Slow recovery underway
Tentative signs of a recovery are appearing in Adelaide’s property market, but there are a few things currently conspiring to slow the process down
Some experts are declaring that Adelaide’s property market may have reached the bottom of the property cycle last year and is now in the early stages of recovery. However, that recovery could become a long, drawn-out one, thanks to a few economic hiccups that could derail this upturn.
For example, the manufacturing sector is slowing down and job losses could escalate as a result, says Herron Todd White’s Michelle Richardson.
“The uncertain future of Holden’s car manufacturing plant at Elizabeth and the slowing down of the SA mining sector appear to be offsetting the benefits of low interest rates,” she says.
South Australia’s economy also remains in the doldrums, recording a slowdown of 0.5% in the June quarter, according to the ABS. Only Tasmania recorded a lower performance at -1.8%.
Despite this, there are signs that activity is returning in the property market.
“Since the start of 2013, auction clearance rates have improved and over the last four or five months have fluctuated around the 70% mark,” says Richardson. “Auction as a sales method has also increased since the start of 2013. Now, the improvement in clearance rates and increase in auction numbers is a positive sign for the beginnings of a recovery.”
Hotspotting’s Terry Ryder says Adelaide markets have much stronger growth prospects than some experts have suggested. This is because inner-city construction is cranking up, new infrastructure projects are being completed, and another crop of SA mining ventures is set to come on line.
His research shows rising numbers of sales around the Adelaide metropolitan area. “The last time we did a suburb-by-suburb analysis of Adelaide we found that the cheaper areas showed the best capital growth, while the list of worst performers was dominated by the ‘prime’ inner-city expensive suburbs,” Ryder says.
“The areas with the best capital growth always tend to be the affordable ones with good transport links to the CBD, as they attract demand from the masses.”
With record low interest rates and stagnant property values, SA is at the peak of housing affordability, which is enticing an increasing number of first home buyers.
CBD development could spark boom
According to Ryder, since the state government relaxed planning regulations last year, developers have proposed Adelaide CBD projects worth $2.5bn.
The Development Assessment Commission has approved $700m in projects, and another 24 projects worth $1.8bn (including the $350m expansion of Adelaide Casino) are in the pre-lodgment process, he says.
“Industry leaders say the reforms have the potential to spark a building boom… The growth will transform the city skyline, complementing the major public projects under construction (such as the Adelaide Oval revamp and the Royal Adelaide Hospital).
“Allowing bigger projects, along with the lack of restraints and obstacles in seeking development approval, has made Adelaide more attractive to developers,” Ryder says.
Suburb to watch
Developed as a residential area in the post-WWII boom, Woodville Gardens is known for its multicultural population and proximity to the Adelaide CBD. The suburb’s diversity of ethnic groups and cultures, combined with its convenient location and affordable prices, makes it an attractive proposition for investors, Daniel Nguyen from Hale Real Estate says.
Served by a reliable bus system, and a train station 2km away, Woodville Gardens is also home to the prestigious Queen Elizabeth Hospital (and just 8km away from the Women’s and Children’s Hospital).
There is a good mix of public and private primary schools in the area. Due to the large Asian population, there are a lot of Asian owned and operated stores and eateries, as well as a good selection of retail options, restaurants and doctors and dental surgeries.
Nguyen says a typical property would be a three-bedroom home on a block of around 700–800m. “There are a lot of new single-storey fully detached three-bedroom homes being built. There are also some bigger family homes, but we rarely see townhouses being built.”
Private investors are planning some development which will increase new homes in the area, according to Nguyen.
“Woodville Gardens is a perfect place to start a family or for retirees, especially with the expansion of Arndale Shopping Centre to cater for future growth. It is one suburb that is sure to rise,” he adds.
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