{"id":6349,"date":"2015-11-16T01:00:05","date_gmt":"2015-11-15T14:00:05","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=6349"},"modified":"2015-11-16T01:00:05","modified_gmt":"2015-11-15T14:00:05","slug":"downturn-in-the-resources-sector-vs-property-market","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/downturn-in-the-resources-sector-vs-property-market\/","title":{"rendered":"Downturn in the resources sector vs. property market – Michael Yardney"},"content":{"rendered":"

 
\nNew figures illustrate just how hard some real estate markets have been hit by the downturn in the resources sector. In today’s show Michael Yardney<\/a><\/strong>,\u00a0\u00a0from Metropole Property Strategists, tells us where and by how much.
\n <\/p>\n

Transcript:<\/h4>\n

Kevin<\/b>:\u00a0 New figures out illustrate just how hard some real estate markets have been hit by the downturn in the resources sector. The figures show that homes in Queensland and Western Australia have been impacted by massive decreases in price over recent years. Michael Yardney from Metropole Property Strategists joins us.
\nHi, Michael.
\nMichael<\/b>:\u00a0 Hello, Kevin.
\nKevin<\/b>:\u00a0 Michael, what\u2019s the bottom line here? What are you reading here?
\nMichael<\/b>:\u00a0 Recent studies have shown that the boom period for Queensland\u2019s mining town house prices is over, and as investment spending has reduced in these areas by the big mining towns, demand for property has contracted, there are lots of properties for sale, there are lots of properties for lease, huge volatility, rental demand has decreased, and values of properties have, in some areas, dropped by up to 70%. This is devastating. In fact, in my mind, it will bankrupt some property investors.
\nKevin<\/b>:\u00a0 Yes, that\u2019s a terrible story. It\u2019s continues on. You\u2019ve been warning for some time about mining towns. Let\u2019s look specifically at why, Michael.
\nMichael<\/b>:\u00a0 In my mind, they comprise of transient populations that are almost solely reliant on a resources project. Employment happens for that reason and because that experiences large swings in demand, I like areas that are underpinned by lots of owner-occupiers wanting to live there.
\nBut people weren\u2019t moving there to live long-term, and most of the properties were driven by investors buying, chasing the next hot spot and it\u2019s just a repeat of what we\u2019ve seen when investors have chased hot spots before. They\u2019ll make short-term profits, and those who get in early sometimes do well but the majority of people get burned, Kevin.
\nKevin<\/b>:\u00a0 Michael, how many times have we said, \u201cIf it looks too good, it probably is\u201d? Maybe we should extend that by saying, \u201cIf it looks too good, it\u2019s probably too good to last\u201d?
\nMichael<\/b>:\u00a0 That\u2019s probably better. One of the really popular hot spots, Kevin, was Moranbah. Its median prices grew roughly 30% each year and that was for about ten years so people said, \u201cYes, it\u2019s going to last forever.\u201d But this stopped in about 2012 when prices peaked at about $750,000, and Kevin, rents in Moranbah grew to $1800 a week. That is too good to last, as you say.
\nAll of a sudden, the mining companies said they\u2019re not going to be able to pay those sort of rents, so they suddenly had these fly in, fly out workers or built temporary camps themselves and now the median price in Moranbah has gone from $750,000 to $215,000. Houses, if you try to get out and sell, would now maybe take eight months to sell, if you could \u2013 because there\u2019s no one buying \u2013 and rents have fallen from $1800 to $300 a week.
\nKevin, we are regularly seeing people who have invested in those areas who come and ask us for help \u2013 not that we gave them the initial advice to do it and invest there \u2013 but we can\u2019t and it\u2019s devastating because they have what is called a negative equity. They own less than they owe so if they had to pay their bank mortgages out, they\u2019d have to fork out a couple of hundred thousand dollars, and this is causing hardship, sleepless nights and probably if the banks pulled the rug out from under them \u2013 and the banks don\u2019t want to \u2013 it will cause bankruptcies.
\nKevin<\/b>:\u00a0 Michael, apart from not doing it, what are the real valuable lessons that come out of this?
\nMichael<\/b>:\u00a0 What you said right at the beginning, Kevin, if it seems too good to be true, it is. I think you have to stop looking for the latest hot spot, the next boom area, but invest in our four big capital cities where there are multiple drivers to the economy, which leads to job growth in a range of industries and therefore wages growth.
\nI\u2019d avoid investing in regional or mining towns because they lack the multiple growth drivers and they\u2019re dominated by investors rather than owner-occupiers. It\u2019s owner-occupiers who bring the stability to our property markets that stops the volatility that you get in share markets, Kevin.
\nThen, of course, I\u2019d only invest in those regions within the capital cities that are going to be driven by higher wages growth, so it\u2019s being very selective in this more mature stage of the property cycle, Kevin.
\nKevin<\/b>:\u00a0 Thanks, Michael. We\u2019ll catch you again soon.
\nMichael<\/b>:\u00a0 Thanks, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  New figures illustrate just how hard some real estate markets have been hit by the downturn in the resources sector. In today’s show Michael Yardney,\u00a0\u00a0from Metropole Property Strategists, tells us where and by how much.   Transcript: Kevin:\u00a0 New figures out illustrate just how…<\/p>\n","protected":false},"author":176692471,"featured_media":6102,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,25],"tags":[101],"class_list":["post-6349","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-sponsored-channels","tag-podcast"],"yoast_head":"\nDownturn in the resources sector vs. property market - Michael Yardney - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/downturn-in-the-resources-sector-vs-property-market\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Downturn in the resources sector vs. property market - Michael Yardney - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  New figures illustrate just how hard some real estate markets have been hit by the downturn in the resources sector. 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