30 million tonnes of coal per year to be mined and has forecasted a 30 year mine life for the development.

According to RP Data, the median house price in Wandoan is $365,000, increasing 15.9 per cent over the last year.

Wandoan’s total population is 655 people.

LJ Hooker agent Mark Robinson has a number of properties in the area listed for sale including two big mining accommodation developments.

He said house prices are on the increase in the suburb because there is currently a significant shortage of accommodation.

There are a number of projects going on in the region which are increasing the demand for accommodation including a $1.4 billion water pipeline to Dalby.

Robinson said big companies are winning contracts in the area but are having issues housing employees which is also seeing rents increase.

 “The problem is Wandoan is there’s not enough accommodation. That’s basically it,” Robinson said.

He added that even if the Xstrata project doesn’t eventuate there is still strong demand from other projects.

“It’s on the border of the Surat Basin. The whole thing up there is getting driven by coal-seam gas which gets piped to Gladstone,” Robinson said.

“Xstrata have merged but coal prices are still good. You’ve got Gina Rinehart up there. You’ve got a lot of action around the area. You’ve only got to look at Mooloomba to see what happens to a town that needs accommodation.”

One of the developments Robinson is selling is a series of new five-bedroom houses built specifically for mining accommodation.

The six properties are listed for $820,000 each and Robinson said each property could earn a staggering $3,500 per week for short-term tenants.

 “It’s a changing space up in these mining places. It’s a work in progress. I don’t think anyone has estimated how many people will come in if everything comes online,” Robinson said.

“I think it’s definitely an investment hotspot.”

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