Townsville property prices at risk if nickel refinery shuts down

The North Queensland capital has already worn the brunt of the slowdown in the mining sector with property prices falling 7 per cent in the past five years, including 2.7 per cent in the past 12 months, according to CoreLogic RP Data.

There are fears if Queensland Nickel’s Yabulu refinery, which is the largest private sector employer in the city, is put into liquidation, property values will fall further.

The refinery employs almost 800 workers but last week Mr Palmer’s company said it would shed 267 jobs.

The future of the remaining 500 jobs at the refinery remains unclear after Queensland Nickel announced on Monday that the company would be put into voluntary administration. The refinery also supports 2600 indirect jobs in Townsville.

CoreLogic RP Data’s research head Tim Lawless said a big loss of jobs in the regional city, which has a population of about 171,000, would be a negative for housing.

“I would not be surprised if we see ongoing softness in Townsville’s housing market especially when sales volumes are still only half of what they were before the financial crisis,” Mr Lawless said.

“It is clearly a negative for housing because when we see jobs lost, there is a reluctance to invest in high-priced assets such as houses.”

He noted that the bulk of new jobs created in Australia were in NSW and Victoria where houses prices have outgrown the rest of the country.

The median price of a home in Townsville in October last year was about $355,000, with units at $280,000. Rents have also been hit in the past year, down 2.8 per cent for houses and 6.3 per cent for units.

Townsville mayor Jenny Hill has warned of dire consequences for Townsville if the refinery was closed, given it contributed about $1.3 billion into the local economy.

“We can’t afford to lose these jobs. There are more risks if we close the plant than keep it open,” Ms Hill said.

She said she hoped the voluntary administrators recommended a restructuring of the company rather than a closure.

Ms Hill said property prices in Townsville had been affected but not as much as in other mining services cities. The city was also hit hard by the collapse of Storm Financial in 2009.

Queensland Premier Annastacia Palaszczuk is well aware of the economic and political fallout from the potential closure of the Yabulu refinery.

She has already announced a fast-tracking of $60 million in capital works programs for Townsville and more projects are expected in the city where unemployment reached more than 10 per cent in 2014.