Carbon energy regions of Australia predicted to boom

Considering the slowing in consumer confidence, higher energy costs, and the catastrophic events that have recently occurred in Australia and in countries close to home, our housing markets have performed surprisingly well.
 
The following graph ‘Australia’ presents the current position and trend in the Australian housing market.


Residex CEO John Edwards said, “The market has rebounded in February to the position it held in June 2010 and is close to its peak of $449,000, achieved in November 2010”.

Mr. Edwards believes the current situation in Japan will impact on our share markets as the Japanese economy slows and sells off assets to fund the rebuilding phase, which in turn could have a positive effect on our housing markets.

“Any share market adjustment that occurs may cause a return to the safe haven, where investments in our housing stock would be less volatile. For me, the real story is around our growing regional townships where energy in the form of coal or gas is either shipped or mined”, said Mr. Edwards

The situation in Japan has created a certain level of political/public pressure to avoid atomic power plants throughout the world. While greenhouse gases are seen as destructive, it is unlikely the public will see it in the same frightening light as radioactivity.

Mr. Edwards predicts that over the next 30 years we will see a breakthrough in hydrogen energy control and move to hydrogen based power plants supplemented with solar, wind, and ocean current/wave power sources, and if right, carbon based energy production/exporting regions of Australia will see good growth over the next decade as the mines and ports expand.

“This is already happening but I believe we can now be sure that it is not a short term occurrence. In our latest release of the Best Rent Report we have identified a number of these towns as candidates for both good growth and quality rental returns”, said Mr. Edwards.

Industry growth promotes population growth and hence housing demand, which in turn causes house price growth or rental increases. It may come as a surprise to most people that in New South Wales, the major coal producing area of the Hunter Valley has been a significantly better investment area than Sydney over the last 10 and 20 years.

 

The above graph and table shows how the Hunter Valley has compared to Sydney over the past 20 years. As you can see, not only did the Hunter Valley provide better growth performance, it also provided a better rental return and is continuing to do so.

For the latest news on the residential property market, in depth commentary and up to date figures and statistics, join 40,000 other subscribers to the free Residex newsletter by clicking here.


April 2011