Adelaide Property Investment
Adelaide has emerged from Sydney and Melbourne's shadows as one of Australia's fastest growing property markets.
In the shorter term prices are likely to continue rising as the state rides the back of the resources boom, low unemployment and stable population.
Looking Ahead ...
Shane Oliver, chief economist with AMP Henderson Global Investors says prices are still playing catch-up and thus accelerating in Brisbane, Adelaide, Perth and Hobart.
However he warns that there are now signs of weakness, with housing set for an extended period of underperformance with investors advised to look elsewhere for high returns.
ANZ's latest Property Outlook report predicts slower growth over the coming year rather than a sharp correction.
"The market is now likely to be entering the early stages of price consolidation, most probably pulled forward by higher interest rates and tested by oversupply conditions. Adelaide house prices should be able to achieve seven to 10 per cent annual growth by year end before hitting more significant constraints."
Real Estate Institute of SA president Robin Turner said South Australia's strong economic fundamentals would underpin continued house price growth.
"Other factors contributing to the continued strong growth could be the low unemployment in South Australia, low interest rates and continued stimulus thorough the First Home Owners Grant scheme, making South Australia the 'affordable homeowner state'," he said.
Top Performing Suburbs
Adelaide's inner city and coastal areas were the star performers of 2004 and look set to continue growing in 2007.
REISA president Robin Turner said: "Generally other statistics showed coastal property continuing to experience strong buyer demand with many increases being for suburbs adjoining those which have show increases in previous quarters."
Hot growth suburbs include the outer northern and southern suburbs such as Davoren Park, Mount Barker, Hallett Cove, Reynella, Salisbury North and Christie Downs.
While past performance is no guarantee of future capital growth, it is a good gauge of buyer demand and likely performance. Population growth is another pointer to future house prices. According to the latest population figures from the Australian Bureau of Statistics, Adelaide's inner city and outer suburbs are experiencing above average population growth. They include the local government areas of Adelaide, Salisbury, Port Adelaide, Enfield and Playford. These are areas to watch in the medium to long term.
Adelaide Property Market Overview to 2007
Macquarie Bank analyst Rod Cornish is wary about the longer-term outlook for Adelaide's housing market. Commenting in Money Magazine, he said: "There are far too many houses being built in Adelaide."
BIS Shrapnel says declining demand and an oversupply of new homes will lead to a flattening of house prices over the next three years. BIS predicts new home construction will slump 21 per cent in South Australia in the coming year. And the firm tips that Adelaide's median house price will climb just three per cent over the next two years.
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