We are walking into a perfect storm. Port Douglas’s housing crisis

Tourist numbers are rebounding, yet businesses can’t get staff, as staff find a place to live. Why?

Mary Banfield

Journalist

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For sale sign Photo: Ray White Port Douglas
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We are walking into a perfect storm. Businesses are closing their doors as they can’t get staff, and staff can’t find a home, while builders are reluctant to build with rising interest rates and inflation.

So disastrous are market conditions that workers are leaving Port Douglas, businesses are cutting opening hours and tourists can struggle to get dinner.

“We have a unique set of circumstances in Port Douglas. Businesses rely on seasonal workers, and backpackers are keen to live here,” Craig Watson, Peninsula Hotel said. “With tourism rebounding, Port Douglas should be booming.”

That’s not happening. “We are being crippled simply as workers can’t find anywhere to live”.

Who makes Port Douglas home?

Port Douglas has a population of 5462 people. Yet our small country town catered for 707,000 visitors in 2021.

From Port Douglas to Craiglie there are 2479 private dwellings with 21% unoccupied (ABS)

“Over summer Port Douglas is almost a ghost town. It’s during winter the place comes alive. We have an influx of holidaymakers and backpackers to staff their facilities,” Craig said.

The government requires backpackers to live in a regional area for 88 days for a visa extension. “They can come to Port Douglas, how attractive is that? Trouble is, we have nowhere to house them. It’s a tragedy.”

It’s a hot, hot property market

Port Douglas properties have risen in value reflecting trends across Australia. “We have a shortage of supply, so inevitably prices will increase. An average 2-bedroom apartment would have sold for around $200,000 in 2020 now sells for between $300,000-$400,000.” Mark Flinn, Ray White Port Douglas said.

“If an apartment costs an extra 30% to purchase, investors expect higher rental yields, which they are realising now.”

Only 11 properties were advertised for lease in Port Douglas last month (realestate.com.au). It’s a landlord’s market.

Tenants have reported extraordinary increases. “I was a long-term renter in PD but the resort doubled my rent when the lease came up,” David Armstrong wrote on Newsport’s Facebook Page.

The impact on renters is devastating. In 30 months, Lee has been forced to move five times. Three properties were sold, he was evicted to make way for an Airbnb and then his rent increased by 20%. He’s now considering leaving Port Douglas.

Is Airbnb a factor?

“This is not just a problem locally; it is nationwide. Properties converting to Airbnb have exacerbated the housing shortage,” Cameron Walton, Deck Catering said

Between Port Douglas and Craiglie, 710 apartments and hotel rooms were listed on Airbnb, and 28 private rooms.

“There’s no doubt that Airbnb has seen a transfer away from affordable long-term accommodation,” Craig said. “That is only part of the story”.

What’s stopping new accommodation?

Port Douglas is a victim of a perfect storm that’s emerging post-Covid.

Tourism has bounced back, unemployment levels are low at 3.5%. Port Douglas should be in the middle of an economic boom.

“I’ve never seen anything like this in my 30 years of working in the building industry,” Sarah Mort, MiHaven said.

“We know this should be an opportunity, but builders are facing unusual circumstances. The cost of materials have shot up by 40%, we have interest rates on the rise, and no one is sure of where the economy will land.”

MiHaven has been in discussions with investors to build what’s needed in Port Douglas, low-cost accommodation offering around 12 new apartments. Yet given the financial uncertainty, only with support from the government could the project proceed

State Government stamp duty discounts have also been raised and are causing difficulties for people to offer accommodation to tenants.

According to the rules you are ineligible for a discount if you rent out part or all of the property.

“If a property is sold a tenant must be evicted within six months or the discount must be repaid,” Mark said.

Ken would have enjoyed leasing out his spare room but in fear of losing his discount, $7000, on stamp duty, the room is empty.

Next week: The impact on business and tourism.


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