Infrastructure spending coupled with ongoing housing supply shortage will see property prices to grow strongly in 2010
It may still lag the performance of its bigger state neighbours, but there are signs South Australia is finally catching up.
According to Residex, South Australia notched up 7.14% growth in value to $396,000 over the 12 months to December buoyed by strong activity from investors and upgraders. During the three months to December, median house values rose by 2.26%.
Bart Quinn, South Australia’s branch manager for WBP Property Valuers says the Adelaide residential market has generally strengthened in the December quarter based on the latest data from Real Estate Institute of South Australia which shows house price for Adelaide’s Metropolitan suburbs continued to increase for the third quarter in a row, jumping by 2.41% to $382,500 and a positive growth of 6.25% for the year.
“The middle ($350,000 to $700,000) segment appears to have strengthened along with demand from investors. Following the withdrawal of the FHOB in 2010, early signs indicate that the local property market has reverted to a more stable level, where demand is largely even across all price ranges. Investor activity will continue in the wake of a very tight rental market,” he says.
Vacancy rates in metropolitan Adelaide fell in November to 1.18% compared to the previous year according to Propell National Valuers. The median asking rents for houses rose by 3.2% to $350 in the December quarter. “Adelaide had the highest increase in median weekly asking rents for houses in Australia over the three months to December. Gross yields for houses in Adelaide have increased by 0.02% to 4.36% over the same period.”
Upbeat outlook
Terry Ryder, director with hotspotting.com.au says there’s a very strong prospect for growth in Adelaide and South Australia as whole.
“It’s coming from a lower base, but the market is really starting to blossom. The resources sector is becoming stronger. There’s also a lot of infrastructure being built in Adelaide. I think 2010 is going to be a good year for Adelaide, not what you call a boom year like the one we saw in 2008, but it’s going to be a better year.”
Matthew Bell, economist with Australian Property Monitors agrees that Adelaide’s exposure to the resources and defence industry will support the ongoing property market recovery.
“I think 2010 is going to better than 2009, but it’s unlikely to outperform the national average. It does have the advantage of being the most affordable mainland state by fair way particularly in terms of units and house. If affordability becomes more acute in other cities then it makes Adelaide more attractive in that sense.”
Raine & Horne SA CEO Kevin Magee says strong migration figures coupled with higher than average birth rates and lower than average death rates will result in significant growth in the state’s property market in the years to come.
“In 2009 alone, more than 270,000 people migrated to Australia, with more than 16,500 of those choosing to call South Australia home,” says Magee. “What these numbers mean is that we have simultaneously had the biggest migration boom, the highest number of births and the lowest number of deaths in Australian history.”
“Migrants increase the immediate demand for property, particularly in rental markets with flow on benefits for home sellers and investors, while new births represent the future of the market. It has been predicted that 40% of houses that will be in Australia in 2030 have not even been built yet.”