I’ve been everywhere, man, I’ve been everywhere. Well, not quite, but I’m getting there! A few weeks back we started the first in a series of blog posts on capital city property markets. Unfortunately, we had to take a slight detour the past two weeks to address 1) negative gearing and 2) the predictions of an ‘economist’ on a top rating ‘news’ program (actually pains me to say both economist and news in this context). Regardless, this week we return to the series. I’ll hold for applause.
Who am I?
- I was the first city to grant women voting rights
- I’m home to a recent prime minister who assumed office in an act that’d make Brutus proud
- I’m banking on an upcoming submarine manufacturing contract to stimulate my fledgling economy
- I have the oldest population of any Australian city
- I am the only city in Australia that was established as a colony of free settlers
I’m Adelaide, of course!
The Adelaide property market has been somewhat stagnant over the past few years, largely a result of a poor jobs market. Here’s why Adelaide is likely to remain bogged in the correction phase of its cycle for the medium term:
- South Australia lacks the strong industry drivers to generate employment growth, population growth and property growth
- The unemployment rate is 30 per cent above the national figure – a fifteen year high in trend terms
- Private capital expenditure (a proxy for business confidence) has been flat for the past decade
- Between September 2010 and September 2015, the median price of dwelling in Adelaide increased 7 per cent – less than the rate of inflation
- South Australia’s population growth rate is the third lowest of Australian states, increasing 0.75 per cent in the year to June 2015
The silver lining on the otherwise dark cloud?
- Increasing demand – upward trending sales growth rates
- Low supply levels contribute to tight vacancy rates and high yields
- Vacancy rate: 2.1 per cent
- Yield: 5.1 per cent
Adelaide: Affordable? Yes. Opportunity? Not yet…