Mining to Boost One Neglected Aussie Property Market
Australia's economic growth may have slowed in the January to March quarter compared to last year, but one investment advisor is betting the mining boom in the country will continue, and that in turn will benefit one largely neglected property market.
"[Australia] just found $1 trillion worth of iron ore. They've got 40 percent of the world's uranium deposits. It's not just a one horse event," Graham Bibby, managing director of Richmond Asset Management told CNBC on Wednesday.
Bibby is betting the State of South Australia, which has so far missed out on the mining boom experienced by neighboring Western Australia, will soon play catch-up.
"A lot of people in Australia don't even know where South Australia is," Bibby said in jest. "In the 90s, give or take the state was basically bankrupt, no money, lost the money, no aspiration, nothing going on."
Bibby believes South Australia, which currently has 5 or 6 large mines, will eventually have 200 world-class ones, and he believes that will boost the State's population, which currently stands at just 1.6 million.
Bibby recommends buying property in cities near the capital, Adelaide especially Murray Bridge and Mount Barker. "Mount Barker is the fastest growing area in the fastest growing region, in the new 30 year plan for South Australia."
But Bibby isn't just pinning his hopes on the mining boom. According to him, a pullback in bank lending in Australia after the global financial crisis has hurt supply of new housing. As a result, he told CNBC, the rental vacancy rate for the Adelaide metropolitan region currently stands at just 1 percent, which will ensure plenty of demand for landlords.