SA Excerpt from the 2011 April Market report

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Interstate investors eye up Adelaide’s affordable offerings, while hopes are pinned on South Australia’s resource industry to balance out the state’s property oversupply.
 
Adelaide’s lagging surplus of stock on the property market is conspiring to keep capital growth rates cool, but the good news is that South Australia’s nation-leading level of population growth may help to balance out the market in the long run.
 
“At the top of the rankings on the population growth leader board is South Australia, with current annual population growth of 1.24 per cent, well above the 0.9% decade average,” writes chief economist Craig James in CommSec’s State of the States report.
 
Another economic factor that could help to bring Adelaide’s supply and demand situation back to parity is the influx of workers that the expansion of the state’s resources industry could bring in, says Residex CEO John Edwards. However, given the speculative nature of South Australian commodity investment at the moment, he doesn’t recommend buying just yet.

“At present though, there are oversupply issues, with 3,000 to 7,000 properties available in Adelaide, which is a big deal in a place that size. There’s massive potential for that to be soaked up by resources employment though, so investors shouldn’t give it up altogether, but don’t jump in yet. It’ll be spring this year before we can see which way it’s really going.”

An unclear future

RP Data research director Tim Lawless also points to South Australia’s resources industry as one of the economic fundamentals that could give the state’s property market a shot in the arm and help to balance out the property market, but he too warns that the future is far from certain.  

“Even though it does have a resources industry – that’s largely around the ports and Olympic Dam – its success or performance doesn’t seem to be as certain as some of the more historically strong-performing resources locations,” he says.

“The plans to expand Olympic Dam haven’t transformed into any real activity just yet, and there’s even speculation around whether or not it will ever happen. If it does, then that hole in the ground will become one of the biggest in the world for those commodities.” So it’s a bit of a waiting game, with a lot hinging on the expansion of the dam.
 
According to the Olympic Dam bosses at BHP Billiton, it’s the world’s fourth-largest copper deposit, fifth-largest gold deposit and the world’s largest uranium deposit.
Little wonder then that Access Economics’ Business Outlook pegs the mooted $21bn expansion project as a potential ‘make or break’ issue for South Australia’s aspirations in the commodity market.
 
The report does side more with the ‘make’ than ‘break’; however, in its longer-term predictions it says that “one day South Australia will join the ranks of the resource titans such as Western Australia and Queensland”.
 
In terms of where to invest in order to capitalise on South Australia’s potential resources boom, hotspotting.com.au creator Terry Ryder points out that, unlike WA for example, South Australia’s mining areas are within striking distance not only of the state capital but also of other established coastal regional centres such as Port Lincoln, Whyalla, Port Pirie, Ceduna and Port Augusta – a town that Edwards, too, has been keeping his eye on.
 
For the time being, however, Access Economics warns that a struggling manufacturing industry – whose exports to its traditional markets of the US, the UK and Europe are falling at “double digit rates” – has contributed to increasing levels of unemployment.
“Unemployment in South Australia has not only moved back above national rates, but that gap is increasing once again, and job vacancies have dropped by more than a quarter in the past year alone,” says the report.

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