The Smartline Report – June Edition

The month in review: Adelaide

By Herron Todd White
June 2015

As we approach the midway point of 2015 we are hearing lots of positive signals flowing from the eastern states about property prices, strong markets and heated market conditions. This is largely driven by interest rates being at all time lows but despite this the South Australian market remains in a becalmed state. Adelaide in particular has not historically experienced boom and bust conditions. But equally it has not experienced extended flat periods. Its probably best described as at times stronger and sometimes weaker but generally “safe”. Currently there is no doubt that we are in a weaker phase in general.

The market is however segmented which means we need to be careful about generalizing. Many segments of our market are pretty flat with prices only seeing modest increases in some areas.

Inner suburban housing closer to the city, facilities and the coast are showing steady growth in prices and turnover. Outer suburban areas and housing in the sub $500,000 range are reporting flat to negative conditions.

Inner markets are simply supported by stock shortages and the safety of those markets. Values don’t decline in Norwood, Walkerville, Unley and North Adelaide Council Areas. Houses are often character styles and with a mixed offering from small cottages worth between $500,000 and $800,000 up to more prestigious homes of $1 million upwards where the market continues to rise steadily.

Outer suburbs paint a different picture with rising stock levels, extended selling periods, and uncertainty surrounding employment in the North leading to low confidence levels, limited new investment and potentially zero to negative real growth. It is well recognised that with the closure of traditional manufacturing in this state there needs to be other stimulus and the opportunities are hard to envisage. Many of us are waiting on decisions relating to public spending and stimulus strategies that will hopefully come from the public sector.

The private sector business community is currently increasingly cautious with below average confidence levels and in view of that, growth in many economic areas including property will be subdued. Unfortunately this paints a somewhat bleak picture for property in the short term. The upside is that, for those of us that can remember, similar conditions existed in the early 1990’s and in time, as it did then, recovery and confidence will be restored. So maybe its just a good time to be considering investment with a view to the longer term. But if doing so be careful and take advice.

A big risk in the Adelaide market is that of generalisation. While some market segments are down, others remain strong with the appeal of inner city and beachside living being strong, values in the inner suburban areas are holding and growing in some places.

The former AAMI stadium (Football Park) is a massive western suburbs project that will bring on stream a variety of housing in a near city location. This project will be a significant factor in the property market in the coming years and we will be reporting on its scale and influence in the years to come. The property is some 23.5 hectares of prime residential and commercial land that has been earmarked for staged development.

Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2015. Australian Credit Licence Number 385325


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