Property Report – February 2011
Planning turns to construction.
by Terry Ryder.
creator of hotspotting.com.au
Planning turns to construction for mega projects in 2011
I’ve been very much looking forward to 2011. I’m certain it will deliver …
- A much better year than 2010.
- Stark differences from one region to the next, from one city to the next.
- Large numbers of consumers deserting the big 4 banks.
- Resources companies threatening to scrap projects on which they have already spent billions because they don’t like government policies (they’ll be bluffing – again).
- More solid evidence that developer lobby groups are lying when they talk about “chronic housing shortages”.
- Proof that economists were misguided when they predicted interest rate rises would cause house prices to fall.
- Spectacular growth in key regional centres around Australia.
For many of the big projects that will impact on property markets around Australia, 2010 was a year of planning and paperwork – 2011 will be the year when sod is turned and structures rise out of the ground.
There will be strong jobs growth and the people filling those jobs (many of them highly paid positions in the resources sector) will be looking for real estate to rent or buy.
The most disappointed people in Australia at the end of this year will be those who considered buying real estate in Gladstone or Newcastle or Geraldton or Whyalla – but decided against it because of dire warnings from economists or family members about house prices falling.
For a detailed analysis of markets nationwide, click on the topics below …
|National Overview||Those who think regional will do best in 2011 – and beyond.|
|Feature topic||Interest rates will NOT be the determining factor in 2011.|
|Adelaide||Ready to assume a bigger role in national economic events.|
|Brisbane||More positive events coming up in 2011.|
|Canberra||National capital is a construction site – and property continues to grow.|
|Darwin||The pause button has been activated – for now.|
|Hobart||The Tassie economy in a Ricky Ponting-like slump.|
|Melbourne||Melbourne exhausted after 2010 auction orgy; regions have more energy.|
|Perth||Poised for a fast year and three slow ones|
|Sydney||The “Infrastructure Premier” has some catching up to do.|
|Conclusion||Step out of the herd and see the opportunities the year will present.|
Making sense of what really happened in markets early in 2010
I wrote recently in my Hotspotting column in The Australian that consumers should ignore anyone who comments on “the Australian property market”. My argument was that any analyst who discusses 2011 in terms of what will happen in “the Australian property market” clearly does not understand the subject – and should not be heeded.
Residential property is not a single market and it’s foolish to generalise about it. The nation has many thousands of sub-markets and they do not all move in concert. They never have – and certainly will not do so in 2011.
The coming year will present great opportunities for property investors who understand that while some of the major city markets may provide little spark, other locations will show good – in some cases, spectacular – growth.
Some of these opportunities will be found in capital cities but most of them will be in the regions – the places where many property investors fear to tread.
We have entered a period in which regional Australia has greater importance than ever before – certainly since the days when agriculture dominated the national economy. Here are four big reasons:-
- Much of the stimulus spending during the Rudd reign was directed at infrastructure in regional areas – and its impact is still filtering through local economies.
- The deal under which Julia Gillard rules with the tenuous support of key independents dictates increased spending in regional Australia.
- Several State Governments, notably Queensland, Western Australia and Victoria, are directing more resources to the regional areas.
- The resources boom will most directly impact regional towns and cities, although capital cities will benefit also.
The economic impetus driving some of our regional centres is unprecedented in Australian history. I doubt there has ever been a regional city with so many mega projects impacting its economy as Queensland’s industrial muscle town, Gladstone. The CSG-to-LNG projects are so big and so numerous, that no one is talking about the $2 billion steel mill or the $5 billion port expansion, which are minor by comparison.
But the line-up of big infrastructure and resources developments across Queensland is so extensive, I’m not fully sure that Gladstone would be my No.1 pick as a Queensland hotspot. Toowoomba and Townsville also have compelling credentials.
Newcastle and the Hunter Valley region is a prime candidate in New South Wales, but so too are Orange and the towns of the north-west, such as Narrabri and Moree. In South Australia there are numerous regional centres with prosperous futures, headed by Whyalla. Western Australia has an even larger list of surging regional economies, headed by Geraldton and Bunbury, while Victoria will see prosperity in Geelong, Bendigo, Warrnambool, Mildura and elsewhere.
The only area where I see mostly grim prospects this year in the state of Tasmania, which is afflicted by myriad economic and political problems. But even Tassie will produce exceptions, like Kingston south of Hobart.
Among the capital cities, I expect to see superior growth in 2011 in Adelaide, Perth and Brisbane, with Canberra producing its usual steady performance.
Interest rates will NOT be the determining factor in 2011
The first thing anyone needs to understand about the likely events in 2011 is that rising interest rates do not cause property prices to fall.
You can be forgiven if you believe otherwise because media keeps telling us that the market declined in the second half of 2010 because of interest rate rises and that next year will be subdued because interest rates will rise further.
That kind of simplistic and inaccurate commentary is what passes for analysis these days.
Research going back 30 years shows there is little correlation between rising interest rates and falling property prices. It indicates that the housing market is not nearly as sensitive to interest rate increases as most people seem to think. (What does influence housing markets is the level of public confidence.)
The problem is the simplistic nature of analysis in Australian real estate. When two events coincide, it is assumed by everyone that one has caused the other.
Here’s an example from early 2009. A sharp increase in activity at the lower end of the housing market coincided with the boost to the First Home Owners Grant. Because those two events ran parallel to one another, pretty much everyone assumed that the grant caused the market the rise.
It was quite illogical to make that assumption – and it was disproven by a number of research surveys – but economists, real estate agents and journalists all accepted the assumption as fact.
It was overlooked by most people that the rise in the bottom end of the market also coincided with lower prices and cheaper money – i.e. a dramatic improvement in affordability.
Even at the peak of first-home buyer activity – around April-May 2010 – first-time buyers comprised only a quarter of buyers. That means over 75% of people buying, mostly at the lower end of the market, were not receiving the FHOG or any of the State Government benefits available to first-home buyers.
Research surveys conducted by several industry organisations found it was the dramatic (and brief) increase in affordability that prompted people to buy. Only a small percentage felt the FHOG boost was their major motivation.
Because so many commentators claimed the FHOG was responsible for the market upsurge, they further assumed – and loudly predicted in media – that the market would decline and house prices fall when the boost was phased out late in 2009.
History shows how wrong they were. The market in many locations rose even more strongly. The reason the second assumption was wrong was because it was based on the first assumption, which was also wrong.
It’s a sad truth of our media-dominated lives that if a lie is repeated often enough people will come to accept it as the truth.
So now most people accept it as fact that rising interest rates suppress property prices. No one produces any evidence to prove that contention, largely because the evidence tends to show the contrary.
The Reserve Bank usually gives us interest rate rises when the economy is pumping on all cylinders, business and consumer confidence is high and people are spending big.
When that’s happening, people generally assimilate a rise in interest rates and carry on regardless. My research shows several periods in recent times when rising interest rates have coincided with house prices rising at a faster and faster pace.
The recent slowdown in some of our property markets (it’s simplistic and incorrect to suggest the market has stopped in all locations) followed a spate of interest rate rises, so again there’s an assumption that one caused the other.
This line of thinking overlooks other events that have coincided with the slowdown in some of our major city markets: the toppling of Kevin Rudd as Prime Minister (which jolted many Australians), the calling of a Federal Election, the indecisive result from that election, constant media speculation about big increases in interest rates, negative campaigns run by the mining lobby and the developer lobby, speculation by a host of inexpert commentators about the level of Australian house prices – all events that have impacted public confidence.
Right now people are declining to spend and retailers are doing it tough (witness the number of major retailers who had sales beforeChristmas!). Buyers are reluctant to commit to property purchases, with so much media speculation about falling values next year.
I recently read an article that blamed the current problems in the Gold Coast market on interest rates. The Gold Coast’s market issues have nothing to do with rates – it is one of the poorest performing markets in Queensland because of its ongoing over-supply at a time of poor economic performance. Tourism and construction are both in decline and population growth has fallen away – resulting in low real estate demand at a time of high supply.
These problems are exacerbated by the way news is constructed these days. So many media stories are generated by press releases from vested interests, not by investigative journalism. Many individuals and organisations with political campaigns to run – or simply a thirst for publicity – know they can gain media exposure by saying something sensationally negative.
Media publishes press releases with little scrutiny and the contents are accepted as fact by the public. This had led to a number of furphies being accepted as truth – including the mythical “housing shortage crisis”, the lie that typical first-time buyers pay an average $540,000 for a first home in Australia, and the notion that the prime millionaire suburbs provide the best capital growth.
The claim that rising interest rates will cause house prices to fall is simply that latest of them.
Adelaide and South Australia:
Ready to assume a bigger role in national economic events
I‘m optimistic about the South Australian economy and property market. SA is on the cusp of a new level of importance in the national economic family. It has the potential to be a major third power in the Australian resources sector (after WA and Queensland) and will make big strides towards that status in 2011.
Six years ago there were just five operating mines in South Australia. Premier Mike Rann opened SA’s 13th operating mine in 2010. There are 30 more in various stages of planning.
Heading SA’s gathering resources momentum is the $15 billion expansion of the Olympic Dam mine. BHP Billiton’s upgrade will have direct impact not only on Roxby Downs but also on Whyalla (desalination plant and pipeline to Roxby Downs) and on Adelaide (new facilities at Port Adelaide).
There are several other billion-enterprises coming up and Whyalla will be the biggest beneficiary. The proposed rare earths processing plant ($1 billion), BHP Billiton’s desalination plant and pipeline ($750 million), an LNG processing plant ($1 billion) and OneSteel’s Project Magnet expansion ($350 million) will all impact the Whyalla property market.
The unknown in the SA resources picture – and potentially the most influential – is the plan to open up the Woomera defence precinct to mining. This untapped area is considered to contain most of the copper and uranium resource in Australia. If Woomera is mined, Whyalla will be the key regional centre.
Other SA regional centres likely to grow on the back on mining activities are Port Lincoln and Ceduna.
An important difference in SA’s resources story – compared to WA and Queensland – is that much of the mining action is close to the state capital and to key regional centres. That, plus the impact of key personnel living in Adelaide and working in mining operations on a fly-in-fly-out basis, will help to underpin the Adelaide property market (which remains the cheapest mainland capital city and one with an enviable growth record).
SA also has national importance in defence industries and alternative energy generation. It is the wind power capital of Australia and has established itself at the place where major defence contracts are based, including the $8 billion Air Warfare Destroyer project now under way at Techport in the Port Adelaide area.
Adelaide markets will benefit from the ongoing program of infrastructure, which includes major road, rail, water and medical projects. The SA capital has more activity happening on transport infrastructure than does Sydney, which is as much an indictment of the NSW Government as a credit to the SA leadership.
Major new hospitals are being built and SA’s efforts to make Adelaide an “education city” include re-development of the former Mitsubishi site at Tonsley as an education precinct catering to 8,000 students.
Brisbane and Queensland:
More positive events coming up in 2011
Some of the gloss came off Queensland’s high-growth image in 2010. Its economy has been slower to recover post-GFC and interstate migration levels have fallen.
Brisbane markets, generally speaking, showed little growth in 2010 and the Gold Coast continues to be among the worst-performing markets in the state, blighted by over-supply and a downturn in its tourism-dependent economy and its construction industry.
However, I expect to be writing a more positive story 12 months from now. Queensland has had declines in its population growth levels in the past and has recovered strongly. It will do so again, and quite soon.
The quantum a major infrastructure and resources projects targeted on Queensland is quite massive, with only WA producing bigger numbers. These projects are spread widely throughout the state and will create tens of thousands of new jobs.
South East Queensland has a number of mega infrastructure projects under way, including the Ipswich Motorway upgrade, the new Airport Link and the Northern Busway, having recently completed the Gateway Bridge duplication and the Clem 7 tunnel. Several more multi-billion-dollar projects, including the Northern Link tunnel, are upcoming.
The Surat Basin west of Brisbane is coming alive with multiple resources projects and related infrastructure, including new rail links. Projects which will directly impact the markets of regional centres like Toowoomba and Dalby total around $80 Billion.
These projects include coal seam gas developments which will be linked via new pipeline and rail links to the industrial muscle city of Gladstone, where new plants will be built to process the CSG into LNG, then exported. Four mega projects linking the resources of the Surat Basin to the new processing plants in Gladstone have government approvals.
Gladstone also has a $2.2 billion steel mill and a $5 billion port expansion in the mix.
Mining in the Bowen Basin west of Gladstone continues to re-energise post-GFC and the new precinct known as the Galilee Basin is set to be significant, with three massive coal projects totalling $15-20 billion (including rail links to export ports) have been announced. Regional centres like Emerald and Barcaldine will be beneficiaries.
Townsville is ready to enter a new growth phase, bolstered by its recently-anointed status as “deputy capital of Queensland”, a billion-dollar expansion of its military presence and several major property developments, some of them billion-dollar enterprises.
Canberra and the ACT:
Nation’s most dependable market will keep on keeping on
I expect Canberra will do in 2011 what it seems to be have done forever: provide one of the nation’s most solid and dependable property markets without attracting a great deal of national attention.
We’re so used to seeing Canberra as a place of political events we tend to forget it’s also a significant economy and property market. A recent visit to Canberra reinforced for me just how much construction is going on around the city – and there’s more coming up in 2011.
The ACT Government spent half a billion dollars on capital works in FY2010 and plans to spend another $850 million in the current financial year. The city’s airport is a major construction site at the moment, with a $350 million upgrade under way. There has been ongoing expansion at Australian National University, the University of Canberra has plans to grow and the Australian Defence Force Academy is building more accommodation.
Several apartment developments are happening, a number of retail and commercial developments are in the construction pipeline (including a $130 million re-development of the Belconnen Fresh Food Markets), a $37 million electricity upgrade is under way, there has been upgrade work at Canberra Hospital and the Department of Defence plans to move 350 staff to a new call centre in Mitchell.
A development of 350 homes in Canberra’s north is in the final stages of planning approval (it requires rezoning of a section of the Belconnen golf course) and there are plans for more developments at Kingston Foreshore, bringing to 330 the number of lakeside units proposed in recent applications.
A $95 million package for cultural exhibitions, new public parks and a doubling of Yarralumla’s population is the favoured option for redeveloping the old Canberra Brickworks. The ACT Land Development Agency has unveiled proposals including a new pedestrian-friendly street network and medium-density residential housing for 4,000 residents. Yarralumla residents and the National Trust are among members of a reference group working with the authority on a preferred strategy for renovating the brickworks and turning vacant land into a prestigious residential addition for Yarralumla.
Potentially the largest upcoming project is a $1 billion data centre. Developer TRE has acquired a 13ha site in Hume from the ACT government to advance the project.
Planners have published a vision of an industrial future for land in the territory’s east. The ACT Planning and Land Authority has issued a report recommending an arc of industrial districts stretching from the Majura Valley in the north to Hume in the south. The paper predicts the 9,000 ha area identified as Eastern Broadacre will have an important role in the supply of employment land.
Canberra is a much busier place than we think, economically speaking. It continues to have the highest average incomes in the nation and the lowest unemployment (government seems a recession-proof sector). All of that drives a property market that hangs tough year in year out.
Darwin and the Northern Territory:
The pause button has been activated – for now
Darwin, the city that has defied gravity more than any other in recent years, demands a degree of caution.
A lot of apartments have been built, many of them in the higher price ranges, and this has created over-supply. Developers are deferring projects or reconfiguring them to target cheaper price ranges, where there is deemed to be demand still. Those with completed projects are offering discounts and incentives to buyers.
Darwin home prices and rents continue to be very high, which is easier to understand if you consider the Northern Territory capital as a regional centre which provides admin services, processing plants and an export port for the resources sector – rather like a Port Hedland or a Karratha, WA locations which have that kind of role and a general shortage of accommodation, hence very high real estate prices.
But the Darwin market showed signs of coming off the boil in 2010, with a falloff in sales numbers and home loan approvals. Price growth has fallen away and we are starting to hear reports of considerable discounting by vendors. There is also evidence of a decline in Darwin’s very high residential rentals.
Most of the economic indicators suggest a waning of the NT success story.
Darwin is pinning its future prosperity rather a lot on the $12 billion Inpex gas project. Many investors who bought in Darwin in the past 12-18 months did so in expectation of the jobs this project would create.
The proponent has deferred a final investment decision by a year and this has created a degree of uncertainty. However, it does appear increasingly likely that Inpex will go ahead and that might put a floor under Darwin values.
Darwin isn’t the only star in the NT repertoire. Alice Springs put its hand up in 2010, with exceptional price growth.
Alice Springs is legendary part of the Australian landscape but often overlooked as an economy and property market. Alice is an important regional centre for diverse industries, including cattle, defence, tourism and government administration.
Its government admin role has expanded as a result of special programs in connection with “intervention” in indigenous issues. This has increased housing demand and pushed up prices in a market constrained by government, indigenous and grazier ownership.
Generally, I expect investors to show a lot less interest in the Territory in 2011, but there’s likely to be a new stampede if the Inpex project is confirmed towards the end of the year.
Hobart and Tasmania:
The Tassie economy in a Ricky Ponting-like slump
I have ample optimism for forward progress in many parts of Australia in 2011, but Tasmania inspires mostly pessimism.
For property markets to thrive, locations generally need a number of stars to come into alignment. In Tasmania, most of the potential stars are spluttering or have been snuffed out.
Its biggest industrial development (the Gunns pulp mill) looks increasingly unlikely to happen (Gunns is threatening to close down many existing operations as well, in what is shaping as the dummy spit of the century). Its biggest transport infrastructure project (the Brighton bypass) has been stalled by heritage issues. The largest property development (the Ralphs Bay canal residential project) has been defeated on environmental grounds. A proposed $500 million power station has been delayed.
Adding to Tassie’s problems is the indecisive outcome of the recent state election, with neither major party winning a clear mandate. The new political situation, with the Greens holding the balance of power, has placed limitations on the forestry industry – which is a great outcome for the environment but threatens to devastate forestry-dependent communities.
Tasmania has the lowest population growth rate among the states & territories and the highest rate of unemployment. Increasingly there is talk of recession in the state.
Tasmania has a record of fighting above its weight, which is why I always hesitate to write it off, but its economic credentials are so lacking in muscle at present it’s difficult to see its landing any telling blows.
Kingston is one location that has promise. It’s a rare population growth area and there is some major construction happening, including a road project, a major new shopping centre and a new school.
There are two major wind farms projects proposed for the north of the state and if they go ahead they will create some jobs to counter-balance the ones being lost.
Longer term, an event for investors to watch is the new development strategy for Southern Tasmania. This dictates where new development will go over the next 25 years, increasing development densities in key areas. The designated growth corridors include the afore-mentioned Kingston, the Rokeby-Tranmere corridor and the Brighton area, where the bypass will be built if heritage issues can be resolved.
Melbourne and Victoria:
Melbourne exhausted following 2010 auction orgy; regions have more energy
We’re going to be some way into 2011 before property markets around Melbourne start to pump again. After years of being a steady but unspectacular property scene, Melbourne went on a binge of over-reactions in 2010.
In the early part of the year, there was an auction frenzy that defied all reason, with over-reacting buyers sending prices in the millionaire suburbs to unsustainable levels – followed promptly by rapid price decline.
Vendors, who mostly sat on the sidelines watching all this happen, then stepped in to take their turn at stunning illogic. Tens of thousands of Melbourne owners rushed to list their properties for sale in Spring, duped by dishonest agents into believjng the myth about “spring is the best time to sell”. Clearly this year it wasn’t and, as the number of listings rose, clearance rates fell – leaving the upper end of the Melbourne market over-supplied with homes for sale.
All of this provides further evidence of my theory that property consumers have an unerring ability to do the opposite of what makes sense, often misled by vested interests which exploit an inexpert media.
There are, however, locations outside those over-rated inner south-east suburbs with things in their favour. The Preston precinct in the inner north, the Epping precinct in the far north (where a massive Ikea store is being added to the development mix) and suburbs on the Mornington Peninsula all have specific reasons to expect solid value growth in 2011.
But the brightest prospects are outside the capital city. I see solid performances coming up in affordable regional centres outside Melbourne, including Bendigo, Traralgon, Warrnambool and Mildura.
Geelong continues to take on greater significance as an economy and a property market. Businesses are expanding and the new ring road will help. Warrnambool and nearby Portland will benefit from the energy generation province emerging on their doorsteps.
I don’t believe the change of State Government will have any meaningful impact on property markets in Victoria. The only changes, if promises are kept, will tend to be beneficial, particularly decreases in stamp duty.
Beyond that, I find Labor and Liberal largely indistinguishable. It’s difficult to see how the Liberals could be more pro-development or more supportive of power station construction than the ALP regime was, with its tendency to declare anything worth more than a few million dollars a special project outside the jurisdiction of local councils.
Perth and Western Australia:
Poised for a fast year after three slow ones
Twelve months from now when I look back on WA’s story for 2011, I’m sure I’ll be writing about the buoyant economies in Bunbury, Geraldton, Karratha and Port Hedland.
I also expect to be commenting on a year of solid growth in the Perth property market, the first positive performance after three years of decline and/or stagnation.
I’m a little surprised that Perth did not do better in 2010. It had shown little spark since its market peaked in 2006/2007, well before the GFC struck, but 2010 recorded the revival of the resources sector. It has been slow, however, to feed wealth into the state capital.
Although the mega projects that will drive the WA economy over the next several years are a long way from Perth, their impact includes a significant boost to the economy of the capital city, where most of the key businesses are based and the big decisions are made.
The most direct impact of the big infrastructure and resources projects will be felt in regional centres like Port Hedland. The town has recently completed an expansion of export port facilities but another much larger ($5 billion) upgrade is in planning.
Multiple iron ore projects, most of them measured in the billions of dollars, use Port Hedland as their facility for export to offshore buyers. The nation’s biggest mining companies, BHP Billiton and Rio Tinto, are spending gargantuan sums on expanding their iron ore operations, as are other significant entities such as Fortescue Metals, hence the need for another port expansion.
The State Government is spending big to improve facilities and amenities in Port Hedland in recognition of its expanding role as a key regional centre for the Pilbara region.
Karratha and nearby Port Dampier have similar events taking place. Some of the nation’s biggest resources projects, including the $42 billion Gorgon gas enterprise, are happening in Karratha’s neighbourhood.
Bunbury south of Perth is benefiting from new transport infrastructure, both road and rail, which improves connections to Perth. It also has a series of big-ticket developments happening around it, including a $1 billion desalination plant, a $2 billion upgrade to an aluminium refinery and a planned $3.5 billion urea plant. Bunbury’s port doesn’t have the volumes of Port Hedland or Port Dampier, but it is increasing in importance and trade numbers – which has prompted planning to an expansion of export facilities.
Another regional centre with an expanding port is Albany in the south. This town doesn’t feature much in the discussions of key economic events in WA, but it has a $1 billion iron ore project emerging on its doorstep and other big spending events under way.
My personal favourite, though, is Geraldton, with its strong, diverse economy, affordable prices, multiple iron ore mines and a new $4 billion port in prospect.
Sydney and New South Wales:
The “Infrastructure Premier” has some catching up to do
NSW Opposition Leader Barry O’Farrell – who, according to the opinion polls will be Premier late in March 2011 – says he wants to be known as the Infrastructure Premier.
O’Farrell has promised to complete Sydney’s north-west and south-west rail links and begin building either the M4 East or the M5 duplication in his first term. He says his government would create two new bodies, one called Infrastructure New South Wales (which will prioritise projects) and the other Restart New South Wales (which will source the funding through tax revenues, private borrowing, and leasing the desalination plant).
Given that these are election promises, and nobody ever got rich by betting on politicians keeping their word, we’ll believe it when we see it. Especially as this is New South Wales, where grand projects are announced, only to be scrapped later, usually within weeks of a change of Premier (and the ones that do get built are usually financial disasters).
But it’s a worthy ambition. Sydney’s lack of infrastructure development is a national disgrace and one of the reasons why its property market has been the worst performer among the capital cities over the past six years or so. Infrastructure projects are a major generator of hotspots through the jobs they create and the improvement to amenity that they bring.
One of the key reasons I rate Newcastle and the Hunter region so highly is the level of infrastructure that’s boosting the local economy: the Hunter Expressway is under way, the port is on a perpetual cycle of expansions, rail links are being upgraded and billions are being spent on power generation facilities and resources enterprises. Newcastle puts Sydney to shame.
So too does Orange, where educational facilities are expanding, a new hospital is being built, water security is being upgraded and $2 billion is being spent on a mine expansion.
Sydney has been the under-achiever of the capital city markets in the past decade. Here’s one illustration: 91% of Adelaide’s suburbs have a double-digit growth average (average annual rise in median house prices over the past 10 years) but only two of Sydney’s 700-plus suburbs have double-digit growth averages.
I don’t see Sydney’s status changing any time soon. But NSW is full of bright and bustling regional centres which provide affordable options and growth prospects for property investors. Apart from Newcastle and Orange, I’d be happy to own real estate in any of these places: Wagga Wagga, Dubbo, Tamworth, Kempsey, Grafton, Gunnedah, Narrabri, Moree, Kyogle, Casino, Glen Innes, Inverell, Armidale, Batemans Bay, Bega, Nowra, Goulburn and Parkes.
Step out of the herd and see the opportunities the year will present
I take a strong interest in people in Australia and around the world who make it big. My research has taught me this: no one has ever become wealthy by following the herd. This is why most people spend their lives dreaming of riches but never achieving them.
The coming year is one that will belong to those who detach from the pack and run in another direction. Most people will cling to the comfort of the herd, which means they will cluster near the bank waiting for someone else to put a toe in the water.
Herd members will muddle around waiting for news of what’s happening to interest rates. They’ll gather in groups talking about when the mythical price bubble will burst. They’ll spend sleepless nights fretting about the “affordability crisis” and the “chronic housing shortage crisis” and the possibility of further weakness in the American economy and rumours that China might stop buying our iron ore and fears that Julia Gillard might call a snap election.
That’s the whole point of a herd. You don’t need to do anything, unless everyone else does.
Herd people bought real estate in the auction frenzy early in 2010 and tried to sell in the slump late in the year. Independent thinkers did the opposite. Lots of herd members were trying unsuccessfully to sell Gold Coast real estate in 2010. Independent thinkers would never have bought there in the first place.
Those who detach from the jittery pack and do well in 2011 will be those who see the gargantuan scale of economic events happening across Australia and the impact they will have on selected real estate markets.