Queensland heading for recession ?

It would not be a surprise to my readers that Queensland’s economy is in serious trouble. Last week I noted that the Gold Coast’s unemployment has “surprisingly” shot up.

Australian Bureau of Statistics figures released yesterday have revealed the Gold Coast unemployment rate climbed to 8.1 per cent last month, up from 6.5 per cent in February.

The figures showed although 1800 new jobs were created in that time on the Gold Coast, 5000 more people were unemployed.

While the national unemployment rate is just 4.9 per cent, the Gold Coast’s figure is now threatening to overtake the US level of 8.8 per cent unemployed.

Gold Coast Combined Chambers of Commerce President Bob Janssen said he had predicted in November the first quarter of the year was going to be bad.

“And I think that figure is still too low,” he said.

“A lot of it is coming out of small business. They are all telling me they have never seen it so bad.

“I would say we are not going to see much of an improvement over the next two years.”

Mr Janssen said female unemployment on the Coast, which went from 6.5 to 8.5 per cent over the month, was climbing because of the slow down in the retail sector.

But that is just the tip of the iceberg. Commsec’s latest state of the states report puts Queensland at the bottom of the pile.

A new report indicates a slump in population growth is having a heavy impact on Queensland’s economy. CommSec’s quarterly State of the States report paints a fairly bleak picture of Queensland’s economy.

Queensland is at the bottom of the list in economic performance, hampered by above average unemployment and a poor housing market. Grattan Institute economist Saul Eslake says interstate migration has slumped because the Sunshine State has lost its shine.

“People in southern cities are well aware that life in Brisbane isn’t at comfortable as it used to be, and that costs of living in south-east Queensland have been rising,” he said.

But Commsec economist Savanth Sebastian says there is light at the end of the tunnel after a summer of natural disasters.

“Given the rebuilding activity that’s taking place, it’s likely to kick-start growth going forward,” he said.

The report also found Queensland’s retail spending and investment is strong. Queensland Treasurer Andrew Fraser says the state’s economy will be back on track by the end of the year.

Why ? I see no reason to suggest it will, this is more broken window theory from Commsec and what seems to be wishful thinking from the state treasurer. With Queensland banks already looking shaky it seems that once again everyone is ignoring credit issuance as the major driving economic factor. The biggest part of credit is the real estate market and Andrew Fraser is well aware that the state has a problem in regards to that because he made statements in parliament last week about the massive slump in interstate migration.

The number of people moving to Queensland has plunged to its lowest level since 1984 and Treasurer Andrew Fraser is now warning of another ”significant drop”. Net interstate migration nearly halved from 18,388 in 2009 to 9576 last year.

But in case you are unaware of just how bad the real estate market in Queensland is I will let the AFR explain it to you in reference to a recent auction at crowne plaza resort and spa. Not one single unit sold out of 36 on offer, and the highest bid for top end properties was just over 1/3 of the asking price.

Heavy discounts, a year to settle and a $5000 rebate were not enough to entice buyers to a liquidation auction on the Sunshine Coast yesterday. Reed Property Group released the final 36 units in its 2005-built Crowne Plaza Resort & Spa in a Helmsman auction, where all units are offered simultaneously to boost interest.

Despite bids on 30 of the 36 units none was sold, although post auction talks continued later yesterday. Reed Property chief executive Ken Reed said the market was soft. “It’s a buyer’s market. Conditions on the Sunshine Coast are not too different from elsewhere in south-east Queensland,” he said.

An opening bid of $65,000 for an 88 square metre one-bedroom unit was the lowest offer made. One of the 512sq m penthouses attracted a maximum bid of $600,000 after it was listed for $1.58 million. Kings Beach residents Deborah and Jeff Taylor said the event was “a fizzier”. “The marker is so depressed at the moment. Things are selling for prices you wouldn’t believe. There are so many units on the market around here at the moment,” Mrs Taylor said.

The $65 million tower has access to a Greg Norman-designed championship golf course, pools, tennis courts and a gym.

I have little doubt that Queensland is heading for a recession.  I am happy to be convinced otherwise as I happen to live here, but I see absolutely no evidence to suggest that I am wrong.

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Comments

  1. “An opening bid of $65,000 for an 88 square metre one-bedroom unit was the lowest offer made”
    .
    Well, someone has a sense of humour 🙂

  2. Deus Forex Machina

    He DE…not pretty and i think you are right.
    Interestingly Unemployment in Newcastle and the Hunter, where I am, of all places has also shot up. We have a mining and infrastructure boom going on here. I can’t figure it out but we have gone from around 4% u/e to 6% u/e.
    Unfortunately I think you are right with Queensland at the pointy end but when Newy also is getting hit I have to wonder what dark underlying currents are going on at the moment in our economy, …seems like we here at Macro and our readers are intune with it but not the MSM…we’re not that mad are we???

    • From what I have read and understand first comes falling property prices, then UE follows. This seems to be true of most places so I feel those UE figures are not unexpected.

      I think Qld will be first to hit the wall, but others will follow.

      What stuns me is these figures are coming from Qld. According to the Govenment, RE brokers and MSM this is one of the ‘Jewels in the crown’ resource rich states with tempting immigration to prop things up. Someone must be getting this stuff wrong. The figures don’t lie.

      God help the rest of us in deep south Oz I say. Give it a year or so I suspect Melbourne will follow…

  3. The real mystery is how did QLD go broke during a mining boom?
    What exactly did the QLD Treasury invest in that has dragged the economy under?
    Pesky derivatives or garden variety CDOs?

    • Na, wouldnt have anything to do with having an incompetent f*ck called Anna Bligh at the helm would it?

      Too many ego’s and vested interests in this day and age – we need a painful crash to cleanse us of all this. Not that it will last forever as human beings have a short memory.

  4. Having just lost my job, I went in to centerlink to try and get a stopgap/fallback claim in. The lady I spoke to remarked that they’ve just totally reformed their claims process to deal with a ‘massive influx of new claims.’

    Ominous?

  5. A former Architect at the firm I work for just called up today wanting to have a chat with our Director.

    I asked her how her job is going, the response being – “Thats the thing, im kinda in-between jobs at the moment”.

    Ominous? Definitely!

  6. “I have little doubt that Queensland is heading for a recession. I am happy to be convinced otherwise as I happen to live here, but I see absolutely no evidence to suggest that I am wrong.”

    No, no – this is impossible DE. Here in QLD we have lots of mining, just like they do in WA. With mining running so hard and fast it’s practically glowing white-hot , it’s completely impossible for QLD or WA to slip into recession.

    Oh wait……….

    My feeling is that the Australian economy will not rise or fall on the (small) mining sector – it will rise or fall on the housing sector.

    • Agreed.

      We all know construction and tradies is the biggest employer of males, and is highly reliant on housing investment – not mining.

      Of course, the women in the household can’t pick up any slack because their biggest employer is the retail sector – hardly glowing with business at the moment.

      There’s what, less than 200k people employed in resources?

  7. “again everyone is ignoring credit issuance as the major driving economic factor”

    Wonder how long it will take main stream economists to make the connection between private debt growth and our economic ‘boom’.

  8. Terrifying. Won’t take long for this sorta news to seriously spook RE investors and other buyers in the capitals.

    • Not sure of that Zed. Some will consider this a great time to buy: it fits into the “buy when there is blood on the streets” analogy.

      Stranger things have happened!

      • Rising prices in the face of rising u/e would truly be strange.

        Blood will be on the streets once this recession has run its course but its a little early for bargain hunters to jump in. Its just started in one state and a couple sectors of the economy (manufacturing, tourism). The govt wants to make severe budget cuts and we ALL know that that means –> higher u/e. 🙁

      • Blood on the streets would be indicated if the developers had of grabbed that offer of $66k with both hands. Hmm maybe not the developer might not but certainly the receiver 😉

  9. Australia has had the worlds highest housing prices, maybe they wont fall as much as the other western countries, whats the saying = the taller they are the less hard they fall? sigh

  10. So what is the real unemployment rate? 2hrs a week in Coles/Bunning/Woolies etc is not a job. I would guess than in GC SC etc that an even higher proprtion of ‘Job’s’ are of this nature than say in the big cities. How about 25%+ unemployment/underemployment? would that sound right? I think so, and this sector will not be confident in competing to bid up house/flat prices.
    I see the same in the outer SE suburbs in Melbourne where recently 200 people applied for a handfull of part time jobs at Bunnings some traveling 30kms for an inteview (friends sister who is desperate for work).