A segment of South Australia’s property market is showing remarkable growth at a time when similar areas across the country continue to struggle
A few hundred kilometres down the west coast of South Australia’s Yorke Peninsula, in a village cut into an arid strip of Spencer Gulf Coast, life idles by much as it always has. Retirees enjoy the sun on patios overlooking scrub littered beaches and holidaymakers camp underneath sapphire skies streaked with thin Cirrus clouds.
In fact, its breathtaking views aside, the town of Moonta, population 3,000, would be nothing remarkable if not for an unusual statistic. As a coastal property market relying on tourists, retirees and sea-changers to fuel property price growth it has reversed an ironclad Australian trend. As other towns in Moonta’s position have recorded massive median price falls, Moonta, astonishingly, has been powering ahead.
RP Data figures indicate prices have surged 26% in the 12 months to August, and within South Australia, the town is not alone. Other small, beachside towns in the rural parts of the state have also seen price hikes. Among them are Yorke Peninsula towns Wallaroo, Kadina, Maitland and Saddleworth, which all saw capital growth increases around the mark of 20%.
One only needs to look at property markets in the coastal areas of other states to realise why this trend is defying the odds. Queensland, NSW and Victoria’s largest fallers of late have all been small seaside towns that rely on holiday homebuyers and retirees to buy up properties. The hardest hit have been areas such as Queensland’s Airlie Beach, where prices have tumbled more than 30%.
Real Estate Institute of South Australia president Greg Moulton says he is not surprised. According to him, the state’s coastal regions have been undervalued when compared to the eastern states and southern WA – a situation that has endured for quite some time.
“Metropolitan coastal areas have shown good growth in the past five years, but areas further out have been undervalued,” he says, adding that holiday shacks have become increasingly popular across the state. This is just as demand from retiring baby boomers has hit a modest spike, driving sales in coastal areas.
Spotting the phenomenon
That there is a contrast between South Australia’s strong performing coastal regions and the rest of the country has not escaped the attention of property analysts either. RP Data research analyst Cameron Kusher says house prices in many regional coastal areas were set back last year.
Falls across all suburbs in the Sunshine Coast and Queensland’s far north coast averaged 5%, while the Illawara region in NSW saw prices dip by an average 3%. The 10 largest coastal areas in the country also continue to see values that sit well below historically high values experienced prior to the GFC, Kusher claims.
“This result… can broadly be attributed to the downturn in demand for holiday apartments, downturn in the tourism sector of the economy and overbuilding of units in some areas,” he says. “A slowdown in migration has [also] had a negative impact on market conditions.”
For property author, lecturer and forecaster Peter Koulizos, South Australia opposing the trend may have something to do with development projects being launched in regional areas – some of which are conveniently close to beachside areas.
The self-described “Property Professor” says parts of the Yorke Peninsula especially have seen infrastructure upgrades, as mining companies move into the area. There are now nine mineral exploration companies doing work on the peninsula, with works underway by Rex Minerals to produce copper at Hillside – a mine close to Ardrossan and Pine Point.
A wind farm, dubbed the Ceres Project, will also seek to produce energy on the Yorke Peninsula and create additional jobs in the area. Operations on the peninsula may also intensify as economic activity tapers away from Olympic Dam, where BHP announced in August that it would not be implementing a US$30bn upgrade.
“With the Olympic Dam expansion being delayed this allows junior miners such as Rex Minerals to sell their copper at a reasonable price as the extra supply from Olympic Dam will be delayed. Also, it will be easier to get skilled workers,” Koulizos says.
How small seaside towns like Moonta and northern neighbours Wallaroo and Kadina will be impacted remains to be seen. For now, investors can merely reflect on recent price growth. In Moonta, typical seaside cottages are now worth roughly $70,000 more than they were a year ago. It’s the kind of capital growth most investors dream about and it is in, what’s for many, a dream holiday location.