Steady and solid growth is Adelaide’s trademark – and it looks set to continue.

South Australia has a reputation for being ‘a little bit dull’ in terms of property investment.

Historically, it’s neither shown excessive growth nor serious slides in value: instead, it’s shown steady growth. Some might call it the Goldilocks state: not too hot, not too cold, others would say you could garner better returns elsewhere.

Judging by recent performance, no one’s opinion of the state’s property market is likely to be radically revised. RP Data figures for September show an overall decrease in median values for Adelaide of 0.6% over the quarter: squarely in the middle of increases for Sydney and Canberra, while better than falls of 1.4% and 5% for Brisbane and Perth respectively.

Angie Zigomanis, senior project manager at BIS Shrapnel, agrees that the SA market is quietly “ticking over nicely”.

“There’s some evidence of things slowing down slightly, from a pure supply and demand perspective,” says Zigomanis. “That’s really because construction has been going on at a fairly high level in a long-term sense, rather than a fall in demand.”

But the state’s relatively slow population growth – as of March 2010, it was the second lowest rate in the country at 1.3% – is acting as a constraining factor on demand. Yet Zigomanis still believes the market is relatively balanced.

“It may well be the case that supply might get to the point where it’s meeting, if not exceeding demand – but I think strengthening economic conditions will keep prices stable,” he adds. “We won’t see massive price increases, but no growth fall-off either.”

Greg Nybo, the recently-installed president of the Real Estate Institute of South Australia, agrees the market is in balance.

“The higher end of the market has been performing quite well – particularly in areas close to either city or beach,” he says.

“In fact, the inner-metro area performed the best out of all regions in the months leading up to the September quarter, with a 12.3% rise over last 12 months.”

Nybo also suggests that a change in government policy could have a positive knock-on effect for investors.

“We feel that investors are very well-placed if looking to buy an established property,” he explains. “In September, the state government decided to cut the first home owners boost on established properties and increase the grant for first homebuyers buying new homes by $8,000. That means there’ll be less competition from first homebuyers for established properties.”

The changes could also see investors benefit in terms of rental demand.

“While rental yields are relatively stable, we could see vacancy rates tighten further. And there will be first homebuyers who are keen on established properties, or who want to buy in inner suburbs where there’s less land available: they’re going to be forced to stay in the rental market longer as they’ll have to save for a bigger deposit,” he says.

Northern suburbs bonanza

The next part of Adelaide to see significant growth could well be the outer northern suburbs.

“One of the big capital expenditures done is the opening of the Northern Expressway, which cuts off significant travel time from the northern suburbs,” says Nybo.

The Expressway runs for 23km from Gawler to Port Adelaide, and links with the Port River Expressway. In addition, the main rail commuter lines from the city to Outer Harbor and Gawler are also being electrified, again improving transport links. This, says Nybo, could well drive renewed interest in the northern suburbs – especially when combined with the relocation of the 7th Royal Australian Regiment to a new army base in Edinburgh, Adelaide from 2011.

The waiting game

For regional South Australia, attention is largely focused on one announcement – the proposed expansion of the Olympic Dam mine. The mine’s owner, BHP Billiton, intends to turn the copper, uranium, gold and silver mine into the world’s largest open-cut mine.

The next key stage is for the environmental impact statement to be assessed. While the public consultation has been closed for some time, there has been little word from the state government as to if and when a response can be expected.

If the expansion does go ahead, it could have a big impact on the state’s relatively sleepy property market.

“If the Olympic Dam spending is approved, there’s likely to be a solid pick-up in jobs, and some migration shift to South Australia,” suggests Zigomanis.

“Adelaide especially could benefit from the cachet of a big project like Olympic Dam – like Perth has benefited from Western Australia’s mining industry in the past. If the mine goes ahead, there’s huge potential there.”

Nybo is quick to urge caution to investors, however.

“We’re all waiting for the announcement that they’re ready to go, but in the meantime the boom that people think is coming hasn’t hit just yet,” he says. “However, hopefully it’s not too far off.”