The eternally calm and steady nature of the SA market should be attractive to those looking for the rewards that come from stable, long-term investments.
When looking at the Adelaide property market in the company of Sydney or Melbourne, it is easy for the elegant “festival” city’s market to suffer in comparison. Much like a swan, it glides along sedately, apparently untroubled by turbulence – but rarely recording the crazy highs that generate buyer zeal.
Newly-elected REISA president Ted Piteo says it is unlikely that SA will see the sharp spikes that NSW has seen of late, because the market just isn’t like that. “We don’t have the same peaks and troughs - or volatility that other markets do.”
This means that he, like many commentators, expects that Adelaide’s market will record small growth over the next 6+ months, but it will not be in the realms of the growth recorded by other capital cities.
The latest APM Housing report found that, over the last year, Adelaide had a modest 2.6% growth. The fact that the market has been flat and quiet for some time means any growth is welcome and significant. Most commentators point to a figure of around 2-3%, and Piteo believes it will be better than 2%.
Over the last few months, REISA has recorded significantly more action from buyers. There is now an increasing shortage of properties to sell and, while the backlog of supply is being cleared, it is not being replenished.
Buyer habits are changing, and average property turnover has moved from 7-8 years to 9-11 years, Piteo says. “With people holding on to their properties a lot longer these days, the market simply doesn’t have the sort of turnover it used to have.”
This situation has the potential to lead to buyer completion and an increase in Adelaide property prices.
In the meantime, it is the city’s affordable prices which are one of its draw cards for investors. RP Data gives the current median house price as $388,000 and the median unit price as $325,000.
As the most affordable of the mainland states, SA and Adelaide is a worthwhile market to invest in. Taking a long term perspective is key to the market, Piteo says. “It is a market which is good for investors who are interested in the medium to long term. It’s not so good for short term speculators.”
Not only is property affordable, but there is easy access to the market and good infrastructure is in place, he continues. “Adelaide is a great place to live and buy. The lifestyle is fantastic. Traffic congestion is not an issue. It’s an excellent market for investors prepared to hold.”
However, the latest Herron Todd White report questions why the Adelaide market has remained subdued throughout 2013 –when there are record low interest rates, affordable prices and low levels of stock available.
The report says it continues to feel as though the market is in the early stages of recovery, yet nothing further is happening. It speculates that property owners are not game to face the market and are holding out until selling conditions improve, while buyers facing limited choice remain uncertain and unwilling to commit.
Employment uncertainty
One possible reason for the ongoing flatness of Adelaide’s market could be the impact of uncertainty over employment on confidence levels.
According to the latest APM Housing report, the Adelaide unemployment rate of 6.2% remains the highest of all the mainland capitals, and predictions of subdued local economic performance will remain a significant barrier to sustained house price growth.
While Ted Piteo believes consumer confidence is on the rise, he says media speculation about economic and employment uncertainty – for example, over the situation with General Motors - can have a huge and damaging impact on the market.
However, he believes that the evolution of the job market, and the economy generally, does tend to take care of such things.
Suburb to watch: Christies Beach
Judy Harrow, from Judy Harrow Property Management, tells YIP about the attractions of Christies Beach.
Selling points: An older seaside suburb, it is becoming a trendy place to retire, build, invest and develop. Its views, locality and access to Adelaide draw people to Christies Beach.
The current low interest rates have been fantastic for the area. There are new developments popping up and being sold to investors, as well as owner occupiers.
Most sought after properties: There are older small homes, 3-storey apartments with penthouses and conventional family homes. But the most popular properties are 3-bedroom, 2-bathroom properties with 2 carports.
Top amenities: High quality schools surround Christies Beach. Colonnades shopping complex is close by, as are Coles and Woolworths stores. There are some restaurants on the beach, and some local bakeries and stores.
Recent changes: The new developments have created a more diverse community. Once a little seaside town, Christies Beach is now a hub with beautiful parks, an upgraded beach front and a community feel.
Best streets: Christies Beach itself, Port Noarlunga South and Seaford. The expressway has made it easy to commute and the rail extension to Seaford has improved sales immensely.
Getting around: Local transport is improving. The rail extension will make a huge difference to commuters, while the reliability of the bus service is now much better.
Main arteries: South Rd goes to Victor Harbour, Jervis Bay leads to the KI Ferry and, in the other direction, town, and Dyson Rd goes to Glenelg and the city. There is the Southern Expressway for commuters.
