Those who missed out on Gladstone’s boom in 2011 are probably wishing they’d bitten the bullet and dived into the market sooner rather than later. If you were like me, you probably watched prices increase by around $5000 per week, every week, for the entire year.
BY LAUREN CROSS
I kept thinking to myself ‘it’s a no brainer to snap something up in Gladstone’, but instead I went with an emotional purchase and bought a house (my principal place of residence) in Brisbane.
It’s now 2012 and while I don’t think it’s too late to buy in Gladstone, it’s now probably too expensive for my budget. It’s also already seen significant growth and I’d prefer to try and buy something where the market is bottoming out or starting to climb, rather than nearing its peak. However, everyone else seems to be cashing in on the mining boom – why don’t my fiancé and I?
I’m determined not to miss out on the next mining boom area but I’d still prefer to buy somewhere that’s only just starting to rise. That’s why I’m now looking at South Australia, which means I’d probably be buying near the bottom of the market in any given area, if and when the Olympic Dam expansion occurs. The project would create one of the world’s largest open-cut pit mines and be an economic driver for SA over the next 40 years.
The closest town to Olympic Dam is Roxby Downs, so logic tells me Roxby Downs will almost definitely take off. I recently saw a property I liked and even made an offer.
However, the ongoing subject of ‘high risk’ made me chicken out in the end. I was told by a couple of property experts, friends and family that a mining town was definitely too high a risk to take, especially for someone with my finances and experiences (meaning I still have a long way to go and a lot to learn). Instead, I was told that I should invest in ‘safer’ options, like Sydney, Adelaide or Perth. Of course, part of me knows you can’t really go wrong in a capital city, but try telling that to the investors who’ve made more equity than they ever dreamed of in places like Karratha, Moranbah or even Gladstone. It’s hard to see the ‘high risk’ when the mining boom has given so many people ‘high reward’, not to mention ‘high yield’.
Logic tells me Roxby Downs will probably be the next place to go (although there are plans for a BHP camp that would accommodate up to 10,000 people close to Roxby Downs on Andamooka Road, which had me slightly concerned about the impact on capital growth).
The next best bet would be to turn to Whyalla, Port Augusta or places that could possibly benefit from the Olympic Dam expansion in some way and even though I like Adelaide, the rental returns just aren’t very attractive at the moment. That’s also the problem with Sydney. I’d love to buy a little apartment somewhere around the Lower North Shore in my absolute favourite suburb of Mosman, but it’s just too hard to be so highly negatively geared at the moment. It’s also quite difficult to argue capital cities are better than regional towns when places like Gladstone and Mackay have outperformed Brisbane in recent years.
What do you think? Are mining towns really that risky? Is it better to invest in a capital city, or is now the time to be getting on board the mining boom? In fact, is this just the start of the mining boom and will regional areas outperform capital cities in the near future?
Lauren Cross is a journalist/subeditor of Australian Property Investor magazine, www.apimagazine.com.au