It’s common knowledge that the majority of employment throughout Australia is clustered in and around our capital cities. After all, this is where the bulk of essential services including infrastructure, transport and housing are concentrated.
For those of you who read my thoughts on property, it is also common knowledge that I believe investing in regional areas is dangerous, with many smaller communities supported by one or two major industries and thus lacking the security of stable long term employment opportunities and income.
A recent report in The Age has highlighted this issue, with figures indicating that although Victoria’s overall labour market and economy enjoyed some improvement over 2010, regional towns are suffering from a rise in unemployment.
According to data from the federal Department of Education, Employment and Workplace Relations, while unemployment in Melbourne fell from 5.5% to 5.2% at the end of September last year, for regional towns outside of Melbourne the unemployment figure rose from 5.5% to 6% for the same period.
Concerning unemployment figures were recorded in Dandenong and Broadmeadows – two areas that rely heavily on manufacturing – with unemployment levels of 12.9% and 15.9% respectively.
Analysts blame this significant rise on the ailing health of Victoria’s manufacturing industry; once the state’s biggest employer, more than 30,000 jobs have been lost in this sector alone since early 2008.
This is a stark contrast to the inner city neighbourhoods of Southbank and the Docklands precinct, where unemployment was recorded at just 1.5%.
Further out from the CBD, the larger regional centres of Ballarat, Bendigo, Corio and Morwell are also experiencing sharp rises in jobless figures.
Much of the decline in employment seen in Victoria’s outer suburbs and regional communities is du to the impact the global financial crisis had on Victoria’s labour market.
Data indicates that while the construction and retail sectors grew by more than 25,000 jobs from May 2008 to late 2010 (largely due to the influence of the federal government’s stimulus spending), manufacturing fell sharply and agriculture, forestry and fishing were flat.
The lesson for property investors in all of this is that over the long term, it’s crucial to invest in areas that have proven resilience when it comes to things like employment and economic stability. It’s hard to argue with the facts, including the reality that over three quarters of the Victorian population’s employment is found in the inner city.
My only caution would be to avoid the CBD directly, where we are starting to see an over-supply of apartment stock coming on line. Instead, focus on the inner and bayside suburbs of Melbourne that have enduring appeal due to their lifestyle and transport amenities. Remember – young people like to be close to their workplace, but not right on its doorstep!
It’s much the same interstate – there are too many off the plan properties on the drawing board in Brisbane also. There are better investment opportunities in the inner ring suburbs of our capital cities than in the CBD itself.
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