QLD to defy ‘mini credit crunch’
QUEENSLAND is set to defy a "mini-credit crunch" that will put more pressure on house prices in Sydney and Melbourne, according to a prominent economic forecaster.
The latest business outlook from Deloitte Access Economics paints a bright future for the sunshine state, with eye-watering house prices south of the border sending more economic refugees north.
But they are not just coming for the cheaper homes and sunny weather.
Deloitte believes the worst of the mining construction downturn is now behind Queensland and improving economic conditions have boosted its appeal as a place to live.
The report states most economic indicators have picked up since the crash in resource investment in 2015 and 2016, with jobs growth improving, gas exports surging and a boost in tourist numbers.
Deloitte believes that combination will result in a continuing improvement in Queensland's economic performance in the next few years.
"All that suggests better times ahead for housing construction in Queensland," the report said.
"Housing approvals have turned a corner and building commencements look to have bottomed out.
"While the overall pace of housing construction will still likely subtract from the state's growth over the next year, it will likely start adding to growth from then on as strong population growth soaks up the current excess supply."
Deloitte is more pessimistic when it comes to Sydney and Melbourne, suggesting the increasingly higher cost and lower availability of credit that are hurting housing markets in the two cities will generate a "mini-credit crunch".
"Lending is down, it's amid its longest dry spell since the global financial crisis, and investor loans have dropped to a six-year low," the report said.
"That says housing price falls - now infecting Melbourne - will get worse before they get better."
The scales will tip in favour of Queensland, which is back to being the number one destination for net interstate migrants - stealing Victoria's title back in late 2016.
Most of the jobs growth has been in government related industry sectors such as public administration, health care and education.
The number of short term tourism arrivals continues to grow and tourism occupancy rates have increased to their highest level since 2013.
These sectors are also contributing to the better outlook for business investment, according to the report.
"The slowdown in resource investment in recent years took a toll on state growth, but that phase is now in the rear view mirror, and commercial building approvals and capex expectations are up," the report said.
Deloitte said the outlook for engineering construction in Queensland was looking better than it had for some time, with the state government announcing an infrastructure pipeline of almost $46 billion over the next four years.
"Rather than wallowing in cash from a strong property market and asset privatisations as NSW and Victoria are, the government is relying more heavily on raising new tax revenue and increasing debt to fund this infrastructure," the report said.
Current public infrastructure spending continues to be led by the $5.4 billion Cross River Rail, while the $22 billion Adani Carmichael coal project leads the pipeline of planned works.