BY MICHAEL YARDNEY

Earlier this year, the RBA left interest rates on hold because they were expecting the mining boom to stimulate our economy. They were worried this may lead to inflation and thought they’d have to balance this stimulus out with higher rates.

However we’re in the middle of the mining boom, billions of dollars are flowing in, mining companies are making huge profits, a small group of skilled labourers are making massive wages, but in general the benefits haven’t trickled down into the economy.

If you think about it, we’ve got a boom and doom economy – while the resources sector is booming, many other sectors of our economy are languishing.

What will lower rates mean for our property markets?

The banks are not going to pass on full rate cuts, but to put things into perspective, each 0.5 per cent drop in interest rates slices about $120 off the monthly cost of an average mortgage. This means more money in our pockets for those on variable interest rates.

Ultimately lower interest rates will be positive for our property markets because it will boost confidence, however it may take some time.

In the past, once rates started falling – and especially if there was a succession of interest rate cuts – property markets would pick up. Established home sales would improve, new housing starts picked up and property values started to increase. But over the last few years the connection between cheaper money and improving real estate markets has been broken.

Why aren’t lower interest rates boosting the market?

While the property fundamentals are improving, confidence is holding back homeowners and property investors. This seems to be slowly improving and falling interest rates will only help.

What’s dampening investor confidence?

It’s a combination of three things:

• Overseas economic issues

• Local political issues

• The mixed messages we’re receiving about our local property market.

Just open up the papers and you’ll see how much confusion there is about what’s happening to the property market. Some say it’s on the rebound, others say there’s worse to come and yet others say the markets are just flat.

More importantly it’s the global economic issues that are affecting the way the average Australian is thinking about property.

Remember we tend to think like investors, but ordinary Australians – mums and dads who are buying and selling their homes – drive our property markets. They’re worrying about:

• What if another financial meltdown occurred overseas? How would that affect me?

• What if the China juggernaut stalls? What will that do to our resources boom and my job?

Right now, our property fundamentals are good: our economy is stable, unemployment is pretty much under control and interest rates are coming down.

In the past low interest rates, strong employment and a solid local economy would have been fundamental drivers that buoyed our property markets, but today the instant news cycle of what’s happening overseas is making outside economic matters far more relevant.

What does the property market need to move forward?

I think we’ll need more than one or two interest rate cuts. We really need some positive news out of the United States and Europe and for the news to remain positive for a while.

Are our markets still falling?

The property research houses have released a slew of contradictory property price data over the past week and they all have different interpretations of what’s happening in the property markets. Similarly, when you ask them what’s in store for our property markets their opinions vary. It’s no wonder property investors are confused.

Why the contradictory results?

I’ve found we always get mixed messages as the property market moves form one stage of the cycle to the next. It seems that we’ve moved out of the downturn stage of the property cycle and are now entering the stabilisation phase of the property cycle when buyers slowly return.

Let’s look at some of the results…

Over the past week the Australian Bureau of Statistics, Residex, RP Data-Rismark and Australian Property Monitors reported their results.

SQM Research tabulated these results as follows:

Of course to make things even more confusing, each state is made up of various property markets, and each is at a different stage of its own cycle.

So what should a property investor do?

With interest rates falling, market confidence returning and the property cycle moving on, it might be a good time to get set for the next stage of the cycle.

It’s a great time to review your wealth creation plans, learn from history and take appropriate action. For some people, buying a well-located property and then letting the magic of time and compounding grow your wealth could be the right answer.

Michael Yardney is the director of Metropole Property Investment Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Investment Update blog

BY MICHAEL MATUSIK

The grant was promoted as a panacea that would lift demand and help get more new development under way. Too many believed that would be the case, with some – even in the development industry – calling for the boost to be extended. And it was.

The then government set aside $140 million to fund the boost. That’s help for up to 14,000 housing starts across the state per $10,000 grant. The boost finished at the end of April, and unfortunately, along the way, housing starts in Queensland dropped.

In fact, the latest Australian Bureau of Statistics (ABS) building approval figures show Queensland dwelling starts totalled 26,515 for the year ending March, compared to 29,210 new commencements for the 12 months to March 2011. So there were 10 per cent fewer houses built, despite the boost.

While there was a flurry of applications as the scheme drew to a close, the number of actual starts was disappointing to say the least. As at April 19 – the latest figures we can get – only 8929 applications had been received and 6367 approved. That’s $64 million worth of grants out of the $140 million allocated.

So what can be done? Dropping interest rates isn’t the answer. I wouldn’t be surprised if Christmas crackers featured a new lame joke this year. Q: “How many interest rate drops does it take to stimulate the housing market?” A: “More than you have available.” Okay I won’t give up my day job!

It will also take much more than dropping the sustainability declaration form and reinstating the stamp duty rebate to get things moving again. So what else can be done in the meantime?

The first bit of legislation that should be ripped up is the Property Agents and Motor Dealers Act (PAMDA). The whole concept of PAMDA was flawed from the start. Twelve years have now passed since it was introduced and it needs immediate repeal. In today’s digital world it’s an archaic piece of legislation.

PAMDA and especially Form 27c, which requires all real estate agents in Queensland to list how much they charge for commissions, are deterrents to investment in Queensland. If the government really wants to regulate real estate and development then all parties involved in the property industry – architects, planners, builders, lawyers, quantity surveyors etc. – should be subject to disclosing their costs.

The second thing that needs to be done is reinstating government subsidies to local government for municipal infrastructure. Queensland’s mining industry started 40-odd years ago and isn’t a recent occurrence. The wealth created from such activity was once redistributed via infrastructure subsidies. This made residential development relatively cheap – well, cheaper than interstate.

This cheaper new housing encouraged interstate migration to Queensland, created employment and wealth, and was all based on subsidised municipal infrastructure.

In order to close a budget gap, previous governments stopped these subsidies. This made the price of new development land very expensive as it bore the full cost of infrastructure associated with it (and often beyond!). Council charges on land rose dramatically too.

The third thing that needs to happen is to cut the waste. The LNP needs to remove ‘zombie projects’. A commissioned audit needs to be done, but in essence many of the things that were pledged in the lead up to past elections need to be canned.

The zombie list should include regional plans – state-based planning operatives and many of Queensland’s building/planning laws. Why, for example, can a granny flat in New South Wales be rented out to anyone, but in Queensland it must be occupied by a direct dependant? I could create a list as long as your arm when it comes to irrelevant Queensland property-related legislation.

So in short, Can Do needs to change to Undo. In order to get things going Premier Newman needs to undo quite a lot of things.

Michael Matusik heads independent property advisory Matusik Property Insights and has helped over 550 new residential developments come to fruition. Michael authors the free Matusik Missive.

BY SHANNON MOLLOY

The well-rounded and charming fellow whose words you read today was shaped in Queensland towns like Yeppoon, Rockhampton and Mackay. They were typically regional – relatively small, a bit out of the way and easy to forget.

Southern folk didn’t exactly plan a getaway to Rocky, despite the dozens of bull statues around town. Yeppoon was the epitome of quaint – if someone new moved to the area, we knew about it. The excitement was rivaled only by the arrival of a new fast food outlet. Or a set of traffic lights. Pandemonium. And Mackay? Cane – lots and lots of cane.

When it comes to real estate, there was no such thing as turning a quick buck. These locations were hardly the focus of big-time investors. You bought a property to live in and never expected to flog it off a year or two later for a profit.

Oh, how things have changed. The flow-on effect of the resources boom is seeing these towns rise to the top of the “hot” list. Mackay is close enough to major mining projects, Rocky is now home to new service industries and Yeppoon is where the fly-in, fly-out workers want to live.

Who knew? If I had, I might’ve snapped up a couple of those houses on massive blocks that went for $100,000 a few years back.

Some spots you can pick, like inner-city suburbs undergoing urban renewal or small towns with new booming industry, while others floor you. Gladstone – most people saw that coming, thanks to an explosion of liquefied natural gas (LNG) projects and thousands of new workers to house.

Then there are accidental hotspots like Hervey Bay and Bundaberg. It seems a flood of former Gladstone locals, escaping the sky high rents and rising cost of living, are staging an exodus. The rush is seeing supply tighten and prices are starting to rise.

Every investor wants to get in before the rise begins and get out at the peak. In most cases, the writing could be on the wall – you just need to know what to look for.

Helen Collier-Kogtevs of Real Wealth Australia says it takes some research to pick which spots are on the cusp of being hot. If you’re chasing the next big thing, here’s what you should keep watch for:

• Infrastructure projects – big ticket investments that provide new jobs and increase the local population, therefore growing the demand for housing.

• Civic projects – local councils with a big agenda, like roads, bridges and public transport projects. With a bit of research, you should be able to identify which councils like building things.

• Neighbours – take a look at what’s over the fence. If there’s a place that’s already hot, could it have a ripple effect on surrounding areas?

Have you successfully picked a hotspot before it heated up? Are there boom spots that took you by surprise?

Shannon Molloy is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au

BY MICHAEL YARDNEY

The following table from RP Data shows that over the last six years capital city home values have increased by 34.5 per cent, compared to rental rates that increased by 46.8 per cent.

Nationally, rents have grown by about five per cent in the last year, with vacancy rates generally sitting below two per cent due to strong demand and limited supply.

The rental markets are fragmented

Currently the Sydney, Perth and Canberra markets are particularly strong due to a low level on construction of new accommodation. This is expected to place upward pressure on rentals.

On the other hand, while rents are still rising in Melbourne, Adelaide, Hobart and Darwin, the markets are not as tight.

According to Gerard Haines, department head of Metropole Property Management Sydney, his team is experiencing strong demand from tenants, particularly in the inner-west where vacancy rates are less than one per cent.

“This region is gentrifying and there is strong demand from a wide demographic of tenants who want to live close to the CBD in these up and coming lifestyle suburbs,” Haines says.

“There’s also strong demand and restricted supply in Sydney’s eastern suburbs, and rents are likely to keep rising in those areas.”

Peter O’Brien, head of Metropole Property Management in Melbourne, tells a different story.

“While the overall vacancy rate in Melbourne as reported by the REIV is around 2.4 per cent, and there is strong demand from tenants for well located properties in Melbourne’s inner and middle ring suburbs, there are some pockets of Melbourne where the vacancy rate is double that and tenants have the upper hand,” he says.

SQM Research reports a vacancy rate of around 8 per cent in some western Melbourne suburbs like Point Cook, Tarneit and Melton. The Melbourne CBD is also suffering with an oversupply and the situation is likely to get worse with over an estimated 5000 to 7000 apartments coming onto the market in 2013.

To make matters worse, according to property consultancy Charter Keck Cramer, there are 17,860 apartments under construction in Melbourne with another 16,850 apartments still being marketed across the city.

Rental growth is slowing

The latest figures from Australian Property Monitors (APM) show national weekly rents for houses remained steady for the first 3 months of the year and rents for units fell 1.1 per cent.

While asking rents dropped in Melbourne and Adelaide, some markets are still performing strongly, according to APM.

Year on year rent growth was highest in Darwin (up 11.8 per cent); Perth (up 3.9 per cent), Brisbane (up 2.7 per cent) and Sydney (up two per cent).

The bottom line

We are at that stage of the property cycle when capital growth is slower and rental growth is strong. But the divergent performance of our rental markets just goes to show that buying the right property in the right location is, as it always has been, the key to successful investing.

For your investment to perform well in the long term you need to own the type of property that will be in continuous strong demand by a wide range of owner occupiers, who will push up prices in the area, and tenants, who will pay you rent.

Michael Yardney is the director of Metropole Property Investment Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Investment Update blog

BY SHANNON MOLLOY

Spring cleaning and a bit of poking and prodding in the dentist’s chair sit at very different spots on the scale of importance, but neither (if you’re lucky) will cost you tens of thousands of dollars a year. So, why would a mortgage check up be just as easy to forget?

Life. It’s easy to get distracted when you’re juggling the daily grind of family, work and some small scrap of a social life or down time. But at the end of the day, mortgages are not set and forget arrangements – you could be wasting a major chunk of cash. Isn’t that motivation enough to make a few calls?

So, take out your diaries. It’s time to book in that regular assessment, and actually stick to it.

Belinda Williamson from independent brokerage Mortgage Choice says investors should check how their mortgages stack up at least once a year.

“Keep in mind that the market changes constantly,” Williamson says. “It’s always a clever strategy to keep a close eye on new deals that you might benefit from. An analysis of our recent loan data shows we’ve saved our refinancing customers $10,000 each on average over five years.”

Most brokers won’t charge you to take a look at your borrowing situation and advise if there’s money to be saved. A quick Google search on “mortgage refinance” will get you started. A competing bank might be keen for your business, and willing to put some enticing offers on the table. Similarly, playing hardball with your current lender and hinting at a possible end to your relationship could pay dividends.

I took a look at my personal situation recently. It’s been two years since I last altered my borrowing arrangements, and I didn’t think there would be much room for savings.

I was wrong. Within a few minutes, it was clear I could save more than $500 a month – that’s $6000 a year towards a new investment, paying down debt or a few weeks in Europe. Best of all, the paperwork consisted of three pages of terms and conditions and one signature. Done.

Williamson says it’s not just about scoring a lower interest rate. Investors looking at refinancing should also think about the type of loan they require. Here are some things to consider:
• What suits you best – interest only repayments, or principal and interest?
• Should you fix all or part of the loan? Is variable the way to go?
• What features do you require? Do you need an offset account or redraw facility?

“Apply for a loan that suits your current needs and lifestyle. With new products entering the increasingly competitive mortgage market, you can always change your loan down the track,” she says.

And while you’re at, make an appointment to see your dentist.

Shannon Molloy is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au

BY GAVIN HEGNEY

The state’s northwest has many towns that are tied to a particular company. I always like multiple resource towns and never suggest a single company town, one where a single resource us mined by one company only.

I also look at the upside potential versus the downside risk of prices in a mining town. Today I find the cash flow returns in these towns are mostly above interest rates, hence they’re cash flow positive after borrowings, which seems to be what draws investors to them. You have to wonder, what’s the chance of the property for $1.5 million becoming $3 million versus the risk of it dropping to $750,000?

Towns like Karratha seem more secure due to the mix of commodities and companies, yet the supply of property in that town is set to increase by around one-third. This is expected to “normalise” prices.

I probably don’t sound that keen on investing in the northwest, even though Port Hedland has been a star performer over the past year or so. Even still, more land is due for release there and it has always been restricted supply (relative to demand) that has caused prices to rise, along with higher than average wages and capacity to pay. The supply of land increasing should be watched closely in any investment town, especially in tightly held mining towns.

There are other towns that have interesting opportunities.

Towns with prospects include Derby for its detention facilities, Kununurra for irrigation and food, and Exmouth and Broome for the gas opportunities. Both Broome and Exmouth are tourism/lifestyle focus and non-resource driven, yet are likely to be adequately supplied with new land.

To sum up, why not invest in a capital city or in commercial property within a capital city if it’s yield you are chasing. Many capital cities appear at a low point in the cycle so perhaps the risks might be less. This is the option I prefer.

The second question I’m being asked with regularity at the moment is with regard to the southwest of Western Australia, particularly the Dunsborough and Margaret River region.

There seem to be a lot of interested parties with money waiting to buy into this market when the bottom of this market cycle becomes apparent. This says to me that when this situation occurs, there will be increased activity due to pent up demand and prices may jump initially. Buyers should get in early or wait it out for the first winter after the initial jump that will probably occur in the prime holiday season of December to March.

Most people base their hopes for the future on feeling good and avoiding loss. That’s the tricky part – it’s not what the numbers are saying as much today, but how this will make buyers and sellers feel. It seems emotions have been down for long enough and sellers have been over-anxious. Fear of buying will turn to fear of missing out at some stage.

Can people be more fearful than they are today and have been over the last couple of years? Perhaps it really is like a horror movie, when you think the scariest part is over, just as the next twist comes.

All I know is that when markets are down, they turn eventually. Buy in gloom, sell in boom has been proved to be right countless times, and it will again. Good luck and good timing will always reap good rewards.

This information is of a general nature only and does not constitute professional advice. You must seek professional advice in relation to your particular circumstances before acting.

Gavin Hegney is the executive chairman of Hegney Property Group in Perth www.hegney.com.au

BY MICHAEL YARDNEY

Melbourne accounted for 80 per cent of Victoria’s growth in 2010-11. While regional cities and the coast grew solidly, population losses continued in inland western Victoria.

The Australian Bureau of Statistics estimates Melbourne had 4,137,432 residents in the middle of 2011 and had grown by almost 20 per cent in 10 years. Most of these new residents set up home on the city’s fringes, as homebuyers moved out in search of affordable housing.

Fact is, for the second year in a row, Wyndham in Melbourne’s west was Australia’s fastest-growing municipality, adding 12,230 people. This is more than Adelaide or the Gold Coast – and almost 10 times as many as the Pilbara.

Before you get too excited, this doesn’t translate to a good area for property investment. Just because there is physical growth in an area and new population growth, it doesn’t mean these are good places to invest. In fact, they generally aren’t.

There’s currently an oversupply of new properties in these suburbs, vacancy rates are high, there isn’t a strong demand from tenants and there is little scarcity in new estates. This means there is often lower capital growth and rental growth. Not a good recipe for investment.

Growth is slowing

Growth in Victoria has slowed sharply since 2009, as the higher dollar and new visa rules have shrunk the number of foreign students coming here. In 2008-09, the city grew by 96,000 people, or 2.5 per cent, compared with 67,000 or 1.6 per cent last year.

The state’s growth has shrunk from 120,000 people, or 1.5 per cent in 2010-11. Even so, it outgrew New South Wales (1.1 per cent to 82,200) and Queensland (1.7 per cent to 74,800).

What about growth in the rest of Australia?

In the past decade, Sydney grew by just 499,073, or 12 per cent. For every three new residents in Sydney, Melbourne gained four. But the gap narrowed last year, and with the economic trends shifting against Melbourne, Sydney could well outgrow it in this financial year.

Perth was the standout of the big cities. It again outgrew Brisbane, adding 42,750 people, up 2.5 per cent, to end the financial year with a population just short of 1.75 million.

The centre of Australia’s economic growth, the Pilbara, grew by just 1,300 people, or 2.7 per cent, despite the billions of dollars of construction work taking place there. It still has only 49,900 people living in an area twice the size of Victoria, as its workers commute from other cities, other states and even other countries.

If you want to invest in mining towns, I suggest you invest in the two biggest mining towns in Australia – Brisbane and Perth.

Michael Yardney is the director of Metropole Property Investment Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Investment Update blog

BY SHANNON MOLLOY

Against all conventional investment wisdom, I toyed with the idea of selling one of my properties last year. I knew it wasn’t the best time, but I was curious so I listed the apartment anyway to see what sort of response I’d get. It wasn’t great. The sole offer I received was well below expectations – daylight robbery, in my obviously unbiased opinion.

The exercise illustrated the extent of the power shift that’s taken place in recent times. It was clear to me that, generally speaking, the places selling were being snapped up with a significant discount, and after an extended time on the market.

According to RP Data, average house prices fell in every capital city over the past 12 months – 6.1 per cent in Brisbane, 5.4 per cent in Melbourne and 3.2 per cent in Sydney. In those three markets, the average time it takes to sell a property is now at 129, 108 and 90 days respectively.

Given how long it’s taking for vendors to offload, and the reduction in average prices, it seems now is the time to buy.

Smart investors are taking their time, doing their homework, keeping their options open, examining the market very closely to sniff out good deals, and – most evidently – driving a hard bargain.

Where to buy obviously depends on factors within each individual market. Sniffing out the next hotspot before it starts to boil isn’t an exact science, but there are points to look out for. Helen Collier-Kogtevs of Real Wealth Australia says locations near major infrastructure projects are worth keeping an eye on.

“I like to research local councils to identify what projects are on the cards or have commenced,” she says. “A proactive council that’s family friendly and supports development helps to protect my investment. (Infrastructure projects) provide new jobs as well as increase population and demand for housing.”

I’ve been considering my own options and the possibility of buying another investment property while the going is good. Before I make a move, I’ve put together an investment checklist to assess each opportunity.

What’s my priority?

Am I looking for something with good cash flow prospects? The location should have strong demand for rentals and a relatively low supply of quality stock. It should also have drivers to be an ongoing rental hotspot, like nearby industry and employment hubs, desirability, educational institutions and so on. That way, it’ll be more likely to achieve rent increases and minimal gaps between tenants.

If a future capital gain is my focus, the areas to explore should have the right attributes for growth. Look for a suburb that’s well serviced by public transport, has good schools nearby, and is home to lifestyle amenities like restaurants, cafés, retail and parks. Consider properties that best meet future buyers’ expectations – a small unit in a mostly family oriented area might be a poor choice.

What’s my strategy?

Once I’ve figured out the priority, work out a strategy to back it up. For a cash flow property, should I consider some minor improvements to boost the rental price? For a place with capital gain prospects, what tools will I use to monitor its performance against wider market sentiment? For both options, what contingency do I have in place if things don’t go to plan?

What’s on the cards?

Are there plans for major infrastructure investment? Is there a new development going in that could improve the area? Does the local council have plans to beautify particular areas? Do any of the houses on ugly duckling streets look to be undergoing renovation?

Which sellers are most desperate?

Watch the market regularly and keep a log of properties that haven’t shifted in a while. If the seller is persisting, they could be especially keen to offload. There’s a fine line between realistic and ruthless – find it, and make an offer.

They could be open to anything, depending on how long they’ve been trying.

Does it stack up?

As always, investment opportunities should be based on personal circumstances. It’s important to assess each scenario. What can I realistically afford? Exactly how long is my long-term focus? What level of risk can I manage?

Shannon Molloy is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au

BY JAMIE MOORE

Accessing this newly created equity means they could fund a deposit and costs on their first investment purchase. With this strategy, the client also gets to take advantage of government bonuses like the First Home Owners Grant (FHOG) and stamp duty concessions.

As an example, take Mike and Kate who recently purchased a $400,000 property in the Australian Capital Territory. They were able to take advantage of the $7000 FHOG and concessionary stamp duty (which was only $5000). Using a 10 per cent deposit, they took out a loan of $360,000.

After a couple of months of carrying out cosmetic renovations on their first home, which included new paint and flooring, new kitchen cupboard doors and sink, light fittings, window furnishings and landscaping, their property was revalued at $450,000.

They were then able to increase their loan back up to 90 per cent of the new value and access $45,000 in equity. This equity was used as a 10 per cent deposit (plus costs) on their first investment – a property across the border in Queanbeyan.

This strategy isn’t for everyone. Some people may not be in a position to afford the holding costs on their own home and an investment property. Others may prefer to rent in a particular location they enjoy or live at home while investing.

Either way – having your cake and eating it too, or in this case buying a first home and an investment property, is a possibility.

Jamie Moore is the owner of Pass Go Home Loans, a mortgage broker firm specialising in sourcing and correctly structuring finances for property investors across the country. www.passgo.com.au

This information is of a general nature only and does not constitute professional advice. You must seek professional advice in relation to your particular circumstances before acting.

BY MICHAEL YARDNEY

The recent long-term forecast update by BIS Shrapnel should give us some reassurance, as it confirms the rapid expansion of minerals-related investment that’s providing a significant boost to the Australian economy.

“These projects are locked in, and will occur irrespective of events in Europe,” the report says.

It says the ongoing strong growth in China and the rest of emerging Asia will continue to support minerals prices and our economy more generally.

“The engineering construction industry is benefiting most from this activity, but sections of other industries are as well, including some areas of manufacturing, transport, wholesale trade, accommodation, and professional and business services,” according to Tim Hampton, BIS Shrapnel’s senior economist.

What about the Australian dollar? According to the report, record high commodity prices coupled with the poor state of many economies abroad has seen our dollar rise to post-float highs in nominal terms and near record levels in real terms.

Hampton says the tourism and international education industries, and many areas of manufacturing, have suffered as the high dollar has eroded competitiveness. At the same time, weak western economies are holding back foreign demand for goods and services.

“Other industries are also suffering due to the high Australian dollar, including retail trade as Australian households spend more of their money offshore.

Many firms in professional and business services are also under pressure because the high Australian dollar is encouraging firms to take these activities offshore,” Hampton says.

The report says business investment outside the mining industry has been weak as a result of businesses de-leveraging and maintaining a cost-containment/cash-preservation focus since the global financial crisis.

It says negative news coming out of Europe and the United States has weighed heavily on consumer and business confidence.

The report also says private dwelling and non-dwelling building activity has been low and this under investment creates pent up demand. It says this will drive activity from late 2012, provided funding is available and consumer and business confidence does not take another hit.

Here’s what I think:

It’s not really a resources boom that we’re experiencing. A boom suggests a run that will end in the short term.

We’re really entering a new stage for the Australian economy – a significant long-term structural change. One that could see us become the major source of resources to the developing Asian region and the premier LNG supplier to the world.

This will lead to massive infrastructure spending, population growth, wealth for the nation and wages growth.

What about property? Sure, some mining towns will boom, but if you’ve been following my blogs you’ll know I would rather feed off the mining boom by investing in the capital cities that will benefit from this boom, rather than investing in the mining towns directly.

Rather than invest in regional mining towns I’d be investing in our two biggest mining towns – Brisbane and Perth.

This is where many mining companies will have their offices, employing thousands of people who will earn good wages and rent and buy accommodation. They will also spend their wages in stores and boost the local economy. In my opinion, the diverse demographics and economies of the major capital cities will offer better investment prospects than the mining towns.

Michael Yardney is the director of Metropole Property Investment Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Investment Update blog