Adelaide's median house price reaches new high

February 2002

Touching new highs and breaking through the $150,000 barrier for the first time in the September quarter, Adelaide's real estate market has defied all expectations of a downturn to set yet another record high.

The December 2001 figures released by the Land Services Group of the Department of Administrative and Information Services (DAIS) and the Real Estate Institute of South Australia (REISA) reveal the median house price in the metropolitan area reached $158,900 in the December 2001 quarter, up from $152,100 in September 2001.

In percentage terms the rise is 4.47 per cent for the quarter and a mammoth 16.58 per cent since December 2000. The result is made even more impressive considering the increase in sales volumes recorded over the same 12-month period.

The result continues the solid upward trend in the median metropolitan house price and is the fifth consecutive quarterly rise recorded since September 2000.

Real Estate Institute of South Australia president Barrie Magain said a combination of low stock levels, low interest rates and the First Home Buyer's Grants were the major contributing factors in the market's sustained performance.

Across South Australia 7,587 houses were sold for a median of $144,500 a result that is up 4.71 per cent on the September 2001 quarter and up 17.29 per cent over 12 months.

Mr Magain highlighted the solid performances in areas such as Salisbury, Morphett Vale and Noarlunga where the percentage returns have been consistent rather than spectacular.

Salisbury East was a standout suburb recording a 4.98 per cent increase over the quarter and a highly respectable 29.72 per cent rise over the year with the median price rising from $94,200 in December 2000 to $122,200.

In the city, councils such as Prospect, Mitcham and Charles Sturt produced some of the most solid gains on large sales volumes in the past year.

Mr Magain said the market had reached a point where many people were deciding to renovate or extend their existing property rather than go through the process of selling and purchasing something new. In some of the State's property "hot spots" such as Victor Harbor, Goolwa, Port Elliott and Carrickalinga prices of vacant land were rising at a rate which made prospective Vendors see more value in demolishing an old home on the property and rebuilding from scratch.

"Anecdotal evidence suggests tradespeople in the building industry are flat out with extensions and renovations as people choose to do up their existing property rather than sell it," Mr Magain said.

"Many Vendors are weighing up the cost of selling, particularly since the advent of the GST and its effect on agent fees. Stamp Duty also adds to the cost of the next purchase and only discourages prospective Vendors from purchasing a new home."

These stock levels explain the disappointing December quarter results for some of the year's standout metropolitan performers.

Mr Magain cited the December quarter sales figures shown at Blackwood, Glengowrie and Henley Beach, which were all down when compared to their 12-month performance, as examples of the lack of quality stock currently available in those areas. Blackwood had a negative 12.94 per cent return for the December quarter with the median price slipping from $185,000 to $156,400, but this was on sales volumes that were down 31.82 per cent. Blackwood's yearly performance finished with an 18.29 per cent increase in the median from $156,400 to $185,000.

Burnside Local Government Area showed a similar result with growth over the quarter slowing to just 1.98 per cent resulting in the median price in Burnside rising from $328,200 in September 2001 to $334,700 for the current quarter. Sales volumes in Burnside were also down 16.28 per cent over the year. When viewed over 12 months, the Burnside result is more reassuring with the LGA showing a 22.60 per cent return.

Larger regional centres within an hour's drive of Adelaide also showed strong results attributed to the First Home Buyer's Grants.

Regional areas:
In Gawler the median house price rose from', $116,300 in December 2000 to $128,300 and Murray Bridge also showed a 9.59 per cent 12-month increase from $83,500 to $93,700. The Murray Bridge result has been linked to strong industrial and agricultural growth in that area, and the influence of the Heysen Tunnels on travel times between Adelaide and Murray Bridge.

The desire of South Australians to live by the beach has driven property values higher in seaside towns such as Goolwa, Port Elliott and Victor Harbor over the past 12 months. Victor Harbor was a standout regional growth area with a 24.86 per cent increase in the median house price up from $128,700 in December 2000 to $160,700 at the end of 2001.

On the Yorke Peninsula, new marina developments on the coast have driven a rise in property prices at Wallaroo. The median was $78,700 12-months ago and has now risen to $97,000.