Mining towns achieve highest yields

23rd June 2008

Strong overseas demand for commodities is fuelling sharp rises in rental yields, according to leading property research firm RP Data.

Tim Lawless, research director at RP Data, noted that the quarterly value of mineral exploration in Australia has increased to more than $450m over the 19 years to March 2008.

“Across the last five years, South Australia has seen the greatest annual increase in expenditure on mineral exploration,” he said. “This is growing at 60% annually, compared to a result of 28% across Australia.”

During the last 12 months, Queensland saw the greatest growth in mining exploration expenditure, increasing by 47%, compared with growth of 41% across Australia, according to Lawless.

“The value of mining exports rose by 14% annually between 2002 and 2007, resulting in exceptional job growth in the sector,” he said. “Jobs in the mining industry jumped by 21% over the last 12 months, creating strong demand for properties in some mining towns. The rapid growth of the local mines, coupled with a shortage of suitable accommodation in some areas means that property owners are setting rents which afford them exceptionally strong returns as well as strong capital growth.”

Lawless identified West Busselton in Western Australia as having the highest gross rental yields at 14.6%, while Hunterview in NSW came in second at 12.4%. The mining towns of South Headland, Dampier and Nickol also recorded double-digit gross rental yields, while Dysart and Scottville in Queensland enjoyed returns of more than 9%.

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