Adelaide market springs back to life after Olympic Games

Nov 2000

Uncertainty surrounding the GST, the Sydney Olympic Games and the impact of the First Home Owners Grant scheme have combined to soften activity in South Australia's property market.

Following the real estate sector's better-than-expected performance during the June 2000 quarter, State Government figures for the September quarter reveal the strong growth experienced during the past year is beginning to slow.

While the median house price across the State increased 3.3 per cent to $118,800 between September 1999 and September 2000, the figure is down 7.3 per cent from the June 2000 quarter.

The Department for Administrative and Information Services (DAIS) sales data - the official benchmark for the property sector - also shows the level of sales volume has declined, with 5,582 properties sold during the September 2000 quarter, compared with 6,290 in the same quarter last year and 7,271 in the June 2000, quarter.

REISA President Mr Barrie Magain, said the figures reflected a high level of buyer uncertainty, particularly over the impact of the Goods and Services Tax after July 1.

"Leading up to June, there was a noticeable increase in sales linked to the end of the financial year and among people trying to beat the perceived imposts of the GST, " Mr Magain said.

"Since then consumers have continued to take a cautious approach to buying or selling while they have waited to see how the Olympics affected market activity as well as whether the new tax system would be smoothly implemented. "

"However, in the outer areas of Adelaide, buyers have been literally queuing up to purchase and that is directly linked to the $7,000 First Home Owners Grant."

"Cheaper properties that were previously not selling are now being purchased very quickly, but this is effectively dragging down the median price of property, especially in metropolitan Adelaide."

Mr Magain said that with the onset of the traditionally busy spring period, many agents were reporting a shortage of housing stock as well as strong inquiry levels among buyers.

"People have realised that now is a good time to buy established property, with high affordability levels and very little difference between a pre-GST and post-GST purchase price," he said.

"People who are holding off buying or selling should not wait any longer."

The DAIS figures for the September 2000 quarter show that Adelaide's outlying suburbs, such as Greenwith, Happy Valley, Paralowie and Craigmore are leading the market in terms of sales volume and median price increases.

Meanwhile, traditionally well performing local government areas such as Burnside, Unley and Charles Sturt are beginning to record fewer sales and fluctuating price increases.

In the rural growth areas of regional SA - which comprises Millicent, Port Lincoln, Mount Gambier, Victor Harbor, Murray Bridge, Port Augusta, Port Pirie and Whyalla - sales volume increased from 437 in September 1999 to 504 at the same time this year. The median price dropped 1.25 per cent to $86,800 during the past year.

Highlights by local government area:

• Prospect; median values rose 7.4 per cent to $186,700, while sales volume decreased by 17.2 per cent on the September 1999 quarter.
• Tea Tree Gully; values up by 4.1 per cent to $131,900, volume down 6 per cent.
• Mitcham; values rose 9.45 per cent to $181,800, volume increased by 3.6 per cent.
• Marion; prices up 4.2 per cent to $133,200, volume decreased 18.3 per cent.
• Holdfast Bay; values rose 3 per cent to $195,000, volume dropped 27.5 per cent.
• Old Noarlunga; prices up 8.4 per cent to $99,600, volume dropped 10.3 per cent.

Mr Magain said that apart from first home buyers, agents were reporting a high level of interest among second home buyers, empty nesters as well as investors eager to include property as part of their portfolio.

"There is no doubt the buyers are ready, willing and able. We just need to see more people listing their properties for sale," Mr Magain said.