{"id":9096,"date":"2016-08-28T01:00:03","date_gmt":"2016-08-27T15:00:03","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=9096"},"modified":"2016-08-28T01:00:03","modified_gmt":"2016-08-27T15:00:03","slug":"be-careful-what-you-include-in-your-portfolio","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/be-careful-what-you-include-in-your-portfolio\/","title":{"rendered":"Be careful what you include in your portfolio – Anna Porter"},"content":{"rendered":"

 
\nThis week a timely warning from Anna Porter<\/strong> at suburbanite.com.au to be very cautious of filling your portfolio with regional properties, or buying in tourism hubs if you are looking to buy a growth property. These markets are volatile she says.
\n <\/p>\n

Transcript:<\/strong><\/h4>\n

Kevin:<\/b>\u00a0 You may recall recently I talked about some of the benefits of investing or looking as an investor at some of the regional markets around Australia. We\u2019ve also sounded a note of caution about some of the tourism hubs, too. I\u2019m going to pick up on that conversation and talk to Anna Porter. Anna is from Suburbanite.com.au.
\nGood day, Anna. Nice to have you on the show again.
\nAnna:<\/b>\u00a0 It\u2019s my pleasure to be here.
\nKevin:<\/b>\u00a0 You\u2019re a little bit concerned about some of the regional areas and particularly tourism hubs. Tell me why.
\nAnna:<\/b>\u00a0 Yes, certainly. We regularly research the 5-, 10-year, and beyond performance of markets. We often have people come to us after a regional growth property, and we say, look, regional investing is definitely one way to do it if you\u2019re chasing yields or income properties, but having a growth property in a regional area is a little counterintuitive.
\nWhen we look at the stats, typically we see regional hubs over a 10-year cycle perform at about more like 4% per annum growth whereas your more metropolitan or satellite city areas tend to perform more at 6% to 8% per annum growth. To put that into real numbers, the difference between 2% per annum over 10 years if you buy a $450,000 property is $165,000 in capital growth. That\u2019s a lot of money.
\nKevin:<\/b>\u00a0 Doesn\u2019t it depend on some of these regional areas and what the drivers are, like if there\u2019s good long-term industry, then it\u2019s going to be okay?
\nAnna:<\/b>\u00a0 There are some regional areas that have performed well, but there\u2019s always risk. If you\u2019re going into a regional area and you do get good performance, it\u2019s often from being quite speculative, so you have to be a risk taker.
\nTake, for example, some areas like recently we had a new client come to us and they had just bought some properties in Lismore, which is a university town. They came to us and they had some problems with one long-term vacancy in the property, and also they had had problems with growth. The property hadn\u2019t gone up much at all in about five years.
\nOne of the factors that we identified early on is they were buying because they felt there was stability with the university being there, but we\u2019ve actually been telling people for years to be careful of that because universities are putting on their own student accommodation, which is pulling people out of the private rental market.
\nThere are these volatility factors. We like to believe investing is like a chair; you have to have four legs, and if one of those legs breaks, you\u2019re still standing upright. If you go into regional towns or tourism hubs, you really only have one or two legs and you can very easily fall over.
\nKevin:<\/b>\u00a0 Yes, we saw that demonstrated quite sadly with some of the mining towns, didn\u2019t we? Some of the mining speculation, then the mines stopped leasing private properties and started building their own, and of course, the markets crashed.
\nAnna:<\/b>\u00a0 Yes. We\u2019ve never gone into mining towns because our barrier to entry for investing is a single industry town \u2013 whether it\u2019s a university, whether it be mining \u2013 and we\u2019ve actually now had some of our clients bring properties that they already had in their portfolio to us and say, \u201cWhat should we do?\u201d
\nOne of those locations is Dalby. Unfortunately other investment firms have recommended this to them in years gone by, and at the moment there are currently 668 properties for sale \u2013 houses \u2013 in Dalby, all quite similar, all of them are going backwards in value and these clients when we do that review have made a capital loss in the last five or six years.
\nIn real terms, that\u2019s someone\u2019s livelihood. That\u2019s someone\u2019s life savings. That\u2019s devastating.
\nKevin:<\/b>\u00a0 Let\u2019s talk about ice cream lickers: people who go to some of these tourism hubs \u2013 Gold Coast, Sunshine Coast \u2013 lick the ice creams, they\u2019re on holidays, \u201cWhat a beautiful place. I think I\u2019ll buy an investment property here.\u201d It\u2019s a cautionary note, isn\u2019t it?
\nAnna:<\/b>\u00a0 It certainly is. While tourism hubs are a great place to visit and spend a holiday, people often get drawn in by that. Some of the volatility we see in those markets is that there\u2019s not long-term sustainable employment. Tourism does bring in employment, but it\u2019s often quite finite in time, and often the biggest factor that sits in those areas is the high unemployment rates that we typically see, which again creates that speculative market.
\nWe call them more \u201cboom and bust\u201d markets. In some tourism hubs \u2013 for example, Gold Coast with the Games and that sort of thing \u2013 you can see this little boom come through, but you can see it bust just as quickly, just as heavily, at the other end of that.
\nKevin:<\/b>\u00a0 Would you be investing in the Gold Coast right now?
\nAnna:<\/b>\u00a0 No, we\u2019re not. We\u2019re actively avoiding that area.
\nKevin:<\/b>\u00a0 What about some of the areas that surround it that might benefit from the Games or even the long-term measures. Would you look at Brisbane as an example?
\nAnna:\u00a0 <\/b>Yes, we certainly are investing in Brisbane at the moment. And when we say Brisbane, we\u2019re not talking Ipswich. We have a lot of our clients who are from New South Wales or Victoria, and they say, \u201cOh, I\u2019m investing in Brisbane; I\u2019m buying in Ipswich or Toowoomba.\u201d And it\u2019s not quite the same drivers there.
\nWhen we talk about Brisbane, we\u2019re talking within 20 minutes of the CBD. We\u2019re not in flood zones. You have to be careful of that. You have to understand there are a lot of flood zones through that market, and your first insurance premium could be something you can\u2019t even jump over if you\u2019re in a flood zone. You also have to be mindful that the unit market is very oversupplied there.
\nWhile Brisbane will have a benefit, it\u2019s not just what\u2019s happening in the tourism space that\u2019s going to benefit Brisbane. There is a lot of employment being driven through the area. A lot of infrastructure has gone in over the past five and six years. They\u2019re the things that also create that longevity and sustainability and create more legs for the chair.
\nKevin:<\/b>\u00a0 Great talking to you, Anna. I\u2019ll leave you with your four legs, but we\u2019ll talk to you again real soon on the show.
\nAnna:<\/b>\u00a0 Fantastic. Thanks for your time.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

  This week a timely warning from Anna Porter at suburbanite.com.au to be very cautious of filling your portfolio with regional properties, or buying in tourism hubs if you are looking to buy a growth property. These markets are volatile she says.   Transcript: Kevin:\u00a0…<\/p>\n","protected":false},"author":176692471,"featured_media":9098,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,10,11,13,36,17,22,25],"tags":[101],"class_list":["post-9096","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-property-investment","category-research-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nBe careful what you include in your portfolio - Anna Porter - 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\/be-careful-what-you-include-in-your-portfolio\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Be careful what you include in your portfolio - Anna Porter - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  This week a timely warning from Anna Porter at suburbanite.com.au to be very cautious of filling your portfolio with regional properties, or buying in tourism hubs if you are looking to buy a growth property. 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