Adelaide Hills are alive with the sound of money

The Adelaide Hills region has emerged as one of the most resilient top-end property markets in Australia, with property prices increasing by more than 10% over the past 12 months.

The region has defied the current national trend, as 20% of the most expensive capital city suburbs recorded a fall in values of 5.4% during the 12 months to April 2011.

It compares with a 0.5% fall at the most affordable end and 0.9% decline across the broad middle 60% of the market, according to the latest RP Data Weekly Property Pulse.

Houses in the Adelaide Hills continue to change hands with the median price a historic high of $600,000, with 63 sales recorded during the March quarter.

Adelaide Hills’ attraction for home buyers is its relatively close proximity to the Adelaide CBD (a 30- to 40-minute commute), but it is still outside the “rough and tumble of city life”, according to RP Data research analyst Cameron Kusher.

“The Adelaide Hills has done a good job attracting people to the market who are willing pay higher prices,” Kusher tells Property Observer.

Kusher says the town of Gawler, 40 kilometres north of Adelaide, has also benefited from a growing population as well as its close proximity to the Barossa Valley wine region.

House prices in Gawler remain at their historic median highs at $344,500, up 9% on the year. Ninety-six homes were sold in Gawker during the first three months of the 2011, according to RP Data.

Gawler, Adelaide Hills and the northern Adelaide suburb of Salisbury (median house price of $317,000, prices up 2.3%) have all outperformed the overall Adelaide market, where median prices are down 2.1% over the year.

“In these regions, the Government has provided decent level of amenities, the populations are growing and they have lifestyle appeal,” Kusher says.

These three Adelaide growth spots are joined by the greater western Sydney municipalities of Blacktown, Campbelltown and Liverpool, which have not experienced price declines over the quarter and where prices remain at or near-historic highs.

Kusher says affordability is the issue driving the strength of these traditionally unfashionable markets: “People have realised if you want to get into the market, you need to move out to these regions.”

At the other end of the scale, some of the country’s most prestigious markets have experienced the biggest declines, with Mosman Park in Perth down 43% from its median peak price and down 3.8% for the year. Houses in Mosman Park at their peak were valued at just under $2.2 million. The current median price is $1.25 million based on a very limited turnover of just 14 sales for the period.

Other prestigious markets where house prices have declined significantly from historic highs include the Perth beachside suburb of Cottesloe (down 21.6% to $2.05 million), Woollahara in Sydney’s eastern suburbs (down 18.5% to $1.84 million) and Mosman on the Sydney north shore (down 21.8% to $2.2 million)

Houses in the Melbourne local government area are currently down 27.6% from their peak, trading at $742,500 from a peak of $1.03 million in December 2010.

Kusher says the premium sector is being impacted by a “perfect storm of forces such as consumer conservatism, higher interest rates, poorly performing equities markets (both in Australia and nationally), unstable global economic conditions and lower levels of business and consumer confidence”.

Lower-than-normal turnover has contributed to the decline in medians in prestige suburbs across the country.

The most expensive local market where house prices have remained at historic highs is Botany Bay in Sydney. Median house prices stand at $850,000, but just 27 homes changed hands over the quarter.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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