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Buying in the right places

Buying in the right places. Terry Ryder hotspotting.com.au. Deciding where to buy …. … is more important than what you buy or when. Margaret Lomas. “Your job as an investor is not to buy in the market where it’s already happening – but in the market where it will happen next .”.

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Buying in the right places

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  1. Buying in the right places Terry Ryder hotspotting.com.au

  2. Deciding where to buy … … is more important than whatyou buy or when

  3. Margaret Lomas • “Your job as an investor is not to buy in the market where it’s already happening – but in the market where it will happen next.”

  4. Survey of investor intentions:Where to buy for best capital growth? • Melbourne 26% • Sydney 25% • Brisbane 17% • Perth 9% • Regional Aust 6% • Adelaide 5% • Gold/Sun. Coast 5% • Mining towns 5%

  5. Where was the best capital growth in 2010 ? (RP Data) • Pilbara WA 25% • Far West NSW 19% • Central Highl. VIC 15% • South-east SA 14% • Barwon VIC 12% • Gippsland VIC 12% • Eyre Peninsula SA 12% • South-east NSW 10% • Melbourne 8.5% • Sydney 6.4% • Darwin 5.8% • Adelaide 3.9% • Canberra 3.8% • Brisbane -1.1% • Perth -1.5% • City average 4.7%

  6. “If it’s more than 2hrs away, city people have never heard of it and have only flown over it on their way to Hong Kong.” Bill Birch, devt mgr, Narrabri Shire

  7. Sea Change v Hill Change Central Coast towns Inland towns Singleton 10% Muswellbrook 10% Maitland 10% Cessnock 11% Branxton 12% • Forster 6% • Tuncurry 5% • Nelson Bay 5% • Fingal Bay 5% • Salamander Bay 6% • 10yr growth averages (APM)

  8. Coastal v Country(Qld) Seaside Inland Dalby 64% Isaac (Moranbah) 54% Biloela 57% Western Downs 64% Atherton 56% Mt Isa 98% Roma 100% • Sunshine Coast 21% • Fraser Coast 18% • Gold Coast 22% • Cairns 26% • Mackay 27% • (Rockhampton 56%) • (Gladstone 66%) • Growth over past 5yrs • REIQ figures

  9. Buyer Beware The lure of high returns

  10. Regional centres are safer options …. … than mining towns

  11. Mining boom towns impacted by Global Financial Crisis • Hopetoun & Ravensthorpe, WA • Zeehan and Queenstown, Tas • Kalgoorlie, WA • Cobar & Broken Hill, NSW • Moura & Dysart, Qld

  12. Weekend Australian 9-1-2010 “Endless cycle of boom and bust” • Ravensthorpe, WA: closure of BHP nickel mine • 1,800 lost their jobs • Cost $2billion to build, sold for $370million

  13. Moura, Qld: Vacancy Rate %

  14. Dysart, Qld: Vacancy Rate %

  15. “Fly-in fly-out miners are killing towns” Article Mackay Mercury 13 March 2011

  16. Safest way To invest to exploit resources boom Choose the Regional Centre Most likely To benefit Newcastle NSW Bunbury WA Geraldton WA Townsville QLD Gladstone QLD Emerald QLD Toowoomba QLD Mackay QLD

  17. Where investors expect to find the best capital growth • 1. Inner-city suburbs • 2. Sea Change locations • 3. Outer suburbs • 4. Regional centres • Hotspotting.com.au survey

  18. Outer suburbs provide the best capital growth in most cities hotspotting.com.au

  19. Brisbane – 10yr growth averages The Best The Worst Griffin $410,000 6.9% Kenm. Hills $700,000 7.5% North Lakes $450,000 8.1% Bahrs Scrub $425,000 8.2% Ormiston$570,000 8.8% St Lucia $780,000 9.1% Auchenfl. $730,000 9.4% Brookfield $890,000 9.4% Newstead$920,000 9.5% Indooroopilly$640,000 9.5% • Blackstone $350,000 17.1% • Woodend$324,000 16.9% • Rocklea$365,000 16.4% • Deagon$410,000 15.7% • Richlands$420,000 15.5% • Kingston $285,000 15.4% • Eagleby $295,000 15.4% • Archerfield$330,000 15.2% • Riverview $250,000 15.1% • Coalfalls$340,000 15.0%

  20. Canberra –10yr growth averages The best The worst Yarralumla $955,000 9.0% Gordon $435,000 8.9% Griffith $940,000 8.9% Hawker $640,000 8.6% Palmerston $440,000 8.5% Forrest $1,700,000 8.5% Red Hill $975,000 8.4% Isaacs $670,000 7.1% Florey $405,000 6.5% Braddon $515,000 5.3% • Rivett $480,000 13.5% • Downer $585,000 13.4% • Watson $560,000 13.4% • Charnwood $355,000 13.1% • Chifley $550,000 13.1% • Holder $525,000 13.0% • Spence $440,000 12.7% • Page $435,000 12.7% • Mawson $605,000 12.7% • Higgins $405,000 12.5%

  21. Adelaide – 10yr growth averages The Best The worst GlenelgSth $625,000 6.4% Netherby $690,000 7.0% Mparra West $285,000 7.9% Oakden $385,000 8.0% GlenOsmond $665,000 8.1% Tennyson $825,000 8.2% Myrtle Bank $690,000 8.6% Glenunga $700,000 8.6% St Georges $685,000 8.9% West Lakes $620,000 9.0% • FerrydenPk $360,000 16.2% • Greenaces $385,000 16.1% • Smithfield $210,000 15.7% • Northfield $360,000 15.5% • ChristieBch $335,000 15.4% • Clearview $360,000 15.3% • WindsrGrd $380,000 15.1% • PortWillung $360,000 14.9% • NoarlDown $320,000 14.9% • Ottoway $315,000 14.8%

  22. Melbourne – 10yr growth averages The Best The worst include Docklands $630,000 2.9% CranbourneSth $480,000 6.5% Tarneit $355,000 6.0% Point Cook $460,000 7.2% CarolineSprings $410,000 8.5% Patterson Lakes $825,000 7.0% Toorak $2,180,000 9.2% SouthYarra $1,030,000 9.8% Caulfield $960,000 9.4% East Melb. $1,280,000 9.6% Beaumaris $1,030,000 9.2% • Cairnlea $460,000 17.7% • StAndrewsBch $540,00015.4% • Somers $620,000 15.2% • Gowanbrae $530,000 14.9% • Braybrook $455,000 14.1% • Springvale $480,000 14.1% • Red Hill $665,000 14.0% • BarwonHds $585,000 13.8% • Indented Hd $330,000 13.7% • Bonbeach $565,000 13.7%

  23. Growth rates – millionaire suburbs of Sydney • Balgowlah 7.1% • Balmain East 6.7% • Birchgrove 4.3% • Cammeray 6.7% • Castle Cove 6.2% • Chatswood 6.1% • Cremorne 7.8% • East Killara 6.5% • Gordon 6.8% • Kensington 7.5% • Killara 7.2% • Lilli Pilli 4.9% • Longueville 4.0% • Mosman 6.8% • Neutral Bay 4.7% • North Sydney 4.7% • Pymble 7.3% • Rose Bay 7.6% • Seaforth 6.5% • Warrawee 5.6% • Willoughby 7.2% • Woollahra 7.9%

  24. Wolseley Rd, Point Piper • Most exclusive address in Sydney • Re-sales show capital growth rates ranging from 2.3% to 3.6% per year • $6.8m 2002, $8.16m 2010, 2.3% per year, profit $1.38 million • $6.8m invested in top Brisbane suburbs in 2002 would now be worth $19.34m • Profit of $12.56 million

  25. Exclusive areas Gold Coast • “scarcity value” or “wow factor” • Hedges Ave – beach frontage • 31: Bought $11.15m, sold $5.4m, loss $5.75m • 247: Bought $10.25m, sold $5m, loss $5.25m • 49: Bought $16.8m, sold $9.5m, loss $7.3m • 33: Bought $27m, sold $17m, loss $10m

  26. Exclusive areas Gold Coast • “Scarcity value” or “wow factor” • Ephraim Island, Gold Coast Broadwater • Buying 2003/2004, selling 2010 • Bought $1.625m, sold $1.015m, loss $610,000 • Bought $1.065, sold $885,000, loss $180,000 • Bought $2.65m, sold $1.625, loss $1.025mil • Bought $1.595m, sold $1.33m, loss $265,000

  27. Don’t be a real estate snob “Capital growth doesn’t hold grudges over suburbs” Cairns agent Lance Richards

  28. Keysborough, Melbourne • Buyers in new estates wanted name change • Part of downmarketDandenong City • Keysborough track record • 10-year growth average: 12% • Last 3 years: 14% per year • 2010: up 14% • Median price 2007: $287,000 • Median price 2010: $425,000

  29. Melbourne growth areas 2009 • 46 suburbs have long-term growth of 12%+ • Three-quarters have medians below $500,000 • Only 1 million-dollar inner-city suburb • Mornington Peninsula (Rosebud, Dromana) • Bellarine Peninsula (Geelong)

  30. Melbourne growth areas 2011 • 126 suburbs have long-term growth of 12%+ • 82% of 404 suburbs double-digit growth rates • 25 suburbs have long-term growth of 13% • 13 have medians below $600,000 • Only 1 million-dollar suburb • Mornington Peninsula (9 of the 25) • Bellarine Peninsula (3 of the 25)

  31. Those who espouse the superior investment qualities of the “prime” suburbs have an attitude, but not an argument The research proves them wrong

  32. Factors to look for Creator Categories (factors that create hotspots) The Stayers The Ripple Effect Sea Change Hill Change Medical/Education • Transport Infrastructure • Ugly Ducklings • Govt Decisions • Lifestyle Features • Boom Towns

  33. Locations with multiple factors Gladstone Qld’s industrial muscle city • Boom Towns • Govt Decisions • Transport Infrastructure • Lifestyle Features

  34. Locations with multiple factors Woolloongabba • Ugly Ducklings • Transport Infrastructure • Govt Decisions • Medical/Educational

  35. Locations with multiple factors Ipswich City • Ugly Ducklings • Govt Decisions • Transport Infrastructure • Boom Towns • The Stayers

  36. Locations with multiple factors Toowoomba & Surat Basin • Boom Towns • Cheapies with Prospects • Govt Decisions • Transport Infrastructure • The Stayers

  37. Report card: Vic Hotspots 2007 June 2007 December 2010 $690,000 15.2 % $400,000 15.0 % $375,000 11.9 % $360,000 12.2 % $520,000 9.4 % $570,000 12.3 % $310,000 6.3 % $750,000 13.6 % $360,000 13.7 % $260,000 7.8 % $4,590,000 12.2 % • Brunswick $420,000 • Dandenong $245,000 • Epping $255,000 • Frankston $240,000 • Torquay $380,000 • Anglesea $380,000 • Warrnambool $250,000 • North Melbrne $480,000 • Rosebud West $230,000 • Traralgon $190,000 • TOTAL $3,070,000

  38. Why regional Australia? • Stimulus spending • Gillard deal with Independents • Resources boom • State Government focus on regions • Population drift to key regional centres

  39. National Top 10Best Buys 2011 • Geraldton WA • Gladstone QLD • Newcastle NSW • Orange NSW • Seaford SA • Surat Basin QLD • Toowoomba QLD • Townsville QLD • Warrnambool VIC • Whyalla SA

  40. ryder@hotspotting.com.au 0408-011595

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