High Australian Dollar and low metal prices, a lethal combination

The recent news that the aluminium smelt is closing in Kurri Kurri, a town in the Hunter Region of NSW is very sad. 

My thoughts go out to the 350 or so workers who will be looking for new jobs or being forced to retire over the next three months as the business winds down.  The plant is blaming a lethal combination of prolonged record high trading of the Australian dollar and low metal prices. Ironically, the announcement coincides with the A$ slump to a six month low off the back of the situation in Europe but the slump has come too late to help this business.    

So how is this going to impact the local property market?   More importantly, will this impact the property market at all?  Of course it will, I hear them saying...but let’s take a closer look at this town and the underlying fundamentals.

Kurri is a small town with a population of just 14,000 at the last census.  However, its close proximity to much larger towns has made it a popular place to live for those who like the peacefulness of a small town.  It’s only 14kms away from Cessnock a major tourist and retail hub with a population of 46,000 and 13kms away from Maitland– the fastest growing inland town of NSW with a population of 63,000. 

Kurri is certainly not located in the ‘middle of nowhere’.

So the big question is how many of the 350 people who lost their jobs actually live in Kurri?  I’m going to ask the local property managers this question to establish the possible impact on the vacancy rates. But will they need to vacate at all?

Can people still continue to live in Kurri and work elsewhere?  The answer is yes.

The saving grace for Kurri and hopefully the people who lost their jobs, is the $1.7 billion dollar Hunter Expressway that is well under construction, currently employing about 800 staff directly on the project and more than 400 subcontractors.  

This massive, four lane freeway will have an interchange at Kurri.  This means that the expressway will cut driving time considerably from Kurri to the mining towns on New England Highway and also to Newcastle and the F3.  So people can still live in Kurri and work in the coal mines of Singleton – only an estimated 30 minute drive once the Hunter Expressway is completed or even Muswellbrook – a further 40 minutes or so.  A short 20 minute drive will see them arrive in Newcastle.  Kurri is a more affordable rental market than Singleton, Maitland and Newcastle.  Having the interchange makes Kurri a very central place to live.

Then there is the undersupply of workers in the Hunter resource industries.   A quick look on one recruitment website saw that there were 1,118 jobs available right now in the Hunter .  There has been an acute skills shortage for years with many businesses complaining that as soon as they train up an apprentice they are lured into the mines by well-paid jobs.  The Hunter Valley Research Foundation has reported that the region’s workforce grew by more than 8000 in the March quarter.

The Hunter is a diverse area with thriving industries including tourism, agriculture, manufacturing, coal and mining, power generation and wine making. When one door closes, another door opens so here’s to a bright future for the people of Kurri.