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28 minutes

Published:

01 February 2011

Property Report – February 2011

Planning turns to construction.

by Terry Ryder.
creator of hotspotting.com.au

Introduction:
Planning turns to construction for mega projects in 2011 

I’ve been very much looking forward to 2011. I’m  certain it will deliver …

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.

National Overview:
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:-

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.

Feature topic:
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.

Conclusion:
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.

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