By Herron Todd White
The South Australian market is renowned for shadowing the major east coast markets; always a step behind. This shadowing has always provided those in South Australia a crystal ball into how our market may track. The back end of 2018 and the beginning of 2019 saw these major markets head into negative territory. After a period of sustained growth dating back to 2017, the South Australian metropolitan market was put to the test. Would the market be a bull and be outstanding in its field or continue to shadow?
In our 2019 February edition, the middle ring was tipped as being the segment to watch in 2019 with an entry price point of $300,000 to $500,000 providing options for both first home buyers and investors. The suburbs of Hope Valley, Dover Gardens and Ingle Farm were our picks to watch. On the most recent quarterly data, these suburbs achieved year on year median dwelling value growth of 1.45 percent, 0.21 percent and 2.62 percent respectively. This year saw Dover Gardens achieve its highest residential dwelling transaction since November 2015 with 1 Seaforth Avenue, Dover Gardens achieving a sale price of $745,000. This property comprises a circa 2006 modern four-bedroom, two-bathroom dwelling on 600 square metres. In a market that has trended downwards, our call on these suburbs deserves a tick.
The suburb of Campbelltown, north-east of the city, was tipped to be treated with caution in 2019. The local council had announced that they would be increasing the minimum allotment sizes to try to stifle the excessive townhouse development occurring within the council area. Broadly, Campbelltown achieved quarterly year on- year price growth of 4.05 percent which bucked the trend of the greater market. More specifically development sites have had mixed results through the year on the back of the zoning changes. As one sale faltered another would catch the market by surprise. The sales of both 3 Grivell Street, Campbelltown and 32 Downer Avenue, Campbelltown tell a vastly different story on how the market treated development sites in 2019. These properties transacted in mid-2017 and early 2018 for $700,000 and $560,500 respectively. Both transacted again in 2019 with 3 Grivell Street having a $25,000 loss and 32 Downer Avenue having a $104,500 gain.
Both Port Adelaide (and surrounds) and Mount Barker were tipped to watch in 2019 with the substantial development occurring within their vicinities (seven years into Renewal SA’s Port Adelaide rejuvenation project and the early 2019 announcement of the Dock One development). The Port was considered an area to watch for increased market activity as early adopters jumped in. Port Adelaide and the surrounding suburbs had mixed results in 2019 with price levels fluctuating and no visible price growth across the board. Our prediction looks to be premature but there is plenty of time for The Port to live up to the hype with another eight years remaining in Renewal SA’s rejuvenation project.
Mount Barker has continued to undergo significant residential development with former agricultural land being carved up. The abundance and availability of stock were considered a negating factor in any immediate and sustained price growth. It was pleasantly surprising to see Mount Barker have a 5.56 percent increase in its quarterly year on year median dwelling price. The increase provides an indication that demand is meeting supply in this developing suburb. The map below provides an indication of the development occurring within Mount Barker with the red lines representing proposed subdivisions and the pink shaded areas representing land zoned for residential development.
At the beginning of 2019, the year’s outlook was somewhat murky. The South Australian metropolitan house price had grown quarter by quarter since September 2017. At the back end of 2018 the sluggish east coast market, banking Royal Commission and tightening lending conditions were making national news whilst locally the state government’s proposed land tax shakeup was striking fear into the hearts of all property owners. If there was ever a time for the South Australian market to hit a speed bump this would be it. The metropolitan median house price hit a peak of $480,000 in the March quarter which was followed by two-quarters of decline with the most recent September quarter data indicating a median house price of $471,900. The non-metropolitan (major towns) median house price has also fallen to $265,000 which is the lowest point it’s been since December 2017. The South Australian market typically lags behind the larger capital city markets; with declines being felt around the country it was only a matter of time before South Australia followed suit.
Speaking to both buyers and agents in the field, the ability to borrow was put down as a major factor in the lack of activity in the market. Agents operating in the inner ring have indicated that properties typical of a sale by auction were receiving mixed results with purchasers struggling to obtain finance. Within the middle and outer rings, first home buyers and mum and dad investors faced similar financial issues. The real winners have been cashed up purchasers who have reduced reliance on lending institutions. These buyers have had the pick of properties in a subdued market with declining interest rates.
A few surprises were thrown up during the year but none more than the transaction of 19 Statenborough Street, Leabrook. This property was transferred off-market for a staggering $8 million in June. This has become the highest property transaction in the metropolitan area’s history, eclipsing the previous record-holder by $1 million. Available information indicates the property has a living area of some 1,300 square metres across three levels on an allotment of 2,200 square metres.
Throughout 2019 the market provided some surprises however wasn’t able to buck the shadow of the east coast markets and keep on the upward trend. Recent data suggests price growth in a number of major metropolitan markets, so don’t hit the panic button yet.
Speak with an Adelaide Mortgage Broker today.
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.