Mining towns are set to offer great property investment opportunities as the economy moves towards recovery.
According to RP Data’s Property Pulse, released today, property investors flocked to small mining towns during the 2005-07 boom, but fell away after commodity prices began to flounder.
RP Data’s national research director Tim Lawless however warned that there is a certain level of risk that comes with investing in a resource driven market.
Earlier this year, the local economy in the Western Australia town of Ravensthorpe was virtually eliminated after BHP Billiton shut down its nickel operation and forced 6,000 people out of a job.
“Timing is crucial – buying into a resource driven market early is the key to strong capital gains and getting out at the right time is also critical,” Mr Lawless said.
“For those investors who get it right there are some spectacular gains to be had by investing in resource driven areas.”
Over the five years to the end of 2009 property prices on the Central Pilbara Coast rose by 230 per cent and rental yields are generally above 9 per cent.