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Four property investment myths – BUSTED!

Property is one of our favourite topics of discussion.  Conversations and debates over whether the market is rising or falling, what the best strategy is, where the next hot spots are and so on are endless. 

So are the myths. Here are four of the most common I hear and why I think they’re bogus!

MYTH #1: You should buy your own home first

Australians have a love affair with home ownership of the owner occupying kind. To own (or, partially own) your own home is still viewed by society as one of the key milestones of success, of having it ‘sorted’.


Unfortunately, many of us are blind to the financial impact and consequences that can come with purchasing a home as your first property. The decision to own and occupy first can weaken your financial position and servicing ability with banks, and increase your cost of living.  More often than not, you will also find you have to live in an area that does not tick all your boxes because you can’t afford to buy elsewhere. 

In the vast majority of situations, it is going to cost you more to own your own home than to rent.  If you want to accelerate wealth creation (and get that dream home quicker), the best approach is to keep your living expenses as low as possible while you establish your investment portfolio; monthly mortgage payments on your PPOR will only hinder your borrowing capacity and slow your ability to grow a portfolio. Continue renting or live with family and resist non-essential spending while you improve your financial position.

If you had the choice of purchasing your dream home in five years, or a poor quality, badly located home now – wouldn’t you wait?

MYTH #2: Invest because it will save you tax

Investing in property to save on tax is absolutely NOT the right approach to property investment in my opinion. In fact, this is not ‘investing’ at all.


Your reason for investing must be to make money – not lose it! Negative gearing is acceptable if you’re confident the average annual capital gains your investment will deliver will sufficiently outweigh what it costs you each year to hold the property. 

Until you realise your capital gains by selling, or your property eventually becomes positively geared, you will actually be losing money every month as you dip into your own pocket to meet your loan payments.

Invest for returns and returns only. And if you are negative gearing, you must make sure you’re invested in a market with strong long term growth drivers.

MYTH #3: Debt is bad

‘Debt is bad’ is another stigma still prevalent in our society which hasn’t been helped by the GFC. There are many advocates of buying a home and paying it off before you out your money anywhere else. This isn’t the wrong approach, it’s just not conducive to efficient and swift wealth creation.


There’s not just one kind of debt – there’s good debt and there’s bad debt. It’s important to know the difference and how good debt  – understanding how to use debt effectively and safely – can see your wealth creation goals realised a lot sooner.

What’s ‘good debt’? It’s using the power of gearing to maximise returns while staying within your financial limits. There’s a reason interest-only loans are popular with investors. You can secure a high value asset with minimum outgoings, while taking all the return.

Using equity from existing assets also allows you to build your portfolio quicker without affecting your cash flow. Multiple properties means multiple capital growth and cash flow opportunities. This means, with smart investing, you will be able to pay down the debt on your home a lot quicker than if you were relying on your salary alone.

MYTH #4: Making money from property is a sure thing

Unfortunately it’s not. This belief is driven by Australia’s historical trend – but as we all know, not everyone that has invested in property has a positive story to tell.


A rising macro market doesn’t mean all property has grown in value – some cities and towns will go up while others will go down. Even if a property has risen in value, it still doesn’t mean it has delivered an acceptable return. A market rising just a few percent each year will barely cover inflation and your costs for holding the property.

It’s quite common for investors to think that buying a centrally located property in a capital city is all that’s required to make money. As any investor in Melbourne’s inner city developments will tell you, it’s just not the case. Sure, the market will recover at some point, but it will likely be years before you have recouped your losses. You’re worse off than when you started!

Don’t ever be lazy with your market research. It is the most important step to achieving property investment success.


Where to find Australia’s best High Yield capital city suburbs

Last week I looked at three regional towns currently delivering strong rental yields with good prospects for future capital growth. This week’s blog highlights three capital city areas with promising investment profiles for strong rental return and capital growth prospects.

Units, over houses, are generally performing better across the board in capital cites.

Brisbane – City

·    Yield: up to 7% (units)

·    Vacancy Rate: 4.5%

·    Growth (1yr/3yrs/5yrs): 0.11%/3.33%/1.09% (units)

Sources: RP Data, SQM Research

Why Invest: The Brisbane market has now entered its next growth phase after a period of decline. Investors have the opportunity to buy-in at very affordable prices, considerably less (up to 45%) than the Sydney and Brisbane medians for quality inner city units.

Brisbane has been undergoing transformation in recent years and along with fantastic weather now counts world-class culture, entertainment and dining options among its draw cards. It’s also investing heavily into infrastructure with $132 billion of projects planned between 2010 and 2014, with a significant focus on improving transport.

Queensland is also one of Australia’s most resources-rich states with a massive LNG export industry that’s only in its early phases of development, further strengthening the state’s industry with significant flow-on effects to Brisbane.

Top tip: Investor demand is most definitely on the rise in Brisbane – apartment sales in 2013 almost doubled that of 2012. Get in now and make the most of the current affordability and opportunity to maximise growth. Look for boutique apartments with unique features.

Risks: Apartment oversupply is an issue in Brisbane, as it is with many Australian capital cities. This could result in slow rental and capital growth, and high vacancy rates in the short to medium term until supply is absorbed.


Sydney – Western Suburbs (e.g. Whalan, Mt Druitt, Lethbridge Park)

·    Yield: 6-7%

·    Vacancy Rate: 0.7%

·    Growth (1yr/3yrs/5yrs): 15%/35%/34% (Averages)

Sources: RP Data, SQM Research

Why invest: Sydney’s market has boomed in recent years prompting investors to look outside the usual inner city areas – which have reached unaffordable heights – to suburbs where they can secure decent sized blocks for renovation or development and where the low buy-in can facilitate good yields.

While not considered highly desirable locations to live in the past, suburbs such as Whalan, Mt Druitt and Lethbridge Park, which all fall within the local government area of Blacktown, have emerged as areas worth further investigation for these very reasons. Despite the LGA’s rapid population growth – a 25% increase over the last 10 years – median property prices range from just $270,000 for a unit to $410,000 for a house across Whalan, Mt Druitt and Lethbridge Park.

They might be 40km from Sydney’s CBD, but transport connections are excellent which is one of the area’s most desirable features. There are direct rail lines to central station and close access to major motorways. Vacancy rates are extremely low at 0.7% and the area is very popular with families.

Top Tip: These outer suburbs are ripe for renovation projects and larger blocks mean the addition of granny flats to increase income are also worth considering.

Risks: Sydney’s capital growth over recent years has been huge and is now slowing. A ‘crash’ is unlikely but investors should be aware that growth will more than likely to be slower than recent years and this is cash flow investment rather than a capital growth investment.

Perth – City of Bayswater

·    Yield: Around 5-6% for units

·    Vacancy Rate: 1.9%

·    Average Annual Growth: 10% (houses and units)

Sources: RP Data, SQM Research

Why invest: It has been reported that slower growth, sales and rising vacancy rates suggest that Perth’s booming property market is softening and maybe reaching – or have already reached – its peak. However, this doesn’t mean good yields can’t be found in certain pockets within the city.

Bayswater council – which includes the suburbs of Bayswater, Maylands, Morley and others – has plenty of highlights. It’s just 7km from the CBD, the Swan river is on its door step, there are excellent bus and rail connections and a lively cultural and entertainment precinct in neighbouring suburb, Mount Lawley.

Top tip: Morley looks to be one of the most interesting of the suburbs within Bayswater due to its recent and future development. Despite not having its own train station, unlike some of the other Bayswater suburbs, it has superb bus infrastructure – the CBD is only around 15 minutes by bus. Major roads are also easily accessible and the light industrial area in Ashfield, under development, is within a couple of kilometres.

In 2011, the $60 million Coventry Square, Perth’s biggest markets complex, opened in Morley, creating a major tourist and entertainment destination.

A masterplan for the further development of the Morley city centre has also been approved. The plans include a new central park, improving public transport, upgrading streetscapes and public spaces, and making streets more pedestrian friendly.


Risks: The Bayswater area has experienced good capital growth in recent years and could slow based on the broader market indications for Perth.

Are you prepared for EOFY? Your property tax checklist

As the end of financial year draws closer, it’s important to ensure your paperwork is in order ahead of your visit to your accountant.

Being prepared at tax time offers many benefits. It not only reduces your accountant’s bill but enables your return to be processed quickly, allowing future lenders to access your up to date financials and approve your next purchase faster.

The comprehensive checklist below is one I use to ensure I’m fully prepared at tax time and maximising all the deductions available. A property investment specialist accountant should also be able to provide you with a list of what they require.


Portfolio information:

·    Copies of your sale contracts which show the price and date the investment properties were purchased

·    Copies of your settlement statements for those properties purchased during the financial year

·    Copies of the depreciation schedules for each property – if you don’t have these you will need to arrange immediately with your accountant

·    All bank statements for the financial year showing the rental income received over the period and the interest paid on the mortgages


Evidence of the all the expenses incurred during the financial year in relations to the properties in your portfolio. These may include:

·    Administration and accounting fees

·    Property management fees

·    Legal fees

·    Quantity surveyors’ fees

·    Insurance costs

·    Advertising costs for marketing the property to tenants

·    Body-corporate fees and charges if any of the properties are strata titles

·    Land tax and council rates

·    Lease agreement expenses

·    Repairs, maintenance and servicing costs

·    Cleaning, gardening and lawn mowing costs

·    Electricity, gas and water bills (only those incurred by you and not the tenants)

·    Pest control

·    Any stationery, postage and telephone calls

·    Travel and car expenses (usually in the form of a log book, with relevant receipts)

I recommend keeping a file on each property and file all receipts and documents away as they come in. Being thorough and organised will not only save you time and money, it will also optimise your returns and will put you in the best position possible to continue growing your portfolio successfully in the new financial year!


Positive vs negative property – know the facts before choosing your strategy


There has long been ongoing debate among property investors, industry thought leaders and economists when it comes to positive and negative gearing.

Views are polarised over which strategy is best, which delivers the better return and whether negative gearing as a tax break should exist at all.

Many within the property investment industry remain steadfast in the negative gearing camp, but is it the right strategy for investors in the modern age?

Negative gearing is not an investment strategy, it’s a tax strategy – and a limited one at that. 

Negative gearing is a strategy based on losses.  It requires you to top up the rent you receive with your own money in order to pay the mortgage. The taxation office allows you to deduct these losses from your taxable income, thereby reducing your tax. BUT the tax savings, generally received upon lodging your return each year, DO NOT cover your losses.

Even with the tax benefits, you are still putting more of your money into the property – every single month. Simply, negative gearing is a deficit strategy that requires the constant and ongoing input of your own funds to keep the ‘investment’ going.

In contrast, positively geared property by definition generally services all the holding costs of the property and earns the investor a net profit.

While these points are the two obvious differences when considering negative or positive investing, there are several others that you should be aware of before taking the plunge down the negative gearing route.

Forget leaving the workforce. Stable, consistent income is vital in order to service loans on negative properties as the rental income isn’t enough. If your salary decreases or you lose your job, what position will you find yourself in? Is it likely you would default on your loan and potentially lose your property? During times of increasing job uncertainty, this can be a risky approach to your investment plan.

Positive property not only puts extra cash in your pocket every month, it also acts as a financial security measure. If you lost your job tomorrow, you would still have the passive income from your positive portfolio coming in.

Portfolio growth is reliant on capital growth cycles. After purchasing a negatively geared property the only way to continue to invest without injecting more of your hard earned cash is by using equity from an existing property. Equity is created when the value of your property increases. To use equity as a deposit on your next purchase, the value of your property needs to have risen substantially. Based on historical performance, long-term property growth in Australia is considered a sure bet, but it can take many years for a negatively geared market to receive substantial growth. This can dramatically impact your ability to purchase multiple properties.

It’s not flexible. A negative gearing strategy relies on capital growth to deliver a return to the investor  – this makes it a long term strategy. You might be forced to hold onto a property much longer than you had expected to because of slow capital growth cycles. It reduces both the liquidity and flexibility of your portfolio. Positive property delivers you a cash return from day one – offering positive return on investment even during period of zero or little growth.

Portfolio growth is restricted by serviceability. Many new investors struggle to understand how some are able to build large property portfolios quite quickly while others are stopped in their tracks after just two or three. The difference – serviceability!

Even high income earners will eventually hit a ceiling if they pursue a negative gearing strategy. There is only so much of one’s salary that can be funneled into servicing loans on investment properties. Investors on lower incomes can hit this ceiling very quickly and portfolio growth will come to a sharp standstill.

With each purchase of a positively geared property, your passive income stream increases. You will continue to improve your financial position in the eyes of most lenders and your capacity to service your loans increases.

Whether an advocate of positive or negative, it’s important to remember that each strategy has a vastly different path and outcome. When deciding the best path for you, do your research. Review the stories of other successful investors to ensure the direction you choose will ultimately lead you to your wealth creation goals.



How to comfortably invest in the other side of the country

For many investors, the appeal of investing in property is that, unlike shares, it is something you can see and touch.

The reality is, the best property opportunities are unlikely to be in your back yard.  Savvy Investors should take a nationwide and diversified approach if they want to generate the best returns and mitigate risk. This often means holding property thousands of kilometres away from the family home, which can be a daunting concept. 

Here are some valuable tips to identify, secure and hold property around the country.

Search for growth 

Research. One of the best ways to find a property hotspot is to identify areas with strong forecast industry growth, which will be accompanied by infrastructure development and a growing workforce.  The area should have multiple projects underway or in the pipeline; the local economy should not rely on a single project or industry.

Rental vacancy and new residential development should be assessed as these will also impact demand for housing. Once you have a shortlist of potential investment locations, the next step is to identify suitable properties.

Property selection. Buying off the plan or house and land packages can be a good option for the long distance investor.  Brand new properties require minimum maintenance and are typically more attractive to corporate leasing clients, which may enable investors to lock in longer term corporate leases. 

Even if you’re buying an established property, it’s not always a good idea to view the property prior to purchase. An investment purchase should be based on research, area, numbers and return. Too often investors can get caught up emotionally in a property they will never live in. Personal preference over street-front, colour scheme and other finishes can sometimes cloud judgement.

However, visiting the town at least once will give you an understanding of the region, and its dynamics. Nothing beats having your feet on the ground to get a feel for a town.

Local expertise. Partner with a local on-the-ground expert in the region.  They can advise the properties types and locations that are most appealing to the rental market, the types of leasing clients in the area, and the rent you could expect to receive for certain properties.  

Utilise expert blogs, free reports and engage with other investors and experts on forums to assist with the decision-making process and to gauge opinion of the best real estate agents in an area.

Asset management

Even if you live close to your investment property, managing it yourself can be a time consuming and stressful process. If you live on the other side of the country, trying to self-manage to avoid agent fees all too often ends in disaster.  Unpaid rent and a poorly maintained property will soon void any savings you have made on agent fees.

Choosing the right property manager.  A good property manager will be experienced in area, possess a strong corporate leasing client base and will be able to advise you on how to maximise your rent.  They should adequately care for you property on your behalf, without the need for you make personal inspections. 

Communication. Your property manager should update you every 90 days regarding the status and condition of the property. Ideally, they should also regularly keep you up to date with media releases, projects and major events affecting the region & your property.

Is it a smart move to purchase a home before an investment property?

As Australians, we place a high importance on owning our own home. After a car, it is usually our next ‘big ticket’ purchase and is considered one of life’s major achievements – a symbol of a sound financial position.

But is it? Is buying a home as a your first property purchase really a smart move?

The old mantra of ‘rent money is dead money’ has been so entrenched in our culture that many of us fail to clearly assess the financial impact and consequences that can come with purchasing a home as your first property. The decision to purchase a PPOR first can weaken your financial position and servicing ability with banks, and increase your cost of living.  More often than not, you will also find you have to live in an area that does not tick all your boxes due to affordability.

If you had the choice of purchasing your dream home in five years, or a lesser quality, poorly located home now – wouldn’t you wait?

A mortgage delays your wealth creation potential.  Many first home buyers and beginner investors jump straight into buying a property to live in. In the vast majority of situations, it is going to cost you more to own your own home than to rent.  To maximise your property investment potential, the best approach is to keep your living expenses as low as possible while you establish your investment portfolio; monthly mortgage payments on your PPOR will only hinder your borrowing capacity and slow your ability to grow a portfolio. Continue renting or live with family and resist non-essential spending while you improve your financial position.

How the living costs weigh up.  An example of buying a PPOR versus renting and investing a $500,000 property in a positively geared market and continuing to rent:


  • Deposit: $50,000
  • Loan: $450,000
  • Repayments (principal + interest, rate of 6%): $675/week
  • Cost to you: $675/week

Positive investment property –

  • Deposit: $100,000
  • Loan: $400,000
  • Rental income: $1,100/week
  • Repayments (interest-only, rate of 6%): $461/week
  • Profit: $639/week
  • Rent a $500,000 property: $500/week
  • Total profit: $139/week

All too often investors who choose to purchase a home to live in as their first property find themselves in a position where they have to wait a number of years to be able to purchase again.

While living in your own home may be tempting, the benefit of remaining in the rental market while you spend a few years developing your investment portfolio means you can fast track your portfolio growth and maximise your net worth.

A little sacrifice in the short term can mean a far better financial position and lifestyle in the long term!  

Investing with low or no deposit – Vendor financing

The second part of this blog aims to provide investors with an understanding of another low deposit option available to them – vendor financing.

A big issue for most investors when first starting out is access to bank finance. Even with a decent deposit it can be difficult to meet the banks’ criteria.  If you have a less-than-perfect credit history, are self-employed or new to the country, then you will find dealing with the banks even more challenging.

Many people are unfamiliar with vendor finance but it has in fact been used in Australia for over a century and while it is increasing in popularity, it still flies under the radar of most investors.

No bank finance needed

Put simply, vendor finance (also referred to as seller finance or owner finance) is when the seller of the property makes the financial arrangement direct with the buyer – no bank loan required! 

Vendor financiers provide a more personal, tailored service focusing on the buyer’s capability to make regular payments, rather than their capacity to demonstrate a savings history, assets etc.

It is a popular service offered by developers who want to increase their pool of prospective buyers by offering more flexible finance options.  Vendor financiers will often lend 90 to 100% of the purchase price (LMI will still be payable though if you borrow more than 80%) which makes properties offered under this scheme attractive low deposit options.

The way vendor finance works can be compared to a lease-to-own structure; you make your repayments to the seller and the property becomes legally yours when all payments have been made.  You can rent it out, renovate etc but the title to the property will remain in the seller’s name until you have paid off the property and met any other contractual obligations.

A bridging strategy to the banks

For this reason, vendor finance is not generally considered a long term option and is typically used as a bridging strategy. It allows investors to get their foot in the door, secure a property and then look to refinance with a bank (thereby paying off the vendor finance and securing the title to the property) in two to three years when they have established a payment history.

Good property selection means many investors will have generated decent equity in the property over those initial years putting them in a much better position with the banks.

Another point to remember with vendor financing is that it is usually provided at a higher interest rate to bank finance.  This is less of an issue in our current super low rate environment but remain an additional motive for refinancing.


Both the seller and the investor are protected against certain risks under a vendor finance arrangement. The vendor cannot sell the property or borrow against it without your knowledge, while the vendor reserves the right to take legal action and terminate the contract if you breach any of the contract conditions.

Depreciation – Are you missing out on thousands of dollars each year!

Successful property investment strategies focus on maximizing both capital gain and cash flow.

Astonishingly, 80 per cent of investors (according to quantity surveyors BMT Tax Depreciation) are losing out on thousands in cash flow each year by not fully utilizing the ATO’s tax depreciation benefit.

Tax depreciation allows property investors to claim a deduction on their residential or commercial property’s depreciating assets – assets related to the property’s construction and any renovations (whether completed by you or a previous owner), and its ‘plant and equipment’ items (removable items such as carpets, dishwashers, stoves etc). 

Maximizing your tax depreciation claim can result in a substantial tax saving adding thousands to your annual cash flow. If you own multiple properties it can have a significant effect on the overall cash flow performance of your portfolio.

Investors can write-off 2.5 per cent a year of the construction costs for 40 years if construction began after September 15, 1987. If construction on your property commenced prior to this date, you can still claim depreciation on plant and equipment items.

Tax depreciation is of even greater benefit to investors buying new builds or off the plan as it entitles them to claim the full amount of the depreciation allowance.

Investors previously unaware of tax depreciation or those who have failed to claim in the past can claim on up to two previous years.

To maximize deductions, investors are encouraged to enlist the services of a qualified quantity surveyor to inspect the property and prepare the tax depreciation schedule for your accountant. A depreciation schedule outlines the deductions available on a specific property for the life of the property and will be used by your accountant when preparing a tax return (your accountant can not prepare the depreciation schedule for you). 

The money saved from claiming tax depreciation usually far outweighs the cost of the report, leaving more cash in your pocket and enabling you to reach your financial goals faster.  

Six steps to creating a $100,000 per year passive Income

Income generating property is fast becoming the key wealth creation strategy of many astute investors.

Properties enjoying increased cash flow via a passive income stream offer rapid portfolio growth while enabling the investor to achieve financial freedom sooner

For many investors, one of the most successful passive income investment options is positively-geared property.

In just five to seven years, an investor could be earning more than $100,000 per annum in passive income from a positive property portfolio.

Six tips for success:

  1. Get your structure right – Speak to your accountant to find the most tax efficient structure to use to purchase your properties. Getting this right at the first stage can save you thousands. Many positive property investors have created large portfolios only to pay out huge fees down the track when they decide to change their entity structure for tax purposes.
  2. Make an informed property purchase – Education and research is key.  The town/area should provide a historical growth rate averaging 10% a year over the last five to 10 years.  A population that is trending upwards, a low rental vacancy rate, industrial growth and investment in infrastructure are all indications that demand for housing will remain strong.  Buy in low to maximize your return. Identify temporary down cycles and quiet seasonal periods which may offer opportunities to secure lower priced property. Fundamentally, the property should deliver positive cash flow of at least $400 a week into the investor pocket.
  3. Maximize Leverage – Whether you are using equity in your home or a saved deposit for your first investment property, maximize your means to grow faster.  Borrow 90% and use Lenders Mortgage Insurance (required if your deposit is less than 20%) to leverage your purchasing power and increase your flexibility. LMI is an acceptable and tax deductable method to get your portfolio started and growing. When your portfolio has generated sufficient equity you can start to buy properties with a larger deposit, without requiring LMI.
  4. Purchase again quickly – Each property strengthens your financial position. Within 12 – 18 months of making your first investment, use the equity now available in this property (which you will have created if you have invested in an area which has delivered 10%+ growth per annum) to buy a second. You may even find you have enough equity to buy a third.  Using different lenders will give you greater flexibility and borrowing power.–
  5. Regularly review your property Values–As your properties increase in value, maximize your growth potential by releasing equity from your existing portfolio to raise the required 10% – 20% deposit amount for future purchases.

    Once you have five properties in your portfolio, depending on the growth rate in the area, you will have created a positive portfolio that is paying you in excess of $100,000 profit per annum.

  6. Review your investment goals every six months – Revisit your goals and continually reassess your passive return strategy every six months to ensure your portfolio continues to maximize its return potential. Utilizing your passive income returns combined with capital growth is the key to rapidly growing your portfolio and second income stream.

Tom Price opens up to property investors

The mining town of Tom Price in WA’s Pilbara has seen house prices increase 19.3% per annum on average over the past decade while its median rent is now at $2,300 per week, according to REIWA, placing it as the highest of all the Pilbara towns.

The doubling of its population to 5,400 in just six years, as a result of the integral role it plays in Rio Tinto’s and FMG’s iron ore operations in the region, along limited housing supply has put immense pressure on its housing market.

But while its performance has been consistent with other regional towns in the Pilbara, it has not garnered the same level of attention.

With 92% of the town’s residential housing is owned by Rio Tinto and a lack of new development (until 2011, there had been no new no land releases in 40 years) investors have had fairly restricted access to this lucrative market.

However, recent land releases have now opened up opportunities. Given its large rental market (86% of the population rent their home), zero vacancy rate and Rio Tinto’s and FMG’s significant new and expanding projects nearby, investors are standing up and taking note.

Rio Tinto intends to expand its iron ore operations in the Pilbara, investing about US$20 billion in the next five years (requiring over 6,000 employees) to facilitate a planned ramp up of production to 360 million tonnes per annum (mtpa), an increase of more than 50% of its current capacity.

The expansion includes a major investment in infrastructure at Rio’s Nammuldi mine, 60km north-west of Tom Price, which will increase production capacity from eight to 23mtpa, creating almost 1,500 construction jobs and secure ongoing employment for more than 700 people.

Recent news further enhanced the town’s prospects as an ongoing hot spot with Rio receiving approval from the Environmental Approval Authority to further expand its Western Turner Syncline hub, just 20km from the town.  Western Turner Syncline has just ramped up capacity to 15mpta but the execution of these recent plans would see it double capacity to 32mtpa.  While these plans are still in their early stages, it suggests significant growth ahead for the company’s Pilbara operations.

The fact that Rio’s Pilbara operations are the lowest cost in the region’s iron ore industry, indicates the mining giant is well positioned to deliver on these additional expansion plans.

Located 70km north of Tom Price, the Solomon Hub is FMG’s next major project and the largest iron ore start-up in Australia. The Fire-tail and Kings deposits are the first stage of the project and are currently under construction. When complete, they will produce a total 60mtpa of ore each year.

The Solomon Hub is the lowest cost operation in FMG’s business and has significant expansion potential. 

The expansion of Solomon and development of Western Hub, an FMG project just 20km from Tom price would see thousands of additional construction and operational workers brought to Tom Price.

As well as investment into industry, the town has also received a $20 billion civil infrastructure upgrade as part of the government’s Pilbara Cities initiative which has dramatically upgraded the town centre, and sporting and community facilities.

Pressure on housing is likely to continue as any further land releases and residential developments are unlikely to create an oversupply given the projected workforce growth and housing shortfall. 

According to a report by Regional Development Australia, Tom Price had a dwelling shortfall of 259 homes in 2012 and will require a total of between 271 and 471 new homes by 2015. Only 37 residential lots were released in 2011 and further releases are yet to be announced.

Encouraging news for investors seeking to build and diversify their property portfolios, by identifying the next WA Hotspot.