Serious growth ... Perth has come back to life.


1. Midland Precinct

Perth’s rental growth in 2012 will be followed by price growth in 2013 and the precinct of suburbs around Midland in the north-east of the city should benefit. This region offers good facilities and multiple growth factors, as well as affordable real estate against a background of a solid capital gains record. Given the vast numbers of fly-in, fly-out workers funnelled through Perth Airport every day, proximity to the airport is a bonus for this precinct.


ROCKINGHAM: The southern seaside suburb of Perth (median house price $375,000) mirrored Perth’s overall performance in 2012, showing strong rental growth and then, late in the year, the first signs of a price resurgence (about 2% growth in the final quarter of the year). Expect bigger growth in 2013.

Western Australia

The Perth market, at last, sparked to life in 2012, after four to five years of no growth. The first signs came with rentals and Australian Property Monitors reported double-digit growth in median rents for both houses and apartments. Towards the year’s end, prices began to follow.

But the serious price growth will come in 2013. Perth is expected to follow a similar pattern to Gladstone and Darwin, where major rental growth was followed 12-18 months later by big movements in prices.

The fall in world prices for iron ore in the second half of 2012, dropping below $90 a tonne in August-September, led to suggestions that the resources boom that had underpinned the West Australian economy was fading. But by year’s end iron ore prices had recovered strongly and December was a record month for ore exports.

So the flow of fly-in, fly-out workers through Perth Airport will continue. The local government areas of Swan and Belmont both have affordability and proximity to the airport helping them, as well as good transport links, multiple jobs nodes and major infrastructure development. Suburbs such as Midland, the hub for the City of Swan, should do well.

Rockingham City continues to appeal as a seaside precinct with affordable dwellings and plenty of employment nodes nearby. Mandurah, to the south, is showing the first signs of recovery, after falling a long way from its 2007 peak when it was one of the nation’s growth stars – in population and price growth.

Investors should be wary about boom resources centres such as Port Hedland (median house price $1.17 million), Karratha (around $900,000) and Newman ($830,000). The economic growth factors are still strong but these markets have had huge capital growth already and appear fully priced. The state government’s measures to introduce more affordable dwellings to these centres may dampen future growth from these already high levels.

2. Mount Isa

A growth star several years ago, mining mecca Mount Isa is about to come roaring back. New mines are being built, existing ones are being expanded, processing facilities (including a $1.4 billion phosphate plant) are planned and there’s a $500 million power station in the mix. Rents took off in 2012 and we can expect prices to follow in 2013. A bonus for the future is the end to the Queensland ban on uranium mining, with most of the state’s yellowcake resources clustered in the north-west.


BOWEN: The median house price for Bowen ($345,000) grew 3% in the final quarter of 2012. The biggest growth is yet to come, with major expansions of the Abbot Point export port facilities and new rail links set to boost the local economy and jobs.


Brisbane appears to have recovered from the double whammy of a cyclical downturn and the floods of early 2011.

There will be price growth in 2013 and Ipswich City in the south-west will lead the way. The Ipswich municipality has everything that drives real estate markets: affordability, population growth, economic diversity, infrastructure development, urban renewal processes, a proactive local council, lots of jobs nodes and good transport links to central Brisbane.

But the real strength in Queensland property markets will be seen in the regions. Queensland is more decentralised than any other state and has an array of strong regional towns and cities. Many of them are getting bonus economic activity from the resources sector and this will be stronger than ever in 2013.

Gladstone, which has been a national market leader for the past two years, will continue to show growth but the best time to buy there has well and truly passed.

Growth centres that are a little behind Gladstone in the price cycle, and therefore have more upside for investors, include Mackay, Mount Isa, Emerald, Rockhampton and Toowoomba.

Mackay is one of those markets that has recorded strong rental growth and an upturn in sales volumes but not yet a commensurate rise in prices. This will happen in 2013. Mackay has attractively high rental yields as well as strong growth prospects.

Townsville, after a couple of down years, is ready for a comeback, although investors need to be wary of the city’s unit market.

Mount Isa is ready for another growth spurt as well. Several resources projects and related infrastructure, including a power station, are getting under way and this is driving up rents, with prices set to follow.

Mount Isa, and Cloncurry down the road, are the main beneficiaries of the state government’s decision to lift the 30-year ban on uranium mining.

It’s still too early to call a recovery on the Gold Coast. Indeed, the Sunshine Coast may return to growth before it does.

3. Dubbo

Dubbo has everything that appeals to investors: strategic location, economic diversity, broad services for a wide catchment, population growth, an ambitious local council and affordable real estate. It also has that additional factor that takes regional centres to another level: growing resources activity in the area.


MUSWELLBROOK: Median house price grew 7% in 2012 to $310,000, continuing the Hunter Valley town’s strong record. Muswellbrook has averaged 10% price growth a year over the past decade and offers typical rental yields around 6.5% for houses and 7% for units, according to APM.

New South Wales

Sydney, the underachiever among capital cities over the past decade, is poised for a solid year.

Helped by low interest rates, improved affordability, low vacancies and a strengthening economy, Sydney will have a considerably stronger year than in 2011, a year of decline, or 2012, one of consolidation and recovery.

First-home buyers will be more active in 2013, helped by lower rates, improved affordability and the state government’s grant for those who build new homes. Sydney’s leading areas for first-timers are Westmead, Liverpool and Blacktown and they can expect growth this year. These affordable areas have commuter train links and additional boosts from education and medical precincts (such as Westmead Hospital), which generate demand for housing.

While Sydney showed little price growth in 2012, many NSW regional towns and cities had a solid year. They included: towns in the Hunter Valley, such as Singleton, Branxton and Muswellbrook; Mudgee; and Dubbo.

Moderate 2012 growth should become strong growth, particularly as many areas had major rental increases in 2012. Affordable regional centres such as Tamworth, Gunnedah and Gloucester have solid local economies, which will be boosted by resources activity, particularly in coal seam gas.

The border city of Albury-Wodonga attracts little attention but is a strong growth centre, with multiple infrastructure and property developments.

4. Whyalla

Five years from now, Whyalla will be established as the industrial muscle city of South Australia, with expanded export facilities, new resources processing plants and multiple mining ventures feeding into business and jobs. The deferral of the Olympic Dam expansion is a temporary setback only, as there are numerous other projects in Whyalla’s pipeline, including a $1 billion rare earths processing facility.


WHYALLA: The median house price ($245,000) grew 7% last year. With rental yields typically around 6.5% and a long-term capital growth average around 11%, Whyalla presents as a good prospect long term as resources-related projects continue to crank up in the area.

South Australia

Adelaide will have a better year in 2013 but it’s difficult to see it being particularly strong.

Its property market is held back by a state economy that is not keeping up with big boys. All the economic indicators are lukewarm at best.

The state’s greatest hope is its resources sector. Gradually the South Australian mining industry is taking on critical mass.

BHP Billiton’s deferral of the Olympic Dam expansion is a setback, but there is plenty of other mining activity in prospect, including new iron ore projects on Eyre Peninsula and the decision to allow miners to exploit the vast mineral riches within the Woomera Prohibited Area.

The most likely beneficiaries are Whyalla, Port Lincoln, Port Augusta and Coober Pedy – all regional centres with plenty of cheap real estate.

Whyalla continues to have the brightest prospects in regional SA. Its future is one where it performs the role that Gladstone does for Queensland: the industrial muscle town. Houses are affordable and rental yields are strong.

Major employer Arrium, formerly OneSteel, continues to expand, while other upcoming ventures include a $1 billion rare earths processing plant.

Mining companies pursuing iron ore projects on Eyre Peninsula need export facilities and these will be established close to Port Lincoln, as well as Whyalla.

In the Adelaide area, investors would be wise to track progress on new infrastructure development, one thing that the capital has in its favour.

The upgrade to the Southern Expressway, as well as the extension of rail links south from Noarlunga, will enhance the appeal of seaside enclaves such as Seaford, Port Willunga and Aldinga Beach.

5. Bendigo

Infrastructure development is one of the keys to real estate growth and Bendigo offers plenty in that regard. Many live in affordable Bendigo and commute to Melbourne and the $5 billion Regional Rail Link will advance that process. Bendigo also has a $630 million redevelopment of its hospital in prospect, a new highway in the city’s east, an airport upgrade, the NBN rollout and multiple other infrastructure and property developments under way or planned.


GEELONG: The best performers in the Geelong market showed solid growth, including Waurn Ponds (a key link in the new ring road), which grew 6%, and seaside enclaves Barwon Heads, Ocean Grove and Queenscliff (up 3%-4%). But Bellarine Peninsula results were patchy, with some suburbs showing moderate growth and others small declines.


Melbourne will occupy an unaccustomed position at the bottom of the capital city pack in 2013. There are too many apartments in the inner-city markets, with more being built. There is also an oversupply of house and land packages in key outer suburban markets.

Developers are using two methods to find buyers in a surplus market: offering incentives to buyers and marketing hard in Asia. Both measures distort the market, concerning lenders and valuers. Research indicates a third of house and land contracts are falling over because valuations don’t support the prices on the contracts.

A bad situation may get worse, as the state government appears oblivious and is working hard to facilitate development of more new supply – pushing urban renewal projects and announcing new suburbs in the outlying areas.

Fortunately, there’s more to Victoria than Melbourne. The state has several strong regional cities that don’t have Melbourne’s problems. Bendigo and Ballarat have similar qualities: growing populations, expanding economies with good diversity, ambitious local councils, plenty of infrastructure development and affordable homes.

Both are well linked to Melbourne so people can live in the regional cities and work in the capital city. This will be enhanced when the $5 billion Regional Rail Link is completed.

East Gippsland is often overlooked by investors but towns such as Sale, Bairnsdale and Paynesville are worthy of consideration. Resources companies working in Bass Strait add an extra element to the economy of this region: BHP Billiton and ExxonMobil are building a $1.1 billion natural gas processing plant at Langford, just outside Sale, and will bring thousands of new jobs to the region.

On the edge of the Melbourne metropolitan area, Mornington Peninsula presents some good prospects. The Peninsula Link motorway adds to its appeal and if state government plans for an expanded port at Hastings move forward, this precinct will take on new significance.

Other states and territories

Darwin was the runaway leader among the state and territory capital cities in 2012, with double-digit rental growth and strong price growth in the second half.

It’s set for another standout year in 2013, with price growth expected to be particularly strong. Darwin is a city of only 120,000 people so a $34 billion project creating 3000 construction jobs is a game-changer.

The Ichthys gas venture is massive in any context, but particularly for a capital city that is effectively a large regional centre. Darwin’s problem – or its strength if you own property there – is its consistent shortage of dwellings and the inability of successive territory governments to deal with it.

Palmerston, the satellite city south of Darwin, has particularly good prospects. It’s where most of the new growth happens in Darwin and is the site of several new suburbs under construction or in planning. Palmerston is well situated in terms of the Ichthys infrastructure developments and other significant projects creating jobs.

Canberra is showing rare inconsistency at the moment. Normally so consistent in its performance that it’s boring, Canberra can no longer rely on having the lowest unemployment and highest average incomes in the land, as the federal government cuts public service jobs to try to balance the books and several major infrastructure projects wind down, leaving construction workers twiddling their thumbs. There’s still demand for dwellings in Canberra but it takes so long to create new supply in the most bureaucratic jurisdiction in the land that most of the ACT’s demand gets exported across the border into NSW, where things are easier and land is cheaper. So the markets most likely to grow from Canberra demand in 2013 are NSW centres such as Queanbeyan and Goulburn.

Hobart, as the capital city of the recession state, is expected by many to have a poor year but it may not be as bad as that. A state government jobs stimulus package announced late in 2012 may help, particularly as it contains specific measures to boost home building. There are a number of significant developments in Hobart – such as the Myer redevelopment and Parliament Square, both $100 million projects – that will boost economic activity and jobs.

But if 2013 yields growth in the Hobart market, it will be minor.


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