It seems, as Novocastrians we are forever looking forward to change…..

harbourWe looked forward to change at the last state election and the opportunities of hope for a fairer hearing in Government. Four years on and it seems we are once again looking forward to the same thing – change. Yet this time we will be reliant on a new breed of young politicians of the Labour persuasion, in opposition. Let’s hope they have the drive, determination and ambition during their time out of government to push themselves into positions of ministerial capacity. Otherwise we are in for the same old same old, forgotten and screaming for a fairer slice of the state pie. This is not a comment made with any political leaning it’s just reality. All we need as a region are strong members in positions of influence in Government.

With the State Government receiving around $2 billion from coal royalties annually, $700 million for our Port, who knows how much for the rail corridor and sell off of their modified inner city site, when will this Government provide us with the reinvestment of those dollars?

Coal mining is down and the pundits are hoping the lower the Australian dollar will be the panacea this industry needs. However the declining Australian dollar generally means declining demand for resources. This demand will fluctuate as it has always done but the real unspoken problem for the communities of the region is the looming automation of coal mining.

As the drive to reduce costs bites into the coal companies, the next efficiency they’ll be seeking will be to cut the wages bill and with that the spending capacity of hundreds of employees. Most current model mining equipment used underground already has the technology built in to become fully automated – it just hasn’t been switched on by the coal companies. Open cuts are heading the same way. When you consider the only real economic benefit flowing into this Region from mining is wages, then this is the real threat.

The current cuts in mine spending are being felt throughout the region in the Industrial and Commercial Real Estate sectors. Vacancy rates are on the rise. Whilst the Property Council Vacancy Reports focus just on the CBD of Newcastle, the Raine & Horne Industrial Average looks into the vacancies in the major regional industrial estates of Cardiff, Rutherford, Tomago, Thornton, Beresfield, Sandgate, Warabrook and Wickham. These give a far better indication of how the region is performing.

In 2012 the Raine & Horne Industrial Average was 3.54% where today it is 7.59%. The highest vacancy rate is occurring in Beresfield 11.63%. All the mining belt service areas (Rutherford, Beresfield and Thornton) are registering above 11%. Whilst the industrial areas focused more towards servicing the needs of the populace as a whole, Cardiff, Sandgate and Mayfield West are below 6%.

Another interesting array of, statistics you may not be aware of that could be influencing the price of residential housing in the Lower Hunter are the unemployment figures. With our industrial vacancies growing so is our unemployment rate. Why then are our residential house prices increasing? Low interest rates could be one thing; our net migration is not large enough to influence pricing, wages growth is non-existent, then why? Could it be psychosomatic thanks to the positive press and TV shows emanating from the Sydney market? If you consider full employment in a society to be around 4% unemployment then much of the Sydney basin is at that or less. We are around 8%plus possibly more while the inner west to the coastal suburbs of Sydney are 4% and less.

Even the Western suburbs are only just reaching 6%. Add to the near full employment, a massive under supply of housing in the Sydney Basin for over a decade, along with overseas buyers and strong net migration and Sydney market deserves to be strong. Ours is a completely different market.

Steven Dick
Director Raine & Horne Commercial

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