Placing bets on property

PREDICTING market trends in any sphere is a tricky business, and the Hunter’s property market is no exception.

Some national pundits are tipping a sharp spike in real estate prices in the region in coming years, but the Hunter Valley Research Foundation is openly doubting their optimism.

It’s not too hard to see why investment advisers outside the region might be suggesting that some of their clients inspect prospects in the Hunter. The region is enjoying an exceptional mining boom, with the prospect of some very large coal-related infrastructure projects that will, if they proceed, underpin employment and economic activity.

The Hunter is also suffering from a shortage of affordable housing, reflected in high rents and a low rental vacancy factor in many areas.

That in turn implies good yields for real estate investors whose participation in the market provides competition for owner-occupiers and helps keep a floor under property prices.

From the point of view of people already living in the Hunter the conservative prediction of price trends might seem to make the most sense.

The valley is in the middle of a mining boom, but that doesn’t automatically translate into widespread prosperity. Mining in the 21st century is a capital-intensive operation that generates far fewer pay-packets than it did in previous periods.

Those arguing in favour of a likely property price spike appear to be suggesting that factors from outside the region may drive the trend.

It is worth considering the possibility that outside investors, seeing flat or declining capital gain prospects in other property markets, will be attracted by the Hunter’s strong yield. If they redeploy their funds to this region they will add to existing investor and owner-occupier demand and put pressure on prices.

If prices do rise, investors will probably seek still higher rents to obtain their desired yields until the forces of supply and demand create an equilibrium or until price signals attract developers to build more housing stock.

Either way, boom or no boom, there will be winners and losers among those who choose to speculate on asset price trends in an inherently unpredictable market.

Hunter honours

PEOPLE serve their communities in a remarkable variety of ways, as this year’s Queen’s Birthday Honours list demonstrates.

The 23 Hunter identities on the list are receiving recognition for everything from outstanding success in business and wealth-creation to tireless and self-effacing service to others.

One thing many of this diverse group shares in common is the insistence that, welcome as the personal recognition may be, the accolade belongs at least in part to the many other people who helped make the achievements possible.

Such an attitude is the surest sign, perhaps, that the awards have truly been well-deserved.

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