Approval of the Olympic Dam mine expansion breathes new life into a stalling market.
The recent announcement that the Olympic Dam expansion is finally moving ahead gave the South Australian property markets a much needed boost in confidence amid a weakening market. During the three months ending September, median house price fell 1.42% to $397,500. Over the past 12 months, values dropped 2.08%, according to Residex.
“It’s certainly all about the Olympic Dam. It’s going to give everybody a great sense of confidence moving forward,” says REISA president Greg Nybo. “The spin-off effect into the whole of the state will be extraordinary.”
The expansion project, which would create the world’s largest open cut mine, is expected to cost $30bn and, BHP claims, will pump $45bn into the South Australian economy during its lifetime.
Little wonder then that the latest developments in the long-running Olympic Dam saga are the talk of the property investment community.
Should the project go ahead, fly-in fly-out workers are expected to head to Spencer Gulf towns such as Whyalla, Port Augusta and Port Pirie, and Nybo believes that there will also be significant overspill into Adelaide’s greater metropolitan areas.
“Transactions have been down by around 20%, but there has been a small correction in the median sale price,” he says. “However, when you compare us to the eastern states, we’ve fared well.”
This is a view shared by PRDnationwide residential research director Aaron Maskrey, who points to Adelaide’s stability as its key drawcards.
“The Adelaide property market has been very stable over the past 10 years, with only the March 2011 quarter showing an anomaly of low sales activity,” he says, adding that the city’s unit market, in particular, compares well to other state capitals.
Aside from the Olympic Dam buzz, Adelaide’s infrastructure developments have been keeping South Australia’s hot spotters busy.
The recent completion of the Northern Expressway, for example, is expected to cut travel times to Adelaide’s Mid-North, Riverland and regional communities, as well as cutting down the commute from Gawler to the Port of Adelaide. Nybo also points to the public transport network’s $2.6bn upgrade.
Closer to the CBD, the urban renewal that’s taking place around Bowden and Brompton makes this area one to watch for the future, says Nybo, after the state government threw open the chequebook to begin work on the Bowden Urban Village project.
“We’ll be looking at around 2,600 dwelling outcomes in the next 15 years. It’s really going to change the face of that location and provide some tremendous, affordable stock for quite a number of years,” he says, adding that the nearby suburbs of Fitzroy, Croydon and West Hindmarsh will also benefit from the area’s gentrification.
Further north, the Royal Australian Regiment’s new base in Edinburgh is expected to fuel buying activity.
“You’re looking at 500 families who have moved or are just about to move,” says Nybo.
However, Access Deloitte Economics notes in its latest report that while South Australia is a state with great resource potential, its manufacturing sector, which the state heavily depends upon, is still struggling. Population growth has also been relatively modest.
“It’s safe to categorise South Australia as a state that’s on the wrong side of Australia’s two-speed economy divide,” the report says. It adds that retail sales in South Australia have been even weaker.
“Moreover, the pace of South Australia’s population growth is now the weakest that it’s been in five years, and there is a risk that some of that slowdown in population growth will reduce the state’s employment growth. Although the latter is slowing, it has held up better in South Australia than nationally, but there is a risk that the negatives for manufacturing make the SA population outlook worse before it gets better,” says the report.
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