Seachange icons and mining towns have been identified as “no go zones” for investors, according to property expert Terry Ryder.
Mr Ryder, who runs the website www.hotspotting.com.au, has published his annual No Go Zone report, and in it has exploded myths about the conventional wisdom of investing in towns like Noosa and the Gold Coast.
Mr Ryder said the report was prepared in response to many emails he gets from people who have bought real estate in the wrong place.
He said: “A common communication is one like this: ‘I bought a high-rise apartment on the Gold Coast five years ago. It’s now worth less than I paid and I’m trying to sell it but I can’t find a buyer.’”
“I recently heard from an investor who paid $510,000 in Surfers Paradise in 2007 and had just sold the apartment for $325,000.”
Mr Ryder said a good investment property bought in a growth location might have appreciated from $510,000 to $750,000 in four years (at a 10 per cent growth rate), showing a capital gain of $240,000 – but this investor lost $185,000 by buying in a “No Go Zone.”
“It surprises me how many investors still believe that the Gold Coast is a great place to invest because it’s a tourism icon and has high population growth,” he said. “More fortunes are lost than made in the over-supplied Gold Coast property market.”
“This is particularly so because many of the worst location choices for property buyers are places commonly believed to be great investment venues: Sea Change icons like the Gold Coast, population hotspots, inner-city suburbs and mining towns are among locations I urge investors to avoid.”
Mr Ryder said he hoped his report can help people avoid the bad financial experience that comes with buying real estate in the wrong places.
The full list of hotspotting.com.au 2011 No-Go Zones are:
- Master-planned communities – expensive, poor long-term capital growth
- Mining towns (general) – volatile, dependent on one industry, pollution issues
- Mining towns (Kalgoorlie) – falling prices, poor rental returns, volatile
- Mining towns (Mount Isa) – falling prices, poor capital growth, pollution
- Population growth leaders – oversupply, high vacancy rates, lower capital growth
- Prestige suburbs major cities – overvalued, volatile, unaffordable, lower capital growth
- Sea change icons (Byron Bay) – expensive, erosion, court battles
- Sea change icons (Gold Coast) – expensive, oversupply, tourism downturn
- Sea change icons (Noosa) – underperforming, unaffordable, inferior capital growth
- Urban renewal sites (Melbourne) – poor capital growth, oversupply, contamination