After the floods, Queensland is about to become awash with cash, jobs, migrants and a booming economy.
With competing pressures in the economy from a booming mining sector and domestic investment, rebuilding after the floods in Queensland will provide an added boost through the commitment of the State Government not to reduce any current projects while funds for the reconstruction pour in from the Federal Government including incentives for interstate and international workers to come to Queensland.
In her address to the National Press Club yesterday the Prime Minister Julia Gillard announced a number of initiatives to deal with the devastation of the floods. With the immediacy of many of the announcements, it won’t take long to see the impact flow through the local economy.
Given the urgency of the need and the preliminary damage bill for Queensland already estimated at $3.9 billion, the Federal Government is making an immediate payment to the State Government of $2 billion as soon as practical but before June 30. In addition the Prime Minister has identified the already high demand for skilled labour in Queensland and the increased demand created by the rebuilding. Ms Gillard’s announcement of up to $9,000 for job seekers to relocate and reducing the turnaround time for ‘decision-ready’ 457 visas (temporary skilled migrant) applications to just five days will attract workers from around the country and around the globe.While these are all positive and necessary steps for the recovery, it comes on the back of a set of preconditions that are likely to bring a booming economy and housing market in Queensland over the next 12 to 18 months.Prior to the floods we were very excited about Queensland’s future. Not only has the national economy been growing stronger with a one in one hundred year terms of trade boom but falling unemployment, rising wages and stable house prices have all seen our wealth increasing.In Queensland there had been some limitations on the economy and housing market with a reduction in immigration and migration over the last year down from long term trends however the fundamentals remained strong. The additional spending and job opportunities would have seen an improvement in the numbers of people moving to Queensland, however the incentives and reduction in visa approval time frames by the Government will likely cause this to increase rapidly.Even though there had been a short term spike in the number of properties for sale towards the end of last year (some suggesting this indicated an oversupply of property), this number is much lower in the new year with thousands of homes removed from supply due to the floods. Most experts agree that there is already a shortage of property in many areas and with an increase in workers coming in (required in many industries, not just for the reconstruction) this will place upward pressure on housing demand and prices.With below trend growth in much of the State in 2010 yet increasing disposable income, housing is becoming more affordable, which is often a key driver of price increases. The pressure on wages between the various areas of an expanding economy and now the reconstruction should see wage growth outpace inflation and interest rates.But its not just the flood affected areas that will benefit from the injection of funds and workers. More workers means more productivity but it doesn’t mean they are ‘taking jobs’. With an already low and falling unemployment rate and increased demand for skilled workers it simply means more productivity which in turn creates more income and profits which has a much wider positive impact on the community, the region and the State overall.For some time we have been focusing on Townsville, the Sunshine Coast and north Brisbane as key investment areas due to the increasing population, regional economies and infrastructure. While none of these centre’s were flood affected, they too will benefit from the investment in Queensland as they compete for skilled workers. For example, work on the new public/private Sunshine Coast University Hospital and associated research and training facilities (the largest health project in the country ) starts this year and will compete for labour and resources with the flood reconstruction effort. This $2 billion project alone is likely to employ 3,500 people directly during the construction and create more than 10,000 jobs in addition.Many people have been underestimating the property market in Queensland generally and in some key regional centre’s specifically for some time. The fundamentals here really are strong and the effect of the floods and the recent announcements in response will only bring forward what we anticipate to be a very positive period for property in Queensland.