Resource, mining towns named top residential investment markets, but not without risk

Published:
16 Jan 2012
Author:
Emma Carroll
Source:
Property Australia Ezine

Regional markets linked to the mining and resources sector top hotspotting.com.au’s list of Australia’s leading real estate investment ‘hotspots’.

Terry Ryder, property analyst and founder of www.hotspotting.com.au, has released the January Ryder Report, which analyses the top performing markets of 2011 and 2012 forecasts.

“I believe we’re seeing long-term structural change in the world economy, which will see Australia emerge as the world’s major source of the resources for developing nations,” Ryder says.

“Western Australia, which achieved the highest-ever quarterly economic growth rate in Australia in the September Quarter, is leading the nation in this long-term future role as one of the world’s greatest resources nations.”

Ryder says while the benefits of this resources-driven growth are often enthralling for property investors, there are risks to be heeded especially in locations dependent on the outcomes of a single project. He says the increasing trend of fly-in, fly-out workers poses growing potential risks for those investing in mining town real estate.

Despite this, the performance and future prospects of property investment in mining towns is highlighted in the January Ryder Report:

Most remarkable property market – Port Hedland, Western Australia

“This continues to be the most extraordinary property market, with house prices rising an average 22 percent per year for the past 10 years and the median price now $1.04million … The median price rose 11 percent in 2011. Despite these ridiculously high prices, you can still get 10 percent yields because typical rents are above $1800 per week. There is no other market like this in Australia.”

Most under-rated market – Newcastle, New South Wales

“While it has a lingering image of smoke stacks and hard times, in reality Newcastle is a prosperous city with a pumping economy and a great lifestyle, which presents as a viable affordable alternative to Sydney. Most Newcastle suburbs recorded price growth in 2011 and some delivered double-digit growth.”

Queensland star performer of 2011 – Gladstone

“Gladstone is the leading boom town of Queensland and arguably Australia. Many of its suburbs delivered double-digit growth in median house prices in 2011 and big rental increases, as the first of the CSG-to-LNG projects started construction. There is more to come, with projects over $100billion targeted in Queensland’s industrial muscle town.”

Queensland rising star in 2012 – Bowen

“Bowen was approaching another growth phase, after a downturn in 2011, because of its important role in the Queensland coal industry. Its prospects were enhanced late in 2011 when the State Government announced a super-sizing of Abbot Point. With six new coal terminals to be built, it will be one of the biggest export facilities in the world.”

New South Wales star performer of 2011- The Hunter Valley

“The Hunter Valley has provided the strongest economy and most active real estate market in NSW in 2011. Singleton, Cessnock and Denman all delivered solid growth but the individual star was Branxton, which showed strong capital gains, no doubt helped by the construction of the $1.5million Hunter Expressway.”

New South Wales rising star in 2012 – Blacktown

“Blacktown will continue its steady emergence as an under-rated star of the Sydney market. First-home buyers are starting to return in numbers to the Blacktown LGA, which includes Seven Hills and Quakers Hill. It is also a population growth leader, has good transport links and is close to major jobs nodes.”

Victoria star performer of 2011 – Ballarat

“A strong regional centre within commuting distance of Melbourne, Ballarat had a strong year while much of Melbourne was struggling. A number of Ballarat suburbs recorded double-digit growth in median house prices. The city’s prospects are set to get stronger, with the Regional Rail Link, multiple wind farms and a new cancer centre coming up.”

Victoria rising star in 2012 – Melton

“Melton was a solid performer in 2011, against the general trend of the Melbourne market, and will continue to do well in 2012. It is the most affordable region of the city housing market, has good transport connections to central Melbourne and will be boosted by urban renewal developments.”

Western Australia star performer of 2011 – Port Hedland

Western Australia rising star in 2012 – Murdoch precinct

“This is a cluster of middle-priced suburbs around a major university-hospital precinct. The $2billion Fiona Stanley Hospital is also under construction and the State Government has released the nearby Murdoch Mix site for development. This precinct draws 25,000 doctors, nurses, teachers and students every day, creating strong housing demand.”

South Australia star performer of 2011 – Ceduna

“Ceduna is one of the most remote regional towns in the nation and sometimes that can be a positive. Its median house price rose 14 percent in 2011, with a growing resources economy adding to Ceduna’s traditional role as the service centre and export port for a vast region where agriculture and aquaculture are the key industries.”

South Australia rising star in 2012 – Whyalla

“Whyalla will step up in 2012 to assume its role as the Gladstone of South Australia. It’s the largest regional centre in the state, it’s affordable and it will play a key role in the $30 billion expansion of Olympic Dam. A new export port is being planned there, as well as a $1 billion rare earths processing plant.”

Northern Territory star performer of 2011 – Tennant Creek

“[Tennant Creek] is a small regional town but it has an importance beyond its size as it services a vast area of cattle properties, tourist attractions and mining sites. It has a long-term capital growth rate of 14 percent a year and showed big growth again in 2011, but is still affordable with a median house price of $220,000.”

Northern Territory rising star in 2012 – Darwin

“[Darwin] is set to recover in 2012, after a downturn in 2011, which followed a prolonged period of growth. The $30 billion Inpex project is almost certain to proceed and the decision to station 2500 US military personnel in Darwin will also boost market confidence. The oversupply of inner city apartments is the major issue likely to restrain growth.”

 

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