Market defies its detractors
Don’t write off the Wine State just yet. House price increases, rising confidence and boosts to land development and the construction sector are just some of the reasons to be optimistic
Anyone who has been following media coverage of the South Australian economy in recent times could be forgiven for thinking it’s on life support. A more thorough glance at the data, however, suggests a brighter future ahead.
Granted, Holden has been given its marching orders and the Olympic Dam expansion didn’t quite get to lift off, but let’s look on the bright side.
There were two key recent statistics that gave the real estate market hope for the year ahead.
- The median house price for Adelaide showed a significant increase of 3.98% from $399,100 to a record $415,000 over the 12 month comparison, according to the Valuer General’s median house price data for the 2014 June quarter.
- It also made a small yet significant gain of 0.42% over the 2014 March quarter.
“It is really positive news for the real estate market that the median price continues its upward trend on comparisons from the same quarter last year and the immediately preceding quarter,” says the Real Estate Institute of South Australia (REISA) president Ted Piteo.
Additionally, the unit and sales market posted a 1.59% rise in the median price compared to the same quarter last year.
Piteo argues that the key indicators which are driving the market are likely to continue that upward trend.
“First home buyers and investors are continuing to buy in affordable quality suburbs and this can only mean good news for families wanting to enter the market and for tenants wanting access to quality services and welcoming communities.”
Take me to the water
Looking for capital growth in South Australia, as opposed to cash flow? It might be wise to consider suburbs by the water.
In recent years, coastal suburbs have shown to increase in value more than their non-coastal counterparts, according to the latest Herron Todd White report.
“With an investment of $500,000 you could purchase a property in the Robe or Beachport townships with an ocean view. The better the view, the better the investment,” says the report.
In particular, transport infrastructure has also helped drive growth in the outer southern suburbs, located close to beaches along Adelaide’s coast line.
With the Seaford Rail Extension and the Southern Expressway Duplication nearing completion, this is set to improve public transport and travel time in these suburbs.
Piteo also lists the ocean and transport infrastructure as being among the criteria that investors find highly desirable.
and Aldinga Beach
continue to rule the roost in terms of sales. Affordable suburbs that offer premiums to first home buyers and investors such as infrastructure, quality transport avenues and a life by the sea will always be highly sought after,” he says.
The property market in Adelaide may have reached the bottom of its cycle but that’s not necessarily a bad thing, says the Herron Todd White report.
“Investors are now more confident that property will start to see some improvement in capital growth in the medium to long term,” the report says.
Indeed, the Property Council/ANZ Property Industry Confidence Survey has found that South Australia’s reading for the September quarter of 2014 increased by four points to 114, which is the second highest level since the survey’s inception in SA in 2011.
The study authors believe the recovery is largely based on expectations of continuing low interest rates, and the likely boost they will provide the land development and housing construction sectors.
The housing construction sector is in fact already revving up, both in terms of approvals and housing finance, according to the latest Deloitte Access Economics Business Outlook report. Furthermore, unemployment looks to have peaked, public spending is resilient and retail sales are looking healthy (particularly when adjusted for population growth), it says.
For the REISA’s Ted Piato, confidence will return further once the effects of the Federal and State budgets become more understood and absorbed into the economy, as first homebuyers and investors will both be more inclined to enter the market.
However, CommSec’s State of the State’s report warns that without a kick-start to its economy, South Australia is likely to continue to struggle.
“South Australia is lacking a growth driver, especially as a number of public sector construction projects have been completed or are nearing completion,” it says.
Suburb to watch
Black Forest: Homes are selling fast in this tightly held suburb
The name might suggest something sinister, but unlike the place of the same name in Beauty and the Beast, this Black Forest is beautiful, peaceful and safe. Lots of the homes are bungalows and tudors which appeal to tenants because of their eye-catching character on the inside and out. The streets are tree-lined and clean, plus all the amenities are ideal for the families, students and young couples who target this area.
It is serviced by trams, trains and buses to the Adelaide CBD, which is just four kilometres away. Furthermore, Black Forest Public school has a fantastic reputation and is a drawcard for young families. It’s a small suburb in terms of size and population that is easy to miss considering more well-known areas like Millswood, Forestville and Clarence Park are nearby. Black Forest is much cheaper than all three as far as the median price of units are concerned, and has a healthy rental yield of 5% to boot.
Units available on Byron Rd are ideal for young couples or students attending the University of Adelaide, South Australia, or Flinders
. They are within five minutes of train, tram and bus transport, and close to the Sunday Farmer’s Market, Goodwood Oval and the Unley Swimming
It’s no wonder units in Black Forest are spending on average just 37 days on the market, which makes them the fastest selling property
type in the Unley LGA. As more people find out about this hidden treasure, expect prices and rents to follow suit as Black Forest heads towards its more expensive neighbours.