Affordable property in Adelaide and speculation surrounding what many believe will be an impending resources boom are keeping property investors’ hopes up for SA.
The good news for the South Australian real estate market is that in a climate of slowing capital growth across the nation, Adelaide is still performing well on the property front. The City of Churches’ property market has been bolstered by having some of the country’s most affordable capital city property, as well as the general speculation among investors that increasing activity in the South Australian commodities sector will keep the state’s property market afloat.
"A lot of people are viewing Adelaide as the new Perth and are hoping to ride that wave of capital growth," says RP Data’s Tim Lawless.
“Adelaide is the number one performer and is still going strong, largely because it’s the most affordable capital city. You can still buy a home within 10 kilometres of the CBD for around $350,000.”
Lawless points to Adelaide’s strong capital growth of 4.8% over the first four months of this year, according to RP data figures, which sits in stark contrast to nationwide stagnation and the negative growth seen by Melbourne, Sydney and Perth over the same period. He does concede however that the property market in Adelaide is now beginning to show signs of a slowdown “especially in the mortgage belt areas”.
Opteon Property Group are among many organisations who are in agreement with Lawless that the excellent capital growth figures that Adelaide has seen in recent times (21.8% for the year ending April 2008 according to RP Data) won’t be sustainable for much longer, citing rising interest rates as the principal cause.
“In recent months there has been evidence of a softening in demand, most likely attributed to increasing interest rates and tightening of lending criteria by most big banks,” say’s Opteon’s June Outlook.
However this slowdown is far from cataclysmic, as demand for property in the South Australian capital remains strong, due in no small part to the state’s ever-growing mining industry.
According to the Opteon report, South Australia has now replaced Queensland as the nation’s second-biggest spender on mineral exploration (after Western Australia) thanks to a 58% increase in spending on the activity last year. This saw overall spending on mineral exploration in South Australia increase from $591m in the December quarter of 2006 to a staggering $935m in the December quarter of 2007.