Capital Growth

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GUEST OBSERVER
Anyone can be a successful investor but it is critical you set your goals and start with the end in mind. Begin by finding a proven system that other successful people have used in the past. 
The key is doing your research and making sure your money goes somewhere that over the medium-term you can expect steady capital growth. Property has long been a proven investment performer in Australia with well-chosen properties tending to double in value over a 7 to 10 year period, and this is a field OpenCorp has a proven track record in helping clients get involved with. 
Do one thing and do it well 
Once you’ve found your already successful mentors and identified a proven wealth creation strategy, stick with it. It takes patience and dedication. Keep the FOCUS acronym in mind: follow one course until success. 
Goal setting 
Keeping the end in sight, you need to set firm goals. A new financial year is upon us so now is a perfect time to do this. The goal doesn’t need to be unrealistic, it should suit what you can reach, however modest that may be to begin with. Keep moving forward. Expect setbacks, learn from them and persist. 
But you do need a very clear visual picture of where you want to end up in 10 to 15 years. My goal when I started in investment was to be able to work only as much as I needed, to still enjoy time with friends and family, but to be able to buy a house and create an environment where I could raise a family. That was my goal. 
Action vs aspiration 
Getting your start-up capital (that first deposit or whatever your goal is) may be the most difficult step in your investment journey, but it’s also the most important. Whatever you can do today is already on the way to growing for tomorrow. If you ever think back and wish, ‘I wish I had done that 10 years ago,’ let that motivate you. Aspiration must meet action to create results. 
Compound growth – people overcomplicate strategy. 
If I had to put wealth creation and making money into two words, it would be: compound growth. The reason, in the simplest terms, is that compound growth is growth on top of growth. What this means though is that wealth creation takes time. It takes patience and discipline to maximise the benefits of compound growth. 
Cash flow properties versus growth properties 
A positive cash flow positive property is an investment property that returns more than it costs to own. Typically, this becomes possible when interest rates are low and there is strong demand, meaning higher rents, or once an investor has made a significant dent in the principal of the loan.
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A growth property is one, on the other hand, that earns less in rental fees than you pay on its mortgage and maintenance, etc. A growth property pays its way through steady appreciation and, ultimately, resale. 
While a cash flow property might seem obviously superior, returning profit from day one, traditionally these properties may be in areas with less economic stability in the rental market. Or they might be seen as having less potential for capital gains. 
However, with Australian interest rates stable at historic lows this does not need to be an either/or consideration. A cash flow property can also be a growth property. While it might take between two and five years for an investment property to become cash flow positive, with interest rates below 4 percent and net yield sitting comfortably above this, solid growth properties across the market can also be cash flow properties. It just comes down to doing your research, getting the best advice and choosing the right property. 
Michael Beresford is director of investment services at OpenCorp and can be <a href="https://www.opencorp.com.au" target="_blank">contacted here</a>.
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jchancellor-FAypfDUnLy

How to set your investment strategy: Michael Beresford

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GUEST OBSERVER
I was recently reading the latest Residex Best Rent Report, which was released a couple of weeks ago.
There are some notable suburbs in the report showing amazing yields – in fact one suburb in South Australia has a rental yield of over 7% – but the predicted capital growth is not that hot.
That got me thinking… I am often asked what is more important – cash flow or capital growth?
Capital growth versus cash flow has been a hotly contested topic in property investing since the year dot and most people stand firmly in one camp or the other. On the other hand, I have always considered that both are important. After all, if I can achieve both then this allows me to build a portfolio without having large out of pocket expenses each month.
I also believe there is a third way of making even more money.
The Trid3nt Strategy® allows you to make money in three ways; it’s like having a Plan A, B and C.
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Buy below market value. In a fast moving market this can be difficult, however the principle is that by doing your research you can identify opportunities and negotiate to create equity from the start.
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Buy a property with renovation potential. This allows you improve the property so you have the potential to increase the property’s value and rent.
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Buy in an area with good capital growth potential. As an area grows, you will get equity in your home and your property will be worth more when it comes time to sell.
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As you can see, with this approach, rental yield alone is not everything. To be clear, you will not make money from a property based on a 5% to 6% rental yield unless you also have capital growth working for you. This is mainly because the cost of holding a property can quickly gobble up your income.
Costs include interest on your loan, council rates, strata fees, utilities, insurance and property management fees, just to name a few. A strong rental yield is important as it will minimise the amount of money you need to contribute out of your own pocket to cover these costs, hence why it is wise to target a high yielding area that also has good growth predictions.
Although there were many suburbs that interested me in the Residex Best Rent Report, there was one suburb that really stood out for me – Wallsend.
Wallsend is located in the western region of Newcastle (NSW), just 11 km from the city centre. The median house value is an affordable $413,500 with a rental yield of 5.04%. The suburb as a whole is also forecast to grow by an average of 6% per year over the next eight years, meaning it could be worth over $700,000 in eight years’ time. With fixed home loan rates below 4.8% at the moment, the median property in this suburb would not cost much to hold, particularly if you are able to make the most of negative gearing.
What really excited me about Wallsend was the Residex Renovators Report. There are over 95 streets in Wallsend that have renovation potential, where you could make over $50,000 by spending just 10% of the property’s value – generating a 20% profit. What’s more, of the 95 streets, 82 streets had the potential to make over $100,000 from a simple cosmetic renovation.
Before jumping into an investment purchase, it’s important to make sure you can easily rent out your property. There’s two parts to this – rental demand and vacancy rates. In the case of Wallsend, over 29% of the suburb’s population are renters and the vacancy rate is a low 2.6%, so both of these metrics check out.
This may not be the first time you’ve heard of Wallsend in recent weeks. If you have been following the news, you may have heard about the ‘big wet’ in NSW, and subsequently that Wallsend has been hit by floods. This brings me to an important point.
Numbers in isolation only tell part of the story. You need to use reports and predictions in combination with other data to conduct a thorough assessment. I believe as a final part of your research it is extremely valuable to actually hit the streets of the given area you are considering. Get a feel for the area, speak to local real estate agents, business owners, councils and residents to find out what is happening with the economy and if there are any plans for development in the area.
Natural disasters may be unavoidable, but knowing that they can happen and understanding the particular areas that are prone to natural disasters – in this instance flooding – should be part of your analysis.
The recent floods in Wallsend should not discourage you. After all, property is a long term investment. This current situation should remind us that there are always other risks to consider when conducting your research. When looking at a specific property it may pay to speak to insurers to make sure you can get appropriate insurance cover at a reasonable cost.
So, going back to the original question – What is more important yield or growth?
As you can see, rental yield is definitely something that should be considered but it is not everything. Capital growth is also important as it will allow you to sell at a profit. Combining this with renovation you also have the ability to push up the rent in the short term and hence reduce your out of pocket expenses, but the numbers alone are sometimes not enough (as recent events have shown).
The fundamentals, though, ring true. If you buy the right property in the right area and add value through renovation and capital growth, there is even the possibility of creating enough equity to buy another property and replicate your success.
Jane Slack-Smith is founder of Your Property Success and Director of Investors Choice Mortgages and can be contacted <a href="https://yourpropertysuccess.com.au/?Cid=Blog-JSS-Jan16" target="_blank">here</a>.
This article first appeared on <a href="https://www.onthehouse.com.au" target="_blank">Onthehouse.com.au</a>.
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Renovation and capital growth: Jane Slack-Smith

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GUEST OBSERVER
The media recently reported that the Australian housing market had ‘peaked in winter’. While Sydney – the market leader – is coming into a downswing, it is not useful to aggregate the market this way.
Historically, the different dwelling markets around the country have not been synchronised. In fact, assuming the economy was performing steadily, the Melbourne and Brisbane markets would be yet to experience peak capital growth before slowing in late 2016. However, economic uncertainly and lending restrictions may prematurely curb growth in these markets.
November 2015 Summary
<a href="/images/2016/01/14/Table_1_November_Summary_v2.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/01/14/Table_1_November_Summary_v2.jpg" alt="" width="768" height="558">
Growth in Melbourne house market is 12.87% in the year to November, which is up from 11.03% in the year to October.
There is a large growth disparity between Melbourne houses and units. Melbourne units performed steadily with annualised capital growth of 6.13%, however values dropped in the month of November (-0.37%). With a difference of 6.74 percentage points between annualised growth in houses and units, Melbourne’s house and unit markets show the largest growth disparity Residex has on record. This is presumably due to large levels of stock in the unit market relative to demand. Graph 1 presents the growth trend.
<a href="administrator/index.php?option=com_content&amp;view=article&amp;layout=edit&amp;id=49586" target="_blank">Click to enlarge</a>
<img src="/images/2016/01/14/Graph_1_Melbourne_Trend.jpg" alt="">
Annual sales figures for Melbourne indicate that houses are the more desired dwelling purchase. Melbourne houses saw the largest volume of sales in the year to November, with 52,530 sales.
Annual growth in Sydney houses was again significant – with values jumping an enormous 20.53%. However, growth in the November quarter was just 2.93% – the lowest result since July 2014 – and while these figures are still very strong, they indicate a clear slowing in this market. Sydney units have also slowed dramatically, with growth for the month of November at just 0.55%.
Despite the slowing of growth in Sydney, 2016 is unlikely to see a market crash due to strong population migration in New South Wales and Sydney feeding dwelling demand. Even a market correction of 10% would still leave Sydney home owners well off after the latest housing boom.
Interestingly, the regional markets of Lake Macquarie, Newcastle and Wollongong have seen enormous capital growth, which is most likely a result of spill over as individuals and businesses seek cheaper rent outside the Sydney Metropolitan.
Dwelling markets across Western Australia continue to struggle. Perth houses fell in value by 2.83% for the year and rents fell a significant 5.43%.
Many unit markets across the country have seen a fall in value in November, as can be seen in Table 1. Dwelling markets usually reflect broader trends in the economy.
Brisbane was expected to be a strong performer in 2015. While the market remained in positive growth, it was very slow and subdued for the Brisbane Metropolitan as a whole. Select markets such as those in close proximity to the CBD and in the south-east performed more strongly.
Continued commodity declines have presented enormous challenges for the mining sector and state government revenues. It is for this reason that care should be taken when considering the economic output of the Adani Mine project and Liquefied Natural Gas (LNG) projects in Queensland. In particular, it should not be assumed that these projects will see long term high capital growth in nearby dwelling markets. This is an important takeaway from recent commodity price crashes.
Indian company Adani is set to go ahead with a coal mine and connecting rail line in Central Queensland’s Galilee Basin. The Queensland Land Court ruled Adani should receive mining leases, however the court agreed that the benefits of the $16 billion project are overstated.
Adani claimed the project would create 10,000 jobs annually from 2024. This has since been revised down to 1,464 full time equivalent jobs. Furthermore, the $22 billion in mining royalties anticipated from the coal mine was based on inflated estimates of the commodity, meaning this figure will be lower.
Challenges also exist for prospects around LNG projects in Queensland, Western Australia and the Northern Territory.
By the time these projects go into operation, the LNG market is forecast to be in a supply glut of approximately 20-30 million tonnes through to 2018, according to Bernstein Research. Oversupply in LNG is partially due to the increase in participating suppliers but also slowed economic growth, especially from China. However, the LNG projects across Australia largely have supply contracts already secured with set prices.
<h2>Economic Outlook</h2>
The Mid-Year Economic and Fiscal Outlook was delivered by Scott Morrison. The government has increased the budget deficit to $37.4 billion over 2015-16, which is greater than the May budget outlook by $2.3 billion.
Despite the budget deficit, Australia still maintains a sustainable level of debt to GDP[1]. So long as debt is at a sustainable level, it is not thought to have a large effect on economic growth relative to other factors such as investment in education.
Employment in Australia seems to be moving in a positive direction, which has surprised many (including me).
Capital investment and commodities have not performed well this year, leading to a huge reduction in revenue for businesses and government alike, and thousands of people losing work.
However, employment and participation in job searching has improved over 2015, which can be seen in Graph 2.
<a href="/images/2016/01/14/Graph_2_Employment-1.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/01/14/Graph_2_Employment-1.jpg" alt="">
The dark blue line indicates where trends in employment began to move favourably. In a recent interview with the Australian Financial Review (AFR), Governor Glenn Stevens suggested this may be because the sectors behind employment growth may not require large amounts of capital investment, such as services, tourism and hospitality.
Uber is one such example of an emerging service where little large scale capital investment is needed, especially from drivers. Uber reportedly employs 15,000 people in Australia.
As a result, Stevens has revised down expected jobless figures and the need to further reduce the cash rate.
However, I would argue that the nature of employment is not enough to provide a wealth effect that would fuel demand strong enough for housing. Wage growth remained at 2.3% in the September quarter and it is likely that a significant portion of new found employment would be part time work.
As documented thoroughly this year, unaffordability persists across the country in both ownership and rent of dwellings. Unaffordability, combined with higher interest rates and low wage growth means that we probably can’t expect the exceptional growth seen this year in any of the major capital city markets in 2016.
Australia’s economy still faces many challenges before returning to strong GDP growth, and many dwelling markets across the country are also likely to see slowed or negative growth in 2016. However, property is a long term game and we have very diverse markets and opportunities throughout the country. I will aim to highlight more of these unique opportunities in 2016.
Eliza Owen is the market analyst for Onthehouse.com.au. She can be contacted <a href="https://www.onthehouse.com.au" target="_blank">here.</a>
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2016 unlikely to see property market crash in Sydney: Onthehouse's Eliza Owen

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GUEST OBSERVER
With a record-high number of units currently under construction nationwide, the capital growth performance of units is weaker than houses in certain cities and we anticipate that this trend will continue.
The CoreLogic Home Value Index shows that over the 12 months to August 2016, combined capital city house values have increased by 7.2 percent compared to a 5.5 percent rise in unit values.
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<h3>Rolling annual change in house and unit values, combined capital cities</h3>
<a href="/images/2016/09/13/2016-09-12--image1.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/13/2016-09-12--image1.png" alt="">
The first chart shows the annual change in combined capital city house and unit values over time.  The chart shows that typically the change in house values is greater than units.  What is interesting though is that during the past two instances of value declines nationally, house values have actually recorded greater annual falls than units.
While the rate of annual growth for units has been only slightly lower than that of houses across the combined capital cities, across individual cities the trends vary significantly.  Hobart and Darwin are the only two capital cities in which the change in unit values over the past year has been greater than the change in house values. 
<h3>Annual change in individual capital city house and unit values 12 months to August 2016</h3>
<a href="/images/2016/09/13/2016-09-12--image2.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/13/2016-09-12--image2.png" alt="">
In Melbourne, Brisbane, Adelaide and Canberra, the change in unit values over the past year has been less than half that of houses.  This in itself is interesting, particularly when you consider that Melbourne and Brisbane in particular are currently experiencing historic high levels of new unit construction.  The fact that in many of these cities substantial increases in unit stock is expected over the coming years, it is reasonable to anticipate that the gap between the annual change in house and unit value will persist and potentially grow larger.
Taking a longer-term look at the change in house and unit values since December 2008 shows clearly that overall value growth has been much stronger in Sydney and Melbourne than anywhere else.  Over the period, both house and unit values are higher across each capital city however, houses have outperformed units in all cities except Hobart and Darwin.  In Brisbane, Adelaide, Perth and Canberra, the cumulative growth in unit values has been less than half that of houses over the period.
<h3>Total change in house and unit values, December 2008 to August 2016</h3>
<a href="/images/2016/09/13/2016-09-12--image3.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/13/2016-09-12--image3.png" alt="">
The data shows that we’re already seeing the growth in unit values generally underperforming houses values.  Of course, over recent years the overall supply of units, particularly in inner city areas has increased substantially with even more new stock to come.  The most recent data from the Australian Bureau of Statistics (ABS) showed that nationally there were 152,449 units under construction at the end of the March 2016 with an additional 41,548 units approved for construction to July 2016, many of which would have already commenced construction.
While demand for inner-city housing, particularly units, has increased significantly over recent years the heightened level of unit construction has the potential to create problems for the housing market.  While an increase in housing supply is important, much of the new unit stock to-date has been targeted at an investor market.  From an investors perspective units offer higher yields and lower prices than houses however, in many cities recent growth has underperformed while the rental market is the weakest it has been in more than two decades.  With additional unit stock under construction, there is the potential as this stock enters the market the rental market will become even more depressed.
<h3>Quarterly number of houses and units under construction, National</h3>
<a href="/images/2016/09/13/2016-09-12--image4.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/13/2016-09-12--image4.png" alt="">
Over the coming years we anticipate that the performance of houses and units could diverge even further.  While units offer a much more affordable purchase price than houses, as the supply of units relative to houses increases, we would expect demand for detached houses to hold-up much better than demand for units.  Especially considering much of the new unit stock has to-date been one or two bedrooms, of a similar internal size and design and very much targeted at a similar market segment.
For those people who are looking to purchase a unit at a time when supply levels are moving through record highs, projects which are differentiated from the broader market, based on their location, design, owner mix or quality of the developer may provide some safe haven from the weaker unit market conditions.
Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Record new unit supply is likely to contribute to the underperformance of unit values: Cameron Kusher

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The national home value index one per cent over December, pointing to a strong start to 2021, data analytics firm CoreLogic's monthly home value index found.

It was the third consecutive month of dwelling value gains after declines of -2.1 per cent drop in dwelling values between April and September.

Darwin again led the way in monthly gains over December, with dwelling values up another 2.3 per cent. They are 5.5 per cent up on the quarter in the Northern Territory capital and nine per cent up the calendar year, the best performing market across the country for 2020.

Darwin was followed by 1.1 per cent gains in Brisbane, Adelaide and Perth.

Melbourne was the other other capital to see gains of one per cent or above, with Hobart and Sydney recorded modest 0.7 per cent growth and Canberra the worst performer but still up 0.6 per cent.

<img alt="" height="707" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/corelogic_january_2021.jpg" width="1200">

CoreLogic’s research director Tim Lawless said the year was characterised by a mild COVID dip in values, but unprecedented volatility in the transaction space.

“The number of residential property sales plummeted by -40% through March and April but finished the year with almost 8% more sales relative to a year ago as buyer numbers surged through the second half of the year," Lawless said.

Despite the volatility, housing values showed remarkable resilience, falling by only -2.1% before rebounding with strength throughout the final quarter of 2020.”

<h2>Houses v Units</h2>

The national housing market started its expected outperformance of its unit counterpart over December, with national average gains of 1.1 per cent over the month.

Unit values held firm however, seeing growth in every capital apart from Sydney.

Sydney's housing market did the heavy lifting for their 0.7 per cent dwelling value gains. Houses were up 1.1 per cent over December compared to a -0.1 per cent contraction in the unit market.

House values in Melbourne outperformed Sydney's, up 1.2 per cent. Their unit market growth was one of the best in the country, up 0.6 per cent, only bettered by Perth's 1.1 per cent gains.

It was a similar script in Queensland, with Brisbane home values up 1.2 per cent and unit values up 0.4 per cent.

 
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The national home value index price rose one per cent over December, pointing to a strong start to 2021, data analytics firm CoreLogic's monthly home value index found.



Joel Robinson

Every capital sees real estate value growth in December 2020: CoreLogic

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The standout feature of Domain’s Top 10 prestige beach suburbs list is the remarkably poor performance on capital growth.
The best of them wouldn’t make the Top 10 list for capital growth rates in Melbourne, Perth, Darwin, Sydney or Brisbane – nor the Top 25 list of best performers in regional Australia. 
One of the so-called Top 10, Noosa, has recorded zero growth over 10 years. This helps to confirm our ranking of Noosa as Australia’s biggest real estate lemon.
The Domain list of Top 10 prestige beach suburbs continues a grand tradition of Australian media publishing real estate lists that are pointless, inaccurate or farcical.
It says something about the mediocre performance of these apparently prestigious beachside locations that one of the Top 10 has recorded no growth at all over the past decade. 
It’s the antithesis of investment, which is meant to be about achieving growth. The only thing of value to owners in many of these ritzy locations is the ego trip. Beyond that, they’re crying all the way to the bank.
These locations, which include Brighton in Melbourne, Bronte in Sydney and Cottesloe in Perth, have all the qualities that many people imagine would make them out-performers on capital growth: great beaches, quality restaurants, wonderful amenities and top quality homes. 
Many investors would rue their inability to afford to buy there and grow their wealth. But they need not concern themselves: there’s better capital growth in the middle market areas and the downmarket suburbs, which dominate the Top 10 growth lists in most of our major cities.
Remember that old real estate adage about property doubling in value every 10 years, which means a growth rate averaging better than 7% per year? It’s generally untrue. The best performers achieve it, but most properties do not. And certainly none of the Top 10 prestige beach suburbs have done so.
The No.1 ranked prestige beach suburb for capital growth, which apparently is Brighton in Melbourne, has managed growth averaging just 6.7% per year.
No.2 Portsea, also in Melbourne, recorded growth averaging only 5.55% per year. This is not a stellar performance, although the people who put together the list apparently thought it was.
Byron Bay, which according to Domain Group senior economist Andrew Wilson is “an exceptional market”, has averaged a mediocre 5.4% per year - a growth rate at which it would take over 13 years for values to double.
The bottom half the Top 10 list is made up of suburbs with growth rates that don’t even match inflation. 
Main Beach on the Gold Coast has a growth rate of a little over 1% per year. Palm Beach in Sydney, where the median price is $2.7 million, has managed less than 1% per year.
To put these growth rates into perspective, the best suburbs in Darwin, Perth and Melbourne all have growth rates above 10% per year. The best in Sydney are above 9% per year.
And, outside the capital cities, the Top 25 regional centres all have growth rates of 10% per year or better, with the top four achieving 15%-plus. 
If you’d bought the typical Palm Beach property 10 years ago, you would have paid around $2.46 million and managed capital gains of around $220,000 a decade later. In real terms, you lost money.
If you’d spent that $2.46 million in the best-performing suburbs in Perth, Darwin, Sydney and Melbourne (you could have bought multiple properties in multiple cities for that sum), your capital gain would have been $4.2 million.
Which would you rather have: the prestige - or $4.2 million?
 
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a> 
 
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terryryder-YECXbqmri2

Poor capital growth performance for beach retreats: Terry Ryder

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The top 20 locations in Australia for long-term capital growth are all regional locations.
That may surprise many people because the general theme in media is that the capital cities out-perform their regional markets. 
The misconception arises when research houses spit figures out of their computers and rush them off to media without providing any analysis of the realities behind the generalised figures.
A general figure describing growth in regional New South Wales will often produce a low growth figure because there are lots of mediocre small town markets, which drag down the average. The generalised number for regional Queensland will be low because there are numerous markets in decline, thanks to their links to the resources sector and/or developer oversupply. 
But the best individual towns often deliver higher long-term growth than the best of the capital city suburbs.
The latest Hotspotting survey for the Capital Growth Superstars report - examining long-term capital growth rates for every suburb and town in Australia - shows that, once again, the best growth rates are all regional.
The best of the capital cities are two suburbs of Darwin, Gray and Fannie Bay, which average 10.2% per year. But that’s barely good enough to make the Top 20 list for regional Australia.
The Top 20 regional locations have growth rates ranging from 10.2% to 20.7% per year.
Most of them are mining towns, resources regional centres or country towns boosted by recent resources activity. This is despite the sharp decline in prices in many resources-impacted towns over the past 2-3 years.
But the No.1 location in Australia for long-term capital growth is not a mining-related location. It’s the oddly-named Humpty Doo, a town of 6,000 about 40km from Darwin on the road to Kakadu National Park. It has a capital growth rate of 20.7% per year, largely because of growth generated by the outward sprawl of Darwin. 
Newman, an iron ore town in the Pilbara region of WA, is No.2 with a price growth average of 18% per year over the past decade. This is actually a significant drop on the town’s peak, about three years ago, when it averaged 30%-plus as the median price reached $780,000. It has dropped back to $685,000, according to the latest figures, but the growth rate is still the second best in the nation. 
Let’s be clear. I don’t advocate investing in mining towns or mining regional centres. They are just too volatile and too high risk. 
A few short years ago the iconic coal-mining town of Moranbah in Queensland had a long-term capital growth average above 30% per year. Back then its median price was $750,000. Today it’s $250,000 and the capital growth average for the past 10 years is now minus 0.2%. 
In other words, all that capital growth since 2005 has been wiped out and values are now lower than they were 10 years ago.
Moranbah is the most extreme boom-bust story I have encountered in Australian real estate, but there are other mining-impacted locations which have soared and are now very busy plummeting.
Port Hedland once had a median house price above $1.2 million and a capital growth rate close to 30% per year. Today the median is around $800,000 and the capital growth rate has dropped to 11.6%. 
That’s still good enough to rank No.10 in Australia and it means that if you bought there 10 years ago you’re still well in front. But if you bought there three years ago, you’re feeling a tad sick.
Despite the sharp decline in their markets in recent years, mining towns and resources regional centres still have the highest long-term capital growth rates in Australia – other than Humpty Doo. By comparison, the best of the capital city suburbs fade into insignificance.
<a href="/images/2015/07/09/ryder_chart.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/07/09/ryder_chart.jpg" alt="">
 
TERRY RYDER is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a> 
Terry was recently joined by Property Observer editor at large Jonathan Chancellor for a webinar on why research is the key to successful property investing in 2015. You can download slides and audio from the webinar <a href="component/content/article?id=42796" target="_blank">here</a>.
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Regional areas offering long-term capital growth: Terry Ryder

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Potential investors looking to spend $500,000 in West Australia have plenty of options in the town of Esperance, with the possibility buying two homes in the suburb of Sinclair with change.
<a href="https://www.urban.com.au/property-observer" target="_blank">Esperance</a>, located in the south east of Western Australia, is known for tourism, agriculture and fishing.
Castletown is another suburb with potential, according to the Herron Todd White July 2015 Month in Review, with a modern finished home available for under $500,000 returning $400 to $450 in rent per week.
The best return on investment for $500,000 may be found in Nulsen, with the possibility of netting three homes with a rental of $250 apiece per week on average.
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