Adelaide economy and property market worthy of serious attention

Adelaide economy and property market worthy of serious attention
Adelaide economy and property market worthy of serious attention

I’ve been trying to convince people, without much success, that Adelaide is an economy and property market worthy of serious attention.

There’s rising potential in the South Australian economy, based on its status as the Australian capital for high-tech innovation and alternative energy, and great value-for-money in the Adelaide real estate market.

This week there was some support for my position from Deloitte Access Economics. In its latest assessment of the state and territory economies, it says that South Australia is poised to become the nation’s fastest-growing economy this financial year, as it achieves its best growth since before the GFC.

“South Australia continues to sprint ... so much so that it may wrest the title of ‘fastest growth in the nation’ this year from the ACT,” the Deloitte Access Economics’ Outlook for March says. “The news will come as a surprise to many …”

Yes, many would be surprised, but South Australia and Adelaide tend to be largely ignored in a media that’s obsessed with Sydney and Melbourne.

The tendency to report city real estate markets in terms of a single growth figure gives the impression that not a lot is happening in Adelaide.

It’s easy to be misled by generalised price data, which distils all the market activity in a major city into a single figure describing what prices are allegedly doing.

As one stark example, there are over 700 suburbs in the Sydney metropolitan area but it’s deemed sensible and meaningful to describe this vast urban area as a single market with one figure claiming that “Sydney house prices” have fallen 3.8% in the past year (according to one source).

But a breakdown of individual market precincts show that some are still rising, others are stagnating, still others are falling a little and one or two are declining rather a lot (mostly the near-city areas like the inner western suburbs and the inner south).

So it’s easy to be turned off Adelaide, because the generalised data suggests that “Adelaide house prices” have risen only 2 or 3 percent in the past year. Not much growth there, it seems.

But individual suburbs and sub-markets are doing considerably better. The secret to success for buyers is to find the out-performers, which exist in most situations.

It’s noteworthy that several millionaire suburbs have recorded major growth in their median house prices in the past 12 months. 

Uplift in the premium market is often an early signal of a strong market up-cycle (we’ve seen this also in the recovering Perth market).

Glenelg South, Gilberton, Hawthorn, Kensington Gardens, Rosslyn Park and Hazelwood Park all have median prices above $1 million and all have recorded median price growth above 20% in the past year. 

Other million-dollar suburbs like Glenunga, Toorak Gardens and Unley have had growth above 10%.

Other up-market suburbs with median prices above $800,000 have had double-digit growth, including Glenelg East, Linden Park, Lower Mitcham, Parkside and Stoneyfell. Mitcham’s median is up 25%.

The above-average growth is not all confined to the top end: there are suburbs with median price growth between 10% and 20% spread across all price ranges. 

This reinforces the reality that out-performing locations can be found even when the overall market appears to be moderate.

Lower-end markets with strong median price growth in the past 12 months include Elizabeth (up 16% to $250,000), Parafield Gardens (up 11% to $335,000), and Salisbury (up 13% to $330,000).

I’m expecting more strong growth in Adelaide because, as I have observed previously, there is momentum in the state economy and this will give impetus to the capital city property market.

This week’s assessment by Deloitte Access Economics tends to support that view.

Terry Ryder is the founder of hotspotting.com.au

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Terry Ryder

Terry Ryder

Terry Ryder is the founder of hotspotting.com.au.

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