Confidence remains strong in Adelaide despite economic concerns

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Economic issues in South Australia are likely to result in two separate and distinct property markets in the state according to one member of the real estate industry.

The state and its sluggish economy were dealt another blow last week when steel manufacturer Arrium, who had already cut 1,000 jobs from its operations in the city of Whyalla, went into liquidation.

While that may mean some pain for the market in Whyalla and its surrounds, Adam Stone, South Australian state manager for National Property Buyers, said prospective investors shouldn’t apply those conditions to the whole state

“To some people they’ll just hear South Australia and they may associate what’s happening in the regional areas to all of the state, including Adelaide,” Stone said.

“I see there being two separate markets in the state. It’s very, very quiet in some of the regional areas that have been hit by economic issues. I see there being the Adelaide market and then there’s the regional market,” he said.

Even before the collapse of Arrium, Stone said he was experiencing first-hand the struggles regional markets were experiencing.

“I do vendor advocacy and I have a property for a client in Port Augusta. It’s been on the market for three months or so and we haven’t even had an enquiry or anybody go through the property,” he said.

“In some of those regional areas it’s bad now and I think it will continue to be that way for a while.”

In comparison, Stone said market confidence within Adelaide has been gaining steam since late 2015.

“I’m finding it’s very, very strong. I’m trying to buy properties before they go to auction and the vendors are deciding that they won’t sell before auction and won’t even entertain an offer.

“It’s very strong at the moment and it’s been that way since about November last year.  Back then I thought it was a matter of things getting very busy and sought after with the end of year approaching, but it’s been full steam ahead since then.”

That confidence is being driven by a mix of investors and home buyers, with Stone saying the city is increasingly on the radar of investors from inter-state.

“We’re getting a lot of investors who are coming from Sydney, I’ve got one client at the at the moments who wants me to buy two properties for him. It’s very noticeable at the moment how many clients are coming from outside the state, especially from New South Wales.

“In particular the younger ones, in their 30s or so, for whom the prices in somewhere like Sydney are a bit beyond them at the moment, so their looking to Adelaide because it’s a bit more affordable.”

While the situation in areas like Whyalla and Port Augusta are unfortunate to say the least, Stone said they serve as another reminder about the dangers of investing in areas reliant on one employer or industry.

“With the some of these regional areas, investors get caught up on yields because there are often good rental returns available… but we always put capital growth as number one when selecting properties for clients.

“You don’t normally get both, you get capital growth or yield and we direct our clients towards growth."
 

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