The Weatherill Government’s latest budget for South Australia came with stamp duty breaks for off-the-plan apartments, no new taxes for foreign buyers and a multi-million dollar assistance package for areas of Adelaide soon to face economic challenges, but those on the ground don’t believe it will provide a kick-start to the city’s market.
Recent figures from CoreLogic put the median dwelling price in Adelaide at $420,000 at the end of June, with growth of just 2.2% recorded in the previous 12 months.
“What I’m picking up at the moment from looking around and talking to other agents and that sort of thing is that there doesn’t seem to be a lot of optimism that the market’s going to take off or rise very much in the near term, the next six to 12 months or so,” Michael Whitrow, director and buyer’s agent at RealTeam Property Group told Your Investment Property.
Whitrow said major announcements in the budget, such as the expansion of the stamp duty concessions for off-the-plan apartment purchases and the assistance package for the city’s northern suburbs will have some impact, but it would likely be marginal in terms of stimulating the market.
“I think people will grab the off-the-plan concessions, being able to save a bit more than $15,000 is probably going to be popular. But that’s for the off-the-plan stuff, which is obviously an important part of the real estate sector, but arguably not the main one.
“The government is projecting about 800 purchases through that plan which is a little bit, but it’s not huge numbers.
“The Holden plant is located in northern suburbs and that’s due to close next year so there’s obviously a bit of concern about that.
“There’s $24m or so to support the northern suburbs, which is apparently going to be spent on things like helping businesses in those areas and other community programs and that’s going to help in terms of peoples’ attitudes a bit I think.”
While Whitrow said there doesn’t appear to be a significant short-term change coming for Adelaide, he said the market still hold some attractiveness for buyers who may be priced out of other locations.
“I just spoke to new client who is looking to Adelaide because he can’t afford to buy where he is now and even if he could he wouldn’t be able to get yield that would make any sense.
“If you’re in Sydney or Melbourne, that’s when Adelaide starts to look pretty attractive. At the moment you can get 4.5% yield on a sub-$500,000 budget.
“I think we’ll see an increase in that, people who are renting somewhere else and use Adelaide as an entry point into the market, but I’m not sure that we’re going to see enough of it to make a real difference.”