Adelaide fringe suburbs gain momentum

Feb 2003

Adelaide's median house price has finished 2002 at a record high, breaking the $190,000 barrier in December and completing an exceptional year of median house price growth in the State's capital.

According to preliminary quarterly data released in January 2003 by the Department for Administrative and information Services (DAIS) and the REISA, the median house price for Adelaide rose 5.61% in the December 2002 quarter and a mammoth 21.21% over the year to finish the year at $192,000.

The quarterly gain in excess of 5.0%, on the back of the record 7.07% rise in the September 2002 quarter completes an extraordinary second half of 2002 in South Australian real estate, much of which has occurred at a time when Eastern States markets have experienced a marked slow-down.

The December figures were characterised by stunning double-digit annual price growth in suburbs bordering the central city precinct; the continued strength of coastal locations and rises in lower-cost suburbs on the outskirts of the metropolitan area.

However, the figures show slowing rates of growth in the top-end Local Government Areas such as Burnside (13.87%) and Holdfast Bay (2.78%) that REISA President Oren Klemich attributes more to the stunning price rises in these areas evident during 2001 and early 2002 that has put these locations out of the reach of the majority of South Australian purchasers.

"There is no lessening in the desirability of these locations, but as the prices rise less purchasers are able to afford these areas so volumes are certainly down and the upward pressure on prices appears to have eased," Mr Klemich said.

Volumes of sales in the December quarter were down across the State, however the DAIS statistics are preliminary with further December sales still to be recorded.

Across South Australia, volumes were down 14.49% from 8,108 in December quarter 2001 to 6,933 in the corresponding period of 2002. In the metropolitan area, volumes were down 15.10% from 5,986 in December 2001 to 5,082 in December 2002.

Mr Klemich said he was not surprised by the atmosphere of purchaser confidence throughout South Australia that continues to see strong demand for real estate and record prices being achieved.

"South Australia has solid economic growth, high levels of consumer confidence, low interest rates, and continued stimulus through the First Home Owner's Scheme Mr Klemich said.

But perhaps more importantly, we have a great quality of living here and a capital city in which it is still possible to purchase a home at a very affordable price, and yet be less than half an hour's commute into workplaces in the city centre.

"That's why the southern coastal suburbs such as Morphett Vale, Christies Beach and Aldinga Beach have registered such growth and helps explain the performance of regional centres such as Murray Bridge, Gawler, and nearer the city Elizabeth and Salisbury," he said.

Mr Klemich said the growth in real estate prices in the city over the past two years has seen purchasers radiate from the city centre as prices have escalated.

For the second consecutive quarter, growth in the Central suburbs, categorised by DAIS as those within a 1Okm radius of the CBD, outstripped growth in the Inner precinct (within a 5km radius).

"Local Government Areas such as Campbelltown (24.56%), Port Adelaide Enfield 1 - Port Adelaide (35.59%) and Charles Sturt (31.07%) have recorded exceptional growth over the year reflecting the increasing popularity of these near-city locations," Mr Klemich said.

South Australia's median house price (whole state) rose 7.36% over the quarter, outpacing the metropolitan quarterly growth for the first time in recent years to finish 2002 at $175,000. This represented a 22.21% annual increase from December 2001 at which time the median house price was $143,200.

"Recent reports of record sales in Robe and the activity in coastal locations on the Eyre and Yorke Peninsula with marina-style developments lead to the perception that real estate is only increasing on the coast - but the Riverland towns of Renmark and Berri, and regional centres such as Mount Gambier, Naracoorte and Murray Bridge also showed strong annual median house price rises over the year," Mr Klemich said.

Economic and industrial projects in Port Pirie seem to have rejuvenated real estate investment in that town with Port Pirie one of the surprise packets in the year's statistics. Port Pirie recorded 7.29% growth for the December quarter and 24.39% growth against the corresponding period of 2001 to finish the year with a median house price of $76,500.

Mount Barker and other Adelaide Hills towns continued to experience strong real estate markets and buyer interest as homebuyers seek the lifestyle benefits of rural locations within close proximity to Adelaide.