Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Thursday, 10 March 2016

Regional land prices are falling

Regional land price decline

More top quality analysis from Cameron Kusher of CoreLogic-RP Data at Property Observer today.

His always excellent work shows how capital city land prices are continuing to rise, but regional land prices - having become clearly overpriced through the mining boom from the early 2000s - have fallen by more than 5 per cent over the last year, with further declines in the post. 

His chart which shows land prices on a per square metre basis is even more pronounced, as capital city lot sizes have been compressed over time, and more significantly than regional lot sizes. 

Sydney land prices have risen very fast in particular over the past three years. 

Reports Kusher, the 69.9 per cent gap between capital city and regional land prices is now the highest on record. Over the short-to-medium term I expect that gap to continue widening towards 100 per cent. 

Read the interesting article over at Property Observer here

Resources boom and bust

The driver of the upswing (and now subsequent bust) in so many regions was of course the once-in-a-century mining and resources construction boom, which followed the China-driven boost to commodity prices in really starting to hit its straps about a dozen years ago, before finally peaking in the last quarter of 2012.

The most recently available figures show that although Queensland has already taken most of its medicine in this regard, on a national basis there is still an enormous decline to follow before reversion is complete.

BHP announced that it would axe 290 coal mining jobs at Mount Arthur this week, while it was announced today that Queensland Nickel will terminate 550 workers at Yabulu near Townsville. 

Plenty of pain to come yet, unfortunately. 

In my opinion the best performing regional cities and economies over time will be those located with reasonably close distances to the capital cities: Wollongong, Newcastle & the Hunter, Geelong, Bendigo, Ballarat, Gold Coast, Sunshine Coast (and Toowoomba, maybe). 

Infrastructure Australia seems to agree