Regional SA April 2018

The month in review: Regional SA

By Herron Todd White
April 2018

Yorke Peninsula

The market on the Yorke Peninsula has remained stagnant over an extended period of time with a number of the major townships showing negative growth. The majority of the larger townships are showing current transaction prices in line with 2013 data. The December 2013 median house price in Kadina was $255,000 whilst for the same period in 2017 the median price was $227,000. Similarly, in December 2013, Moonta Bay had a median house price of $301,750 compared to a median price of $289,000 for the same period in 2017. In 2009, 25 Letcher Street, Kadina was purchased for $270,000. This is a 3-bedroom, 1-bathroom renovated character dwelling situated on an allotment of 1,135 square metres. This property was recently withdrawn from sale after a five-month marketing period with an asking price of $270,000. The property presents in a similar condition to when it last transacted in 2009.

The market away from coastal locations is driven by locals with the largest proportion of dwelling transactions falling within the $200,000 to $400,000 price bracket. Household income in this region is at a lower level than metropolitan Adelaide, which is a driver of prices within this price bracket. Properties priced above this range typically require extended selling periods to achieve a sale.

At the other end of the scale, the market typically hits a ceiling in the $750,000 to $850,000 bracket. Prices at this level are typically achieved by properties with water views, close proximity to the beach and access to boat ramps.

This is a thinly traded market segment which is driven by holiday-makers from Adelaide and retirees. An example of a sale in this price bracket is 975 Old Coast Road, Port Vincent which settled in January this year for $820,000. This is a two-level dwelling of HardiPlank construction with 4-bedrooms and 2-bathrooms. The property is situated on 3,413 square metres of land having direct beach frontage and unrestricted ocean views. Port Vincent is located approximately 193 kilometres from the Adelaide CBD.

Regional SA

There remains a steady supply of vacant land over the greater Yorke Peninsula area. Many of the larger townships have had one or more residential land divisions occur over the past decade. The Dunes in Port Hughes, Patricks View in Moonta Bay, Wallaroo Heights in Wallaroo and The Sands in Marion Bay have all led to a surplus of available land. Many of these land divisions remain partially built out with vacant allotments requiring significant price reductions and extended selling periods to achieve sale. Land in Patricks View was transacting in the mid to upper $100,000s when initially offered to the market in 2009.

Recent sales evidence has indicated allotments are transacting within the $60,000 to $90,000 price bracket.

Regional SA 2

Given its geography, the Yorke Peninsula provides a multitude of differing market segments and property types. Each of these segments is driven by a number of different market factors causing them to fluctuate separately from one another. Overall, the peninsula remains over supplied with increased stock and a limited level of demand.

Mount Gambier

Regional SA 3

The graph above shows the unemployment rate (per quarter) for Mount Gambier from 2011 to 2017 and it has remained relatively steady. When we compare this unemployment graph to the number of sales that occurred during the same period, it can be seen that unemployment rates have not had a significant effect on the number of sales. For example, in 2015 when unemployment rates were at their highest, sale numbers were still higher than they were in 2012 and 2013 when unemployment rates were lower. However, as unemployment has remained relatively steady we would not expect the number of sales to fluctuate significantly based on the relatively small changes in unemployment.

Employment, however, particularly in the forestry sector, is one of the main factors impacting the strength of the Mount Gambier property market. Currently talk about employment in Mount Gambier is generally positive and in addition interest rates are low, which probably explains why the median sale price in the city has continued to increase since 2014.

The forestry sector is the largest employer in the south-east region with nearly 3,500 directly employed and more than 9,000 indirectly employed. This equates to around 35% of employment for the region. Many of the smaller regional towns, in particular, are heavily reliant on this industry and a large number of job cuts in previous years caused the market to slow down in these towns.

Smaller towns are generally more susceptible to higher unemployment rates or job cuts as they are reliant on one main industry, exposing them to danger. Larger centres such as Mount Gambier are less exposed as they have a number of larger employers, however, they are still impacted.

Within Mount Gambier, higher unemployment rates are most likely to have an effect on the lower end of the market or for first home buyers looking at entering the market. However, it is the number of sales that occur that is impacted, not necessarily particular price points.

The economy in Mount Gambier is currently well positioned and there is positivity in the marketplace. The Mount Gambier median house price for 2017 was $265,000 which has continued to increase since 2014. Considering the market within the region has been relatively stable in the past three years, we believe that a growth in employment would help to improve the market further.

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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.