Student housing is top of the list as giving the best yields for many investors looking for growth and income – but they could be looking in the wrong place.
The student market in Britain, the US, Canada and Australia is booming – but mining towns are offering far higher returns.
Often located in out-of-the-way places with high demand and low supply, mining towns can offer huge returns that far exceed other sectors.
Rental homes in mining towns across Australia have delivered huge returns.
In 2012, 10 of the best performing property investment locations in Australia were mining towns.
Happy returns
Two towns lead the way – the coal-mining community of Moranbah, Queensland, has seen average house prices surge by £395,000 in a decade.
Port Hedland, Western Australia, was a double winner – with the highest average home price increasing by just over £600,000 and the place where landlords in Australia charged the highest rents of £1,575 a week.
Australia is not the only country with a land rush for homes around mining centres.
North Dakota, USA, is one of the nation’s least populated states with a massive shale oil and gas boom.
Oil companies are drilling wells by the hundred and drafting in rigs and staff from around the world.
Mining Risks
Most people have heard of the capital Bismarck and the biggest city Fargo, famous as the location of a Coen brothers movie, but that’s about it.
Few tourists visit the state – mainly because of the weather, as the winds are said never to drop below 10 mph.
However, the advantage is the state lacks rental housing for the oil and gas workers.
Investing in mining communities is not without risks.
Mines and oil wells close as they become uneconomical or exhausted. Workers move on and property prices plunge.
Broken Hill dreams
Some towns suffer from an oversupply of housing that pushes down prices and rents as developers move in.
Broken Hill, New South Wales, Australia, proves the point.
The bustling metropolis was the state’s third largest city during the first 50 years or so of the 20th century, with a population of more than 30,000. Then, the mines closed and the population slipped to less than 10,000.
Broken Hill has never really recovered. The population has risen to around 17,000 as mining has gently increased in recent years.
The fall from grace torpedoed property prices and rents, which have never fully recovered.
