Special reports

Housing

Why focus on housing in the CSG region?

Affordability - Rural and regional communities are historically affordable places to live.  Affordable housing is a feature valued by residents of these communities. The desire to keep housing affordable is a common theme in many regional and community plans and vision statements.  Interestingly, though, residents who are seeking to retire and move away from the region prefer to see higher house prices.  A boost in sale prices of houses - such as occurred during the coal seam gas construction period - can bolster their nest egg.  

Local spending - For those on modest incomes, when housing costs are kept low, there is more money to spend locally. Such savings are particularly important in regional areas, as other costs of living - such as fuel and store-bought goods - can be higher.  According to the Queensland government, prices for furnishings, household goods, and services were nearly 20 percent higher in Dalby than in Brisbane in 2013, though clothing and alcohol were 2-3 percent less expensive.  So, goods are more expensive, but wages are lower than in metropolitan areas (statistcs referred to in this article can be found in the individual town data booklets, the Cumulative Impacts Report, or the compare town indicators tool).

Changing residence - Clearly, the cost of housing can influence where one chooses to live and whether one selects to stay in an area or to move away.  Changes in the population level or turnover in the population can be keenly felt in rural and regional communities.  For example, over fifty-percent of the population of the Western Downs town of Dalby changed residence between the 2006 and 2011 Australian census.  That was before the big upswing in CSG construction, in a town with modest effects on housing costs when the upswing did occur.  

Small town feel - Such communities are traditionally close-knit - with a 'small town' feel.  Familiar neighbours can play a key role in creating and maintaining stability and a sense of wellbeing.  So, changes in the housing market that cause people to change residence can have a ripple effect.

Monitoring changes - That sort of impact accompanying coal seam gas development in the regions studied followed shifts in the housing market that affected housing affordability.  Likely causes and effects were picked up by monitoring changes in housing costs and interviewing key stakeholders.  This focus on housing costs was agreed to as important early in our study by local representatives, State government staff, and staff in resource companies.

Definitions - Important for understanding the attention given to housing are understanding housing affordability and why house sale prices and weekly rents in 3-bedroom houses were accepted as suitable indicators.

How housing changed

Town level differences - During development of the coal seam gas industry in the Surat and Bowen Basins, the housing stock and housing markets changed in different ways in different towns. The changes were shaped by local history, geography, town dynamics, proximity to resource development, and the balance between resident population and non-resident worker numbers.

Where rents increased - In Chinchilla, Roma, Miles, and Wandoan, rent increased significantly during the CSG construction period, 2011-2013. However, sale prices of houses were less affected.  In the large towns of Toowoomba and Dalby, which could be seen as gateways to the area where CSG development occurred, there appeared to be little effect on rents and house prices. In these towns, new housing was able to meet demand.  In towns such as Moranbah and Dysart, both rent and house prices increased significantly and then dropped quickly. This cycle coincided with shifts in the area’s major industry, coal mining.

Rising rents – outward migration, investment, …    

Outward migration - The rises in rent in certain towns are reported to have engendered outward migration of local, low-income families and others who were unable to afford increased rent.  This conclusion is reinforced by our assessment of the number of households receiving government support payments.  This movement can cause a rise in average personal income - that is, the average increased because those with lower incomes left.  

Selling high - Others who chose to migrate out of the towns as rents increased included homeowners who took the opportunity to benefit from the ‘heated’ market. These homeowners could move out of their home to collect rent or to sell for a higher price.

Leaving & FIFO - This option was taken by some elderly homeowners.  This shift - noted in our interviews - is consistent with a reduction in the Western Downs in the average age of the population between 2010 and 2015, according to government statistics reported by Lawrence consulting.  That is during a period when the number of older residents in Queensland as a whole is increasing.  Certain other residents, who were younger, are reported in our interviews to have shifted their residence but remained working in the region. They could resort to working on a fly in-fly out basis while living in Brisbane or the Gold Coast and Fraser Coast.
Villas being demolished for new housing at Miles

Responding to demand

Short leases - It is important to note that rents responded relatively quickly to demand.  Leases run for one year, and rents can be raised quarterly.

Complexity - Making the market more complex, as noted above, a homeowner could move to make their own residence available to rent.  Additionally, some companies would purchase properties to lease to staff.  These leases would not necessarily be registered with Queensland’s Residential Tenancies Authority, our source for average rental figures.
Investors

Outsiders - High rents in some towns (particularly Moranbah, Chinchilla, and Roma) attracted property investment, notably from ‘the outside’, such as Melbourne.  This outside investment contributed to an increase in house prices.  

Large increases in rent - It is easy to see how such investment could be attracted as the average weekly rent on a 3-bedroom house in Chinchilla rose from $300/week in 2011 to $450/week in 2013, a 50-per cent increase.  Smaller towns, like Miles, saw increases of over 150 per cent during this period.   

Absentee owners - Investors were prepared to pay higher prices for houses. They would do so while benefitting from the negative gearing incentive and with expectations of collecting high rent. Our interviews revealed some concerns in these communities about the proportion of ‘absentee owners’ and the implications for neighbourliness and social cohesion.
Employers

Subsidised rent - Both local businesses and companies associated with the CSG and coal resource-sectors bought and sold properties in order to accommodate their workforce, as noted above.  Some also contributed to workers’ rent payments, when the rents were high. Such a subsidy was seen to be necessary to recruit workers to the area.  

Non-resident workers - in camps or in town?

FIFO/DIDO - To accommodate the workforce, resource companies developed workers’ camps. They were particularly for the use of fly in-fly out (FIFO) and drive in-drive out (DIDO) staff and contractors.

Away from town - Some people interviewed noted that it was appropriate to accommodate non-resident workers (NRWs) in camps. They seemed to prefer essentially quarantining the NRWs away from the town to preserve the traditional feel of the town, without the presence of many young males in fluoro workwear.

In town - Other interviewees suggested that it would have been best to accommodate the NRWs within the towns. They highlighted the opportunity to encourage spending in local businesses and participation within the community.  This perception is reinforced by data from one CSG company, for whom – during the construction boom – locally housed staff volunteered in the community at twice the rate of local residents.

Timing - The timing of the development of work camps influenced trends in rents and house prices. Some interviewees suggested that the work camps should be in place and ready to accommodate workers before the onset of the local CSG work, a sequence that was not always the case.  The subsequent opening of a work camp lessened the demand on established local housing.  

Tier 2, 3, 4 contractors - Further, there has been the contention that the work camps were designed to accommodate only CSG company staff and tier one contractors.  However, tier 2, 3, and 4 contractors entered the towns in need of accommodation beyond what was provided in the camps.  Such a situation occurred earlier, when the Kogan Creek power station was built in 2005-2007.  The 250 or so construction workers were said to be housed entirely in a work camp.  Yet, average rents on 3-bedroom houses in Chinchilla doubled, from $145/week to $290/week.

Time delays

Approvals - Efforts were made by all responsible parties – in government and industry - to supply additional housing. However, time was required to acquire or release suitable land, approve development, construct, and market housing. For some towns, these processes were delayed by various factors.

Decision making - There was recent local government amalgamation, leading to re-organisation of development approval processes.  Qualified council staff and needed home construction trades people would have been attracted to work in the resources sector.  An attempt to have the council build affordable housing in one council area strained local capacity to make timely decisions.  There, political capital was evidently not sufficient in the newly amalgamated council area to foster a coherent vision and rapid decisions.

Cost - Building housing during this period promised to be relatively expensive, in any case.  That can be attributed to the high demand for construction skills – both for the CSG industry and for reconstruction following the 2010-2011 flooding. Roma, for example, experienced 400 flood-affected properties (Brisbane Times).

Too late - In some cases, time taken to build new housing was too long for the window of demand (a 3-4 year construction phase).  Demand had already begun to ease when new houses came on line.  Interviewees also noted that housing designed for the CSG construction staff – e.g., 4-bedroom houses with four ensuites - became available only after the peak in construction.  One subdivision is reported to have ended up with so few residents that there was insufficient flow in the sewage system to send its waste to the treatment plant.

Camps - Temporary workers’ camps came on line to relieve much of the demand from the CSG workforce, particularly in the smaller towns of Wandoan and Miles.
New land for sale at Stage 2 of the Clearview etstate, Roma

Adjusting to the CSG operational phase

Construction phase - The most significant impacts on housing occurred during the CSG construction phase. However, the CSG construction was not the driver for Moranbah and Dysart during this period.  Coal mining activity can be seen to have been the key factor.

Shift - The three-year CSG construction phase required housing the greatest number of workers, and demand for housing peaked. During the shift in the CSG industry in 2014 into the operational phase, the housing situation has changed, with demand dropping.

Construction continued - Post construction, from 2014 onward, the number of NRWs and associated contractors from the construction phase declined significantly.  Though the demand for housing reduced, in some towns, new housing to meet the previously high levels of demand was still being supplied.  Evidence from our interviews indicates that this decrease in demand may not have been relayed to distant investors, who had sought to profit from the CSG construction boom by financing the building of houses in the region.  Further, concerns have been expressed that local council staff did not deter those continuing to file development applications when the demand for housing was subsiding or expected to subside.

Dropping prices & rents - The towns that experienced inflated house prices and much higher rents due to housing shortages have seen house prices and rents decrease, sometimes sharply. There emerged what local real estate agents referred to as an ‘oversupply’ of housing in Roma, Chinchilla and Miles.  Their concern was expressed not just in terms of decreased prices and rents but primarily in terms of the number of empty houses – with 250 empty homes being cited in Chinchilla and characterised as ‘a disaster’ for the real estate market.
'Oversupply' of houses  

Mining-dominated communities - An oversupply of houses was reported in Moranbah and Dysart, though that is reflective more of the fluctuations in the market for coal than the progression of the coal seam gas projects.  So, the Moranbah and Dysart stories suggest how the CSG communities have seen a muted version of the cycles faced by mining-dominated communities.  Our interviews found some in Moranbah and Dysart saying, "We'll be ready for the next boom and won't have housing prices skyrocketing again". Others were less sanguine about it. The empty houses were more of an issue in Moranbah than Dysart, but empty houses were reported in both places.  In Moranbah, a coal company struck a deal with the government so that some of their housing stock could be used as public housing. The availability of this housing, and the lower rents, lay behind the number of families on income support who were being moved into houses in these centres.

Alternative uses - One positive use for an empty house was noted during an interview visit was near to Halloween.  Moranbah community groups planned Halloween activities to (re)build community spirit and 'social capital'. Aside from a masked ball and other activities, one of the empty houses was temporarily converted to a haunted house for the kids to go through and have some fun (there may have been a charge, and it was a fundraiser). In Chinchilla, empty houses were seen as possible homes for Syrian refugees. That proposal was not pursued due to a lack of community support.  
Pros & Cons of declining rents & sale prices  

Flow-on effects of falling demand - We heard in interviews that some investors are now struggling to maintain costly mortgages as the houses that they own have no tenants.  Empty new homes can be seen in Roma, for example.  Banks have deemed Moranbah and Dysart as ‘high risk’ postcodes for loan defaults and have tightened lending criteria. Such measures stifle demand as higher deposits are required to purchase a house. That can be a barrier for first-time home buyers, even though house prices have fallen significantly.

Conversion to social housing - Interviewees in Moranbah and Roma explained that some resource companies sold properties to the state government for use as social housing.  The people being placed in the social housing have little to spend in the local economy and require a range of services. Interviews revealed how some of these families have children with special educational needs, placing additional demands on local schools.

Young families - The availability of new homes at affordable prices has attracted first home-buyers with young families.  As a result, some towns are seeing an increase in school and kindergarten enrolments.  The desire to attract young families was a common theme found in community vision statements and regional planning documents (see the Boomtown Toolkit Tool #6).
New homes for sale in Roma
Conclusions

Different for different towns

Changes - Changes in housing demand and supply were evident in all towns that we studied, but the magnitude and timing differed among the towns studied.  Moranbah and Dysart experienced the most dramatic price rises and drops.  That is not surprising as these towns are economically dependent on a single industry – coal mining, and housing is heavily influenced by the industry’s work activity.

Upward then downward - The traditionally rural towns where CSG development has occurred did not experience the same intensity of change as Moranbah and Dysart, but rises in rents were quite steep – 180% - in smaller towns, such as Miles.  The relatively steep increase in demand for housing during the CSG construction phase can be seen to have pushed rents upward, with a noticeable but lesser boost to house prices.  Following the CSG construction phase, rents moved back toward a value consistent with the historical trend in each town - though ducking below that trend where too many houses had been built.  Again, the precise timing of this return differed somewhat depending on the town.    

Local factors - Impacts of large projects - such as CSG development - on local housing are complex and change across time and locations.  These impacts must be considered within the policy and local contexts.  All levels of government - local, state, and federal - are responsible for policies that affect housing affordability.  Regardless of where the responsibility for a response lies, local factors will influence how CSG development has affected, and will affect, housing affordability.  Local factors will also affect what is likely to be accepted as an appropriate planning or mitigation strategy.  

From market dynamics to long-term effects   

Key factors - Changes in housing that may be associated with CSG development are characterised by:
    High turnover - the number of sales of properties;
    A shift from owner-occupied to absentee-landlord dwellings; and
    Increased density of housing in the form of both units and new housing estates.

These changes were propelled by low interest rates and low unemployment, which encourage people to borrow or invest.

Migration - The dynamism in the housing market during the CSG construction phase - and during the transition to the operational phase - helped to spur migration.  Families and individuals came to the area.   Outsiders invested in building housing.  Transitory non-resident workers and contractors moved through the area.

Social cohesion - Such movements affect social cohesion and neighbourliness, generally in a negative way, at least in the short term.  Long-term studies from North American communities in similar circumstances – development of energy resources - show that communities can regenerate social capital.  This process has been documented to take 15 to 20 years.  It seems important to find examples where that process has progressed more rapidly. Spurring the process along is likely to involve attracting and retaining new residents who will gain a sense of community while bringing new ideas and energy.