A new Premier and rising sentiment sees the South Australian property market poised to recover its losses from 2011 and even exceed some expectations.
T he Adelaide property market is not known to have as many variables as some of Australia’s other capitals, so a slowdown in the major city suburbs is echoed across the state.
Andrew Wilson, senior economist at Australian Property Monitors, believes things are looking more positive for South Australia at the beginning of 2012. He says the state should make a recovery, despite the market remaining fairly flat.
“Adelaide has been down 2–3% over the last year, and has had a mixed economic performance,” Wilson says. “I was expecting Adelaide to be around the 0–3% for average median house price growth, but I’m now thinking it might be closer to 3% than to zero.”
Wilson says that this is due to confidence climbing back up and unemployment beginning to edge down since late 2011.
“Unemployment in Adelaide rose last year and has now dropped to around the 5% mark… national unemployment is 5.5%, so it’s not too bad for Adelaide.”
A resourceful state
Wilson says an improvement in global economic stability will positively affect Australia and trickle down to South Australia.
“Australia still has this potential, this tremendous economic boom coming through from resources growth,” he says. “In terms of the big picture, we are starting to see signs that the US economy is picking up and still remains the world’s biggest economy. These things will activate commodity prices and give China another market, which is good news for the resource sector in Australia, of which South Australia is a player.”
The Olympic Dam mine is one venture that is causing excitement for the state. The BHP Billiton project, situated at Roxby Downs, 560km north of Adelaide, survived lengthy debates in the State Parliament before being approved in late November 2011.
Greg Moulton, President of the Real Estate Institute of South Australia, is feeling positive now that the proposal has got the green light.
“We have been talking about mining having a positive impact on the South Australian market now for two or three years,” he says, “2012 will be the start, 2013 will be where the true dollars will flow through, but it’s all very positive, particularly with BHP signing on the dotted line and getting things moving.”
A leadership change has helped increase confidence, with new Premier Jay Weatherill enjoying popularity since taking over from Mike Rann. Moulton believes the Premier is enjoying a honeymoon period with the electorate, which perceives him to be proactive.
“We have got some political stability at the state level, which is important,” says Moulton, who also notes that the new leader has a favourable focus on real estate. “He seems to be on the same page as us in looking at stamp duty, land taxes and major costs to people purchasing property. We think over the next 18 months we might be able to work with the government and come up with some alternative revenue streams.”
Moulton believes poor sentiment was the only rationale for negative growth in 2011, something he thinks can be easily fixed.
“It’s very rare for the median house price to drop in South Australia,” he says. “It has only happened a couple of times in the past 15 or so years and usually picks up pretty quickly.
“We have seen an increase in turnover just prior to Christmas, which will follow through until the next interest rate cut, which we believe will be in February.
“There has been a lot of price adjustment from vendors who have had to accept the market has gone backwards a bit. Now the vendors are back on track, their property prices are at the right levels and the turnover has improved.”
Looking forwards, Moulton likes two markets in particular.
“The areas that will probably show the most growth are Gawler, located north [of Adelaide] at the gateway to the Barossa Valley and on the new Northern Expressway, and Bowden [in Adelaide’s inner west], which is close to the city and about to have a major development in there.”
He also likes Stirling in the Adelaide Hills, which he believes will recover quickly from a top end price drop thanks to its proximity to the city and the lifestyle it provides.
“We’re always a little biased, but South Australia provides a really stable investment. We’re starting to see a little bit of interstate money coming into the state, particularly from some of the more volatile markets like Sydney and Perth,” Moulton says.
“We’re expecting a really solid 2012 and an excellent 2013.”
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