The SA and Adelaide markets seem to have been struggling along for some time, with little good news. But data and reports from a number of sources hint at a more positive future
Elegant and cultured, Adelaide was recently listed, by Lonely Planet, as one of the world’s top 10 cities to visit in 2014. The travel guide described the city as “effortlessly chic – and like a perfectly cellared red, it’s ready to be uncorked and sampled”.
Unfortunately, the same sentiments are not often voiced when talking about the SA capital’s property market. After years of correction and struggle, the Adelaide market still seems to attract unflattering press.
Yet there are ongoing hints that, just like the aforementioned red, the market is worth sampling.
According to the latest RP Data Rismark Home Value Index results, the Adelaide market hasn’t been performing too badly of late.
Over the last month, there was a 2.1% increase in dwelling values. More interestingly, over the quarter to April, there was a 3.3% increase in dwelling values. This result put Adelaide in third place, behind Darwin and Sydney, for the quarter.
RP Data’s Tim Lawless says that, overall, Adelaide residents are also showing surprising optimism when it comes to housing market conditions. Apparently, 76% of residents now believe it is a good time to buy.
The Adelaide market started the year on a positive note with good results from several different sources, REISA president Ted Piteo says. “With the median price at its highest level ever, the key indicators are all solidly pointing to a good year ahead for real estate.”
He points to the Valuer-General’s median house price data for the 2014 March quarter. This shows that the median house price in Adelaide rose by 4.43% from $393,000 to $410,399 over the 12-month comparison.
Last year saw the median price climb over the $400,000 threshold for the first time in three years, Piteo says. “This quarter sees the median price pass $410,000 - for the first time ever – representing a new record for the Adelaide property market.”
Further, the March quarter data from Australian Property Monitors (APM) shows that Adelaide house prices increased 1.3% over the quarter, which contributed to an overall rise of 4.1% over the year. Unit prices have risen 1% over the past 12 months.
The APM data summary described these figures as indicating " a modest housing market revival”. They also indicated growth that is sustainable and should be attractive to buyers.
Piteo says Adelaide is always a moderate market and not prone to the sharp ups and downs of other markets. “From an investor’s perspective, this is a good thing. Four per cent growth is good: it’s not over the top and it means there are affordable increases in prices.”
Affordability essential for future?
Maintaining affordability is important to the future of the Adelaide market. While its median house price has hit a record high, the city is still the most affordable of the capital cities.
This is an important selling point, particularly for interstate investors, Piteo says. “Buying property at an affordable price, knowing there is going to be sustainable growth, is crucial for investors who are in it for the long term.”
Affordable housing could prove to be crucial for the broader economy too.
The recent CommSec State of the States report ranked SA sixth or seventh on most of its key economic indicators. It described the outlook for the state as challenging and said that, hopefully, property investors would soon switch their attention to more affordable housing markets, like that of SA.
However, Piteo is more upbeat and believes the broader outlook is more positive than often represented in the media.
Investment projects steaming ahead
Meanwhile, it seems that as investment in the resources sector starts to decline further, SA has much less to lose than some other states.
According to the latest Deloitte Access Economics Investment Monitor, due to the fluctuating fortunes of resources in the state, SA’s major investment projects have been transport and utilities projects. This means that ongoing public-funded transport projects should keep investment levels in decent shape.
The reports states that a number of factors have impacted negatively on SA’s commercial construction sector, but it adds that the state government is doing its best to boost the sector with public money.
Such state-funded projects include the redevelopment of Tonsley Park into a 25ha industrial precinct, and a series of major health projects, such as the new Royal Adelaide Hospital.
Suburb to watch
Whyalla Norrie
Situated in the seaport city of Whyalla, which is on SA’s Eyre Peninsula, Whyalla Norrie is a suburb on the rise. Packed full of parkland and within easy reach of amenities, it is particularly well suited to young families looking to settle.
In recent times there has been a buzz building about the broader Whyalla area. While the city has already experienced an economic upturn, thanks to mining ventures, certain other projects look set to continue the momentum.
Some examples are the recent completion of a $72m expansion to the port, which positions it to be one of SA’s major export ports, and the ongoing redevelopment of Whyalla Hospital, which will make it a regional health hub.
Projects such as these have been attracting workers, boosting rental markets and injecting energy into the area. Thanks to the affordability of its property, Whyalla Norrie is a major beneficiary of these developments.
Solid brick maisonettes and duplexes with decent-sized yards dominate the Whyalla Norrie market. These tend to be affordable to buy and easy to rent, which contributes to the strength of the rental market.
Adding to the suburb’s attractiveness is its position between the highly sought-after suburb of Whyalla Playford and Whyalla Stuart, which is home to a University of South Australia campus, a TAFE and a variety of schools.
Whyalla Norrie’s affordability, convenience and family-friendly environment mean that, as the city of Whyalla’s fortunes rise, the suburb’s future prospects look bright.
