On the 12th of May the Australian Government committed $5 billion to building the Infrastructure of Northern Australia, all in the name of ‘enhancing the prosperity of the North.’
Infrastructure Australia’s Northern Australia Infrastructure Audit found that the North has numerous issue relating to infrastructure. Predominately mentioned were; road maintenance backlogs being commonplace, limited population and small industry sizes making it difficult to capture the infrastructure economies of scale that allow commercially viable infrastructure services at competitive prices and that 70% of premises in Australia’s North received the lowest broadband quality rating in 2013.
All of these issues are linked, in that poor infrastructure leads to a lack of interest in the area, which in turn means that new infrastructure isn’t built, as there are too few people to warrant it. To allay this, the government has brought about the Northern Australia Infrastructure Facility. The purpose of which is to provide concessional loans of up to $5 billion to private companies in the building of infrastructure in Australia’s North.
Josh Frydenberg, the Federal Minister for Northern Australia has already had discussions with Northern Territory Chief Minister, Adam Giles, about the infrastructure projects set to ‘unlock the potential of the North.’ Already in the works is the North East Gas Interconnector pipeline, a project set to link the North’s gas grid to the national grid. As Frydenberg has suggested, ‘what we want to do is help put in place other infrastructure to stimulate growth and jobs’.
So clearly there is some serious growth in infrastructure of Australia’s north coming up in the next few years. With these greater levels of infrastructure, there is subsequently far more potential for populations to grow, and businesses to expand, a massive boost to the Australian economy.
But how can you capitalise on this?
Well if an increase in population is going to be the stimulant for economic growth in the North from infrastructure improvements, then obviously you need to provide something for the people who move up there. There are undoubtedly new businesses that could be set up to capitalise on this increase in population, but for the majority of us who are not entrepreneurs there is an easier solution.
The one human need that cannot be afforded by every individual, property is an investment that can be bought and then held for many years, earning capital growth and rental income for all of that time. In areas that explode in population, property also has the added bonus of benefiting from scarcity, so prices are driven up if housing infrastructure does not meet population requirements.
From here, it is a matter of constantly checking the North’s development to determine where the key growth areas are, before purchasing early while prices are still low. But of course this would just be the beginning, in the shorter term you could watch the market and wait for prices to hit their peak before selling. Or alternatively you could hold in the long term and rake in capital growth over the course of 10-20 years.
If you want to learn more about the potential for growth in Australia’s north, be sure to get in touch!
CEO McCarthy Group