Australian Property Update – August 2011

In this weeks report we have decided to break away from the standard What’s Hot
& What’s Not reporting format and undertake a very important task… ‘Identify Australia’s Top 100 investment destinations’

Fortuitously two of Australia’s leading property media publications ‘Australian Property Investor’ and ‘Your Investment Property’ both ran their
picks for the Top 100 property destinations around Australia at the current time (July 2011), so we have used these as the basis for our report!

Now the interesting part, whilst many of the panellists are the same, as we will discuss later, the two publications
could only agree on 21 destinations

And the 21 Common Property Hot Spots are:

Suburb	Location	‘Y-I-P’ Rank
Glastone	QLD Coast	2
Toowoomba	QLD – Surat	7
Chinchilla	QLD – Surat	11
Townsville	QLD – Nth QLD	19
Dulwich Hill	Sydney – 8km CBD	22
Paddington	Brisbane – 3km CBD	27
Bathurst	NSW Central Coast	30
Tempe	Sydney – 8km CBD	38
Baulkham Hills	Sydney – 24km CBD	41
Thornbury	Melbourne – 3km CBD	46
Port Macquarie	NSW – Nth Coast	49
Geraldton	WA – Nth Coast	51
Kensington	Adelaide – 4km CBD	54
Ainslie	Canberra – 5km CBD	62
St Kilda	Melbourne – 6km CBD	63
Brunswick	Melbourne – 6km CBD	66
Balaclava	Melbourne – 7km CBD	70
Port Noarlunga	Adelaide – 28km CBD	84
Rockhampton	QLD – Nth Coast	93
Warnambool	VIC – West Coast	94
Broadmeadows	Melbourne – 18km CBD	97
Please Note: API do not have rankings

HotSpot Suburb Profiles

It’s reasonable to assume that any suburb or location that makes the combined list is
worth a look, so here’s a quick summary of each and the drivers for that particular property market

Gladstone Qld

Thought to be the centre of the greatest single focus of investment in Australian history.  The diversity of industrial investment in Gladstone tied
to still affordable, though rising values, make it an absolute “no brainer” that prices and rents will grow substantially.

Toowoomba Qld

A focal point for Surat Basin mining, it has overcome its major short term issue – water management.  Many projects will feed the Gladstone behemoths and
with affordable pricing and additional road and air infrastructure enhancements, even those panellists who doubt that Toowoomba’s time is ‘now’ agree that it is ‘soon’.

Chinchilla  Qld

Nominated by ‘YIP’ in its own right and by ‘API’ as part of the Surat Basin towns.  With environmental approval for some CSG and LNG projects achieved, jobs and
population growth are on the way and with them, the almost inevitable upwards pressure on real estate yields and prices.

Townsville Qld

Has taken plenty of pain in recent years but appears to have very strong fundamentals.  A diverse economy with resources, manufacturing,
tourism, defence, health, education and government all developing.  Government presence may also be significant as at over 1000 km from Brisbane, it is being developed as a ‘second capital
city’ for Queensland.

Dulwich Hill Sydney

Less than desirable a few years ago, affordability, lack of supply, lifestyle and transport access offer property investment opportunity.  Emerging as a
lifestyle precinct option and with likely light rail access, it typifies the strong demand for affordable CBD fringe suburbs.

Paddington Brisbane

CBD access and lifestyle at affordable pricing get Paddington onto the list.  It is one of the dynamic emerging Brisbane lifestyle zones, centred in the
inner north, and notably, the “sweet spot” according to the local expert is ‘properties that are not yet renovated or restored’.

Bathurst NSW

“Hugely affordable and with a high yield at present”, Bathurst seems to owe its presence to outright cheapness (average units $191k according to APM) and position
as a thoroughfare on the road from Sydney to the Central West region and the far more dynamic city of Orange, 60km to the west.

Tempe  Sydney

Ugly but affordable.  Prime access to both the CBD (7km) and the airport (1km).  With Sydney expected to lead capital city markets in 2011
largely due to undersupply, cheap and well located suburbs like Tempe may benefit.  Would benefit far more with some urban renewal.

Baulkham Hills Sydney

Typifies the second category of capital city opportunity in 2011 – affordable outlying suburbs.  It offers better lifestyle than many locations 23 km
from the CBD but still under the greater Sydney basin average house price.

Thornbury Melbourne

One of the Melbourne CBD fringe suburbs expected to benefit from a blend of lifestyle opportunity and less than obscene pricing.  At 7km to the CBD, it
has less to offer than St Kilda but appears to have been nominated as it is significantly cheaper.

Port Macquarie   NSW

Whilst property markets in Queensland’s seachange locations have been devastated, partly due to oversupply, Port Macquarie is quietly reinventing itself
as a regional centre with developments in several economic sectors.  Potentially has the blend of lifestyle and commerce that areas like the Sunshine Coast have failed to deliver.

Geraldton WA

A classic regional boom town.  A solid long standing economy based on agriculture and fishing is being enhanced by strong resources and infrastructure
projects.  With lifestyle recommendations and affordable housing, it could be one of the best medium term performers.

Kensington Adelaide

Its strongest recommendation is that it is well located and less expensive than surrounding suburbs.  With SA in limbo until BHP announces final
confirmation of Olympic Dam, affordability is probably the most important short term driver.

Ainslie  ACT

In Canberra’s unique and expensive property market (ongoing shortages in a highly paid secure employment climate), Ainslie is viewed as well located, offering
good services and relatively affordable.

St Kilda  Melbourne

As one of Melbourne’s iconic lifestyle destinations, St Kilda is one of several CBD fringe suburbs benefitting from the disturbing oversupply issues in inner
Melbourne.  A popular zone with aspirational young professionals.

Brunswick Melbourne

Another CBD fringe Melbourne suburb, 6km north of the city centre.  Like Thornbury, will benefit from the urban renewal based on Coburg, but interestingly,
the local expert recommends a “forgotten pocket” with potential bargains.

Balaclava
Melbourne

Some dubious claims from a ratings agency based on price secure the suburb’s spot on the list.  It has similar, if less of, the lifestyle, demand and
pricing benefits that make St Kilda and Albert Park appealing.

Port Noarlunga  Adelaide

An almost universal pick as an outlying city suburb with strong lifestyle offerings.  A beachside playground with enhanced infrastructure and development
potential, median house pricing at $365k (APM) makes it affordable and attractive.

Rockhampton Qld

In some ways Gladstone’s poor relation, it has strong claims in its own right. A traditional tourist destination that is attracting its share of the
Queensland boom in industry and infrastructure, it has a notably dynamic local council and affordable housing.

Warnambool Vic

Tipped to be the strongest growth region in western Victoria, partly as a tourist hub on the western end of the Great Ocean Road.  Its real potential is as
an emerging centre of energy production, green, gas-fired and geothermal.

Broadmeadows  Melbourne

Another affordable outlying capital city suburb, this one in Melbourne, on the far side of the group of suburbs that will benefit from Coburg’s urban
renewal.  A traditional destination for new migrants, it has plenty of renovation potential and there is a plan for railway upgrades.

Newcastle NSW

Has multiple suburbs listed across the reports.  We have made the decision to include it as the number of nominations, whilst not agreeing suburb to suburb
(some share postcodes) does reflect the outright weight of investment taking place in industry, government sectors and urban renewal – all
drivers of property markets.

A quick word on the selection panels.

As you can see, there is a strong similarity between the selection panels.  YIP magazine has taken input from more local specialists, which clearly
dictates their areas of recommendation – a Melbourne agent is hardly likely to nominate Gladstone or Toowoomba, which seem obvious
destinations to the holistic observers.

Herron Todd White (Property Valuers)	Colliers International (Property Specialists)	Charles Tarbey (Century 21 Chairman)
WBP Property Group (Property Valuers)	Damian Collins (Momentum Wealth MD)	Jeremy Sheppard (Redwerks Director of Research)
Tim Lawless (RP Data Research Director)	Margaret Lomas (Destiny Financial)	PRD Nationwide (Real Estate Agents)
Australian Property Monitors (Property Ratings Agency)	Michael Yardney (Metrople Property Director)
Peter Koulizos (Property Author)	Monique Sasson Wakelin (Wakelin Property Advisory MD)
Terry Ryder (The Australian / Hotspotting.com.au	Nathan King (LMW Hegney Director)
	REBAA (Real Estate Buyers Agents Assoc of Australia)

This may also help to explain why Alexandria was nominated #1 on YIP’s list buy could not
make the top 100 for API.  Neighbouring suburbs have been nominated for API and what the list definitely does is confirm the 3
strongest themes in Australian property investment in 2011.

Analysis

To assist in the area reviews we have broken the identified areas in to three themes:

1. Boom regional Centres
2. Affordable ‘City Fringe’ Suburbs near capital Cities
3. Affordable ‘Outlying’ Suburbs near capital Cities

Boom regional centres seem to be the “no brainers” on the list.  Gladstone, Toowoomba, Chinchilla,
Townsville, Geraldton, Rockhampton and Warnambool all qualify on this basis.  Bathurst makes the list for its proximity to a boom
regional (Orange).  All are resources driven and represent relatively cheap entry points to the residential market.

This category could potentially be even more strongly represented if it was not for the presence on the API list of at least one disciple of
what could be considered a ‘flawed’ approach of only looking in centres of more than500,000 residents. 

Affordable capital city CBD fringe suburbs existing up to 10 km from the city centre and offering
transport links are strongly represented but less clearly identified than the boom regional centres.  Dulwich Hill, Paddington, Tempe,
Thornbury, Ainslie, St Kilda, Brunswick and Balaclava all fall into this category. 

In Sydney, Tempe and YIP’s top pick Alexandria are neighbours, which highlights the ‘thematic’ rather than ‘specific’ value of these lists
when applied to large cities.  The Melbourne selections highlight 2 main themes:

1. 1. The lifestyle appeal of CBD fringe
      destinations like St Kilda and the power of urban renewal (Thornbury,
      Brunswick and Balaclava all benefit from proximity to Coburg).
   2. With Southbank and Docklands experiencing
      major problems linked to oversupply and credit, many aspirational young
      professionals are looking elsewhere.

Probably the most important point to highlight is that opportunities can occur in many
places  – thorough searching and diligent research is the key.

Affordable outlying capital city
suburbs comprise the rest of the list.  As with CBD fringing suburbs, these suburbs are less
clearly defined but highlight the concept.  Baulkham Hills, Kensington, Port Noarlunga and Broadmeadows represent this
category.  Again, these tend to highlight worthwhile principles rather than absolute destinations – the important principles here, like
suburbs closer to the CBD, are affordability and strong transport links.

All properties are individual investments, and this should always be borne in mind when
researching these areas, and in fact, several are strongly recommended on the basis of cheap, neglected pockets of housing.

Bathurst and Port Macquarie are not accounted for in these 3 themes.  It should be pointed out that they are amongst the weakest recommendations, though
Port Macquarie stands a chance of blending new industry with lifestyle benefits.  Bathurst appears mainly to affordably fill a link
between Sydney and more distant centres of commerce.

The NextHotSpot Final Top Picks!!!!!!!

By overlaying these 21 destinations on API’s list of destinations picked by more than one of their panel, we can produce a list of 6 locations more or less
unanimously backed by the experts.

For the sake of thoroughness, the 13 locations with multiple API nominations are Blacktown, Coorparoo, Darlington, Gladstone, Newcastle, Port Noarlunga,
Scarborough, Seaford, St Kilda, Thebarton, Toowoomba, Torrensville and Townsville.

The final top 6 destinations are;

1. Gladstone

2. Newcastle

3. Port Noarlunga

4. St Kilda

5. Toowoomba

6. Townsville

A final word

An intelligent disclaimer from YIP magazine accompanies their list (and a similar one from API), basically stating the obvious, that just
because they nominate a suburb as a Hot Spot, that it does not automatically ensure investment success.

‘Your Investment Property’ recommends that you;

• Carry out your own detailed due diligence on any area or property before purchase
• Consult with relevant professionals as appropriate before embarking on any property purchase
• Invest in line with a clearly-defined investment strategy