Much has been made of the impending “demise” of the mining boom. While the boom has flattened as the resource industry reinvents itself in a sleeker, slimmer model, the mining industry is still providing a lot of income and making a lot of contributions to the Western Australian economy.
We have found that too many investors adopt a herd mentality when investing. They don’t talk to a financial planner or even bother to talk to a mortgage broker to see if they can find better terms than they get from their bank or their favourite lender. Instead, they just do what everybody else is doing and wonder why they are hurting when everybody else is hurting.
The Solution: Patience
There are very few instances where real estate is a good short term investment, but it is unmatched in its consistency and reliability as a long term investment. But you have to be careful when investing. Mackay and Emerald in Queensland are classic examples of markets that were overbuilt and are suffering from the contraction of the resource industry. Those who bought property in those towns looking for short term gain are in a state of panic because the prices and demand for both rental and properties have gone down.
Those who sell there now are going to take a bath. But the numbers dictate that those who can afford to wait out market volatility will profit well in the long term. Mackay, in particular, has provided double digit capital growth for most of the last 10 years. Patterns dictate that they will continue to do so and that the current dip in the market is temporary.
Emerald has seen rents go down from $525 per week in September 2013 to a current level of $350, but will soon be the beneficiary of at least seven coal projects with a projected influx of 25,000-30,000 jobs and $35 billion to the area. Those who panic will lose; those who can afford to wait will win.
So, What About WA?
Queensland has been through what WA is going through now. Real estate is still a great long-term investment for those who can “ride the waves.” Call our mortgage brokers in Perth at (08) 9472 9766 for more information.