Real Estate South Australia - Property SA

Real Estate SA - South Australia

The value of an average home loan in South Australia actually declined over the same period (down 1.8 per cent to $158,346) as a big jump in average household income helped to offset the higher cost of housing (Source: REIA/AMP Home Loan Affordability report). As a result, the proportion of family income required to meet average loan repayments fell from 28 per cent to 27.1 per cent.

However improved affordability has done little to entice more first home buyers back into the market. The report shows that first home buyers accounted for just 11.7 per cent of homes financed during December, one of the lowest proportions in the country (the national average is 16.6 per cent).

Independent property analysts BIS Shrapnel, believe that high levels of dwelling construction activity in Adelaide is resulting in an emerging excess of dwelling stock as underlying demand eases. Without strong population growth driving demand, price growth is expected to be limited in the short term. Shane Oliver, chief economist with AMP Henderson Global Investors says prices are still playing catch-up in Adelaide. However he warns that there are now signs of weakness, with housing set for an extended period of underperformance with investors advised to look elsewhere for high returns.

ANZ's latest Property Outlook report predicts slower growth over the coming year rather than a sharp correction.

"The market is now likely to be entering the early stages of price consolidation, most probably pulled forward by higher interest rates and tested by oversupply conditions. Adelaide house prices should be able to achieve seven to 10 per cent annual growth by year end before hitting more significant constraints."

Real Estate Institute of SA president Robin Turner said South Australia's strong economic fundamentals would underpin continued house price growth in 2005.

"Other factors contributing to the continued strong growth could be the low unemployment in South Australia, low interest rates and continued stimulus thorough the First Home Owners Grant scheme, making So Macquarie Bank analyst Rod Cornish is wary about the longer-term outlook for Adelaide's housing market. Commenting in Money Magazine, he said: "There are far too many houses being built in Adelaide."

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