ADELAIDE LEADS PROPERTY BOOM
A search for an official definition of what constitutes a "booming market" comes to no avail. But there appears to be a consensus that from 2001 to 2003 the Australian real estate market experienced a boom. At some stage during that period, most capital cities exceeded annual growth of 20 per cent or more.
The Adelaide market has officially moved into "boom" territory. The median price of a dwelling is up by 20.1 per cent, from $305,200 in October last year to $366,590 at the end of September. Early indicators show the market is still gathering pace – the average time it takes to sell a property is falling, the level of vendor discounting is diminishing and price increases show no sign of abating.
Adelaide is performing well mainly because of affordability, attractive investment potential and growth in the South Australian resources sector. Its prices offer the most affordable entry to the national market. The median house price is $385,580 and that for the median unit is $304,370, both the lowest of any capital, apart from Darwin units.
With housing affordability a national issue, Adelaide investors are motivated by above-average rental yields and strong prospects for capital growth. Rental yields are averaging 4.4 per cent for houses and 5.0 per cent for units, both above the national average of 4.0 and 4.9 per cent respectively. And spending on mineral exploration in South Australia – representing 17 per cent of the nation’s total exploration dollars (up from just 7 per cent two years ago) – is second only to Western Australia.
Nationally, the real estate market is strong, except in Perth and, to a lesser extent, Darwin. Perth prices fell by 0.5 per cent in over the September quarter and Darwin prices increased by only 1.6 per cent. Perth and Darwin are also the only capitals where the length of time it takes to sell is increasing.
Brisbane is close behind Adelaide in price growth, with values up by 18.9 per cent for the year to September. The city shows the shortest time on market of any capital city, with houses averaging 24 days to sell and units just 14. The growth trend is steep, and Brisbane should enter boom territory in the coming months.
Sydney is still improving but broad growth of 7.2 per cent hides a delineated market. There are price falls in the west, but inner Sydney is up by 18.2 per cent and the eastern suburbs by 15.7 per cent.
Melbourne is third after Adelaide and Brisbane, with overall dwelling values up by 16.6 per cent. Its properties are selling quickly – houses averaging just 30 days on the market, and units 31 days.
Canberra is also solid, with dwelling values up by 12.3 per cent. High wages counter the nation’s third-highest median dwelling prices. It is the only capital to record average rental yields in excess of 6 per cent, a comparatively attractive return for investors.
Tim Lawless
Tim Lawless is research director of
RP Data. tim.lawless@rpdata.com
