Friday, June 14, 2013

Risks of Investing in Mining Towns

An article from the AFR on Thursday, 13 June 2013 is a good reminder why investing in boom towns is more like gambling than investing:

Boom town burns investors:  John Briggs of Port Hedland Real Estate predicts tough times ahead. 'Sales are few and far between.  Anybody who invested in the last 18 months is in for a torrid time.'  A banking source said lenders require potential buyers to have about 50% equity to buy into the former mining hot spot.  'Anyone looking to buy into towns like Port Hedland is buying at the wrong end of the market cycle,' said Gavin Hegney, a valuer.

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