Real estate and mining: a game of patience
Gas, coal and valuable minerals have long been a staple of the Queensland economy. Digging these precious materials out of the earth has provided capital, employment and investment opportunities for many years, keeping the investors of Brisbane and its surrounds productive, warm and wealthy. However, the end of the mining boom continues it's downward trod, bringing the value of local real estate along with it.
The fact is that investment in mining in Queensland has steadily been dropping since its peak in December 2013, according to the Queensland Government's Mining Journal. Clearly, there has been a step away from mining in recent years, but does that mean the boom is over?
Why property investors should care about mining
Real estate and mining are intertwined – what affects one will affect the other. Miners need housing, and housing needs miners. With the sudden drop-off in the amount of mining activity across Queensland, you can bet real estate will be affected.
In fact, we are already seeing the effects of this fading boom in the regional mining towns of Queensland. Towns like Moranbah, for example, have taken a big real estate hit as mining dies out and people move to greener pastures.
The power of virtue
"The industry is in a marathon, not a sprint"
It might be tempting to consider selling up and moving on, breaking our golden rule of never selling property. Perhaps you'd even think of investing in the unaffected Brisbane, taking advantage of the 7.14 per cent median value gains CoreLogic RP Data has quoted.
But does this recent shortfall really spell the end for the close relationship of Queensland property and mining? PwC doesn't seem to think so. Rather than focusing on these short term falls, PwC advocates that investors instead take a "long-term view". PwC Australia mining leader Chris Dodd explains that the miners are down, but not out. Considering the rising value of such materials as lithium (used in advanced battery technology), mining and its associated real estate may still have some life in it yet.
As Dodd says, "the industry is in a marathon, not a sprint, and with the trend towards urbanisation set to continue in the future, the rewards will flow to those that are patient and take a long-term view".
Knowing the long-term outlook of your property portfolio is integral to the health of your wealth. Make sure you get in touch with the mentoring team at Think Money and ensure you get the right wealth coaching and make the most of your capital!