September smashes thoughts of real estate price slow down

Nov 2002

Adelaide real estate has continued to defy market speculation of a property downturn to post a record percentage increase for the September 2002 quarter.

September figures released by the Department for Administrative and information Services and the Real Estate Institute of South Australia revealed the eighth consecutive quarterly rise in the median house price.

The September result for Adelaide is the largest percentage increase since the statistics were first collated in March 1984. It is even more spectacular given the September quarter is a traditionally slower quarter due to the impact of the quieter selling season in the winter months.

In the metropolitan area, the median house price has now broken the $180,000 barrier, finishing the quarter at $181,800. This represents a 7.07% rise over the quarter and 19.61% when viewed over 12 months.

The South Australian whole state median has echoed the performance of the metropolitan area, breaking the $160,000 mark to finish the quarter at $163,800. This reflects a 6.02% increase over the quarter and an 18.78% rise over the year.

For the first time in years, the median house index has revealed the central metropolitan area is overshadowing that of the inner metropolitan suburbs in terms of relative price growth.

Inner metro suburbs are categorised as those within a 5km radius of the CBD, with central metro suburbs being those within a 1Okm radius.

Real Estate Institute of South Australia President Oren Klemich said the increased activity in the central area was showing the affect of rising property prices and development in councils such as Holdfast Bay, Port Adelaide and Charles Stuart.

"I think it's generally showing that as inner prices have moved higher, the ripple-effect is causing homebuyers to look further outside the inner city to buy," Mr Klemich said.

"The coast is so strong, and also some of the renovation and new building going on in the central area is pushing that index higher."

While the $12,000 skyrocketing rise in the median house price for the quarter has exceeded the expectations of most forecasters, Mr Klemich said the result further justifies the demand for property in South Australia, and the affordability of real estate in this State.

"Market pundits keep predicting the burst of the real estate bubble right across Australia", Mr Klemich said.

"South Australia has solid economic growth, high levels of consumer confidence, low interest rates, continued stimulus through the First Home Owner ' s Scheme and stable rental markets. It begs the question - why are market analysts and pundits continuing to predict a market nose-dive?"

It seems that purchasers are being increasingly drawn to the Port Adelaide area where the traditionally lower house prices are providing access to the real estate market at very affordable prices.

A quick glance at the Local Government Area of Port Adelaide Enfield 1 (Port Adelaide) shows a rise in the median house price over 12 months from $134,200 to $183,100 - a staggering 36.44% rise over the period.

Mr Klemich attributed much of the price rises in Port Adelaide to purchaser confidence creating demand in the area following news of private and Government investment in redeveloping the wharf precinct.

Increased demand for low-maintenance unit homes in the metropolitan area continues to drive median unit prices to record levels.

Volume of unit sales was down 17.73% from 1,709 sold in the September quarter during 2001, compared to 1,406 in the corresponding period in 2002.

Mr Klemich said that the rise in unit prices could largely be attributed to low stock levels and strong buyer demand.

"In some areas, new zoning approvals has meant that the 1960s and 1970s unit-style developments are no longer being built," he said.

In areas like Burnside or West Torrens, these solid home units are in very attractive locations, yet lack the high price tags of eastern suburbs housing.

"In so many cases the rising house prices for established homes has priced these out of the market for many buyers which makes a unit one of the best options".

Illustrating the growth in unit prices, Mr Klemich highlighted the figures for Burnside Local Government Area with a rise in the median from $136,800 in September quarter 2001, to $169,000 in 2002. West Torrens also revealed good growth rising from $93,700 to $133,000 over the same period.

Echoing the strong flavour of state-wide property growth, several rural and regional parts of South Australia showed good results.

Perennial property out-performer Victor Harbor had a slower quarter, but still shows a 27.64% rise over the year while Port Lincoln recorded 17.77% growth over the year to finish the September quarter at $154,400.

Gawler broke the $150,000 median barrier for the first time with a 7.76% price rise over the quarter to $150,000 and a 19.43% rise over 12 months.