This is an excerpt from an article in BRW a few weeks ago.
"Residential property investment expert Terry Ryder believes that water and climate change are already affecting how buyers select real estate.
But he says while rainfall should be a big factor, this needs to be matched against well-planned and managed water storage and usage.
The key for property buyers who rate water security highly is to seek out locations that have no shortage of water and also manage their water well."
And it goes on to say how water shortage should be taken into consideration when developing properties. It also gives a list of Ryder's six "oasis-change" investment hotspots:
- Townsville, Qld
- Perth
- Maleney, SEQ
- Dubbo, Central NSW
- Diamantina shire, West. Qld
- Hobart
I'm interested to hear what others think of factoring "water shortage" into the property development picture. I have not developed any property myself and I'm going for Marty's seminar to learn.Areas with good water supplies and infrustructure will be the new 'sea change' type areas if the drought goes on further.
I do think it is worth considering. I'm living in Perth but homesick for family /friends in Bris. When I visited a while back I felt like I was visiting the desert. I was considering if I were to move back I would probably be more likely to move to Northern NSW or Maleny. I do like my nature/greenery/gardens. x
This is an interesting issue, I had 3 properties outside Towoomba , Dalby to be specific, SEQ. I decided to sell not too long ago and take profit because when I bought them they had the “mythical” 10%-12% yield, however as they doubled up in price during the boom and rents sort of stayed the same, my yields were really 5% after a few years, so… Steve explains this better than me anyway.
Point is, when I decided to sell, it took about 4 months to sell two of them, the feedback from the agents was that buyers and locals in general were really negative about the draught. Lucky the properties were cash flowing nicely, good tenants in them, etc so I was not desperate to sell.
Happy Investing
Hi Jon
Thanks for your comment. I hear what you are saying — it is a very real issue then and worthwhile to bear in mind when investing in some of those areas. Where I live, the grass is quite green and so it's easy to overlook the impact of the drought on the real estate market in other areas such as Dalby.
Eve
Hi Eve,
While the drought is an important issue and worthwhile to bear in mind when investing in some of the areas you mentioned it will not stop an investor to buy the ip in that area especially if it is a booming town, close to beaches, shops etc.
The point is that no matter how affected the areas might be don't be scared or worried if you find a good ip property in the area.
in my experience so far it didn't stop people from getting good retal yields and good appreciating when they purcased in drought affected areas.
Definately be careful as some of the smaller towns can have residents really worried about the drought soo much to the point that the town will experience population decline!
good luck..
For me the main issue here is “how will the current climate conditions impact the economics of an area?” I live in central Vic and like most places water is a big issue around here. Yes they have just connected places like Bendigo and Ballarat to a ” Super pipe” but the pipe is only any good if there is water to run through it?? From what I see there is no certainity of this going forward!! At some point this lack of certainity must have an impact as those within Industry and with dollars to invest, are unlikely to choose this area. If it was my money I’m certain I ‘d look else where. Present industries are finding it tough enough. In the past couple of weeks over 100 people around here have lost their jobs due to the lack of rain.And I’m sure there are others that have not been in the media. Apple growers in the Harcourt Valley are trying to keep their trees alive and productive on 30% of their entitlements. I could mention many other examples. I hope I’m wrong but areas with issues such as these may not be the best places to buy an IP???
Hallg
Well I live on the Sunshine Coast in QLD, and we have very good rainfall and full dams. Maleny is a very lush, green area and some people are attracted to that, although I see it as 'bonus' issue rather than the whole reason. What I mean by this is that people who are already thinking about moving to somewhere like Maleny will justify it to themselves with 'oh, and they get lots of rain', rather than thinking 'we need to move somewhere where it rains more'.
The other side of low rainfall is that some people will actively seek out drier areas to live in. Ask some British migrants to Australia and many of them couldn't care less if it never rains (assuming the water can be supplied somehow). Take a drive through Arizona and Nevada and you'll find people who like living in an arid climate. Whether the water supplies can be supplied to them is another issue, but in the case of Coastal Australia, the desalination / recycling option is there to help solve the problem.
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